The last six odd months has seen the cryptocurrency market witness an unparalleled amount of financial volatility, so much so that the total capitaliz
The last six odd months has seen the cryptocurrency market witness an unparalleled amount of financial volatility, so much so that the total capitalization of this fast-maturing space has dropped from $3 trillion to approximately $1 trillion. This comes after the industry hit all-time highs across the board last November, with Bitcoin (BTC) reaching a price point of $69,000.
Despite the previously stated volatility, a recent report shows that small to medium-sized enterprises (SMEs) across nine separate countries, Brazil, Canada, Germany, Hong Kong, Ireland, Russia, Singapore, United Arab Emirates and the United States, are extremely open to the idea of accepting cryptocurrency payments — especially Bitcoin.
Within the study — which surveyed a total of 2,250 market entities — 24% of the respondents said that they plan on accepting Bitcoin alongside other digital assets in the near term, while a whopping 59% of participants revealed that they plan on transitioning exclusively to the use of digital payments by the start of 2025.
From the outside looking in, crypto payments offer a range of benefits. For example, the issue of chargebacks or compliance with payment card industry standards are completely mitigated when it comes to digital assets. Not only that, acceptance of Bitcoin and other digital currencies can help attract additional business from crypto enthusiasts as well as potentially multiply one’s profits (since many of these currencies stand to become more valuable over time).
Does accepting crypto really make sense for SMEs?
According to Igneus Terrenus, policy advocate for cryptocurrency exchange Bybit, Bitcoin makes absolute sense as a day-to-day medium of exchange for SMEs. He told Cointelegraph that as a payment network, Bitcoin (when used in conjunction with the Lightning Network) is unequivocally superior to the seven-plus-decade-old system that underlies credit cards, adding:
“Bitcoin on Lightning is disintermediated, has finality built into it, faster, more secure and is many magnitudes cheaper in transaction cost than credit card’s ~3% fee. The payment does not necessarily need to be settled in BTC since the Bitcoin network can take dollars, convert them to BTC and transfer it across the network and convert it back to dollars upon arrival.”
When asked about the volatility side of things, Terrenus explained that if viewed with a shorter time frame, BTC is no doubt a risk-on volatile asset. However, if looked at with a more panoramic view or denominated in relation to inflationary currencies like the Turkish lira and the Argentine peso — that have exhibited respective increases of 73.5% and 58% in their May consumer price index levels — it may very well still be better at preserving purchasing power than most fiats during times of intense volatility/bear markets.
Ben Caselin, head of research and strategy at cryptocurrency trading platform AAX, agrees with this assessment, telling Cointelegraph that accepting Bitcoin as well as other more established cryptocurrencies is still the right course of action for most SMEs since there is now a plethora of mechanisms for them to tap into large liquidity pools and new demographics without being over-exposed to excessive market volatility, adding:
“Current market conditions may be bearish but the overall adoption of Bitcoin and key crypto infrastructure including the development of the Metaverse as well as the integration with traditional financial markets continue to advance. For any businesses looking to plug into the crypto ecosystem and economy, this is a good time to pursue such endeavours in anticipation of the next phase of the adoption curve.”
The answer may be quite simple
Lior Yaffe, co-founder and director for blockchain software firm Jelurida, noted that business owners who want to accept Bitcoin but are afraid of a serious price decline should simply “convert their BTC to fiat as soon as they receive it.” In Yaffe’s view, a business’s decision to accept Bitcoin should not be based on short-term price fluctuations, adding:
“Even with all the volatility, there are compelling reasons for SMEs to accept Bitcoin, such as the ability to control funds directly without relying on the good will of a third party. Businesses selling goods and services over the internet and having problems using the existing credit card system, businesses based in countries where the local currency is extreme, businesses who cannot work with their local banking system can all benefit from the use of BTC.”
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That said, he did concede that there is no shortage of problems for entities accepting crypto payment these days since tax payments and business expenses are required to be paid in local fiat currencies. As a result, accounting becomes more difficult and expensive while elevated cybersecurity risks also enter the fray.
Kene Ezeji-Okoye, co-founder and president of…
cointelegraph.com