The Small Business Times

Trending Small Businesses Use Bitcoin ―But They Should Mind The Disadvantages

Bitcoin has been widely approached as a store of value a while after its release on the market due to its numerous benefits.

Since 2009, Bitcoin attracted global investors, becoming an established cryptocurrency until today.

Although many other alternatives for Bitcoin appeared, such as Ethereum, Litecoin, and Ripple, BTC remains dominant due to significant market capitalization and reliance on market volatility.

Investors can choose how to buy Bitcoin in accordance with accessibility to financial services or future interests, making it an approachable cryptocurrency. 

Still, despite all benefits, Bitcoin is a risky investment and companies that implement crypto payments must be wary of changing regulations and policies that governments impose.

Crypto taxation, sales, and reporting regulations have changed considerably in the past years when Bitcoin became more critical.

Indeed, they’re addressing fundamental problems of money laundering, mining effects and CBDBs. 

So, if your small business is about to use Bitcoin or other cryptocurrencies, here are some advantages and disadvantages. 

BTC Ensures Fast Transactions Worldwide

International bank transfers are significantly beneficial for the modern world, but sometimes they take up to a few days to process.

Depending on the currency exchanged between companies, the process can lengthen, especially when it comes to weaker and less-known currencies.

However, Bitcoin transactions are nearly instant, mainly because there are no foreign transaction settlements or exchange fees.

Small businesses don’t have to deal with barriers or unknown additional costs if they receive Bitcoin, making transactions more efficient.

Compared with credit card payments, Bitcoin transactions are fast, even when processed by a third-party vendor.

BTC Provides Low Transaction Fees

BTC services fees provided by third parties are mandatory in processing the transaction, but they’re lower compared to other options.

Depending on the flat rate of the transaction volume, fees will be assessed correspondently, allowing frequent transactions to be less expensive.

BTC mining fees might be more expensive due to the activity’s nature, considering how miners have to invest in professional hardware and software.

Nevertheless, crypto services providers offer different fees for businesses and individuals to benefit from the best fees.

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Indeed, other cryptocurrencies like Ethereum or Ripple might require lower fees.

BTC Extends Reach

Small businesses that use BTC can extend their operations, considering that international customers are looking for crypto businesses through which they can optimize their portfolios due to low currency exchange fees and lack of bureaucracy.

Many small businesses leverage cryptocurrencies for funding projects through DAOs (decentralized autonomous organizations) where there’s no central authority, and voting is done in a decentralized manner.

This allows participation to those who own a specific token, so voting is finalized through smart contract technology.

BTC Is Volatile

Unfortunately, Bitcoin is the most volatile cryptocurrency on the market.

Its value fluctuates considerably due to high demand and limited supply, but market factors also contribute to sudden price changes.

These fluctuations can be combated through portfolio diversification, when BTC investments are supplied with different cryptocurrency types, from tokens, altcoins, stablecoins and meme coins, the latest craze on the market.

This mixture ensures less risk and more stability when the market goes down.

BTC Needs To Strengthen Its Security

Ensuring security for cryptocurrencies can be challenging, even though they live on blockchains, one of the safest ecosystems backed by cryptography.

However, the problem concerns managing the digital wallet, which is safeguarded by a private key that can easily be lost.

This means the wallet owner can never access BTC and might be exposed to breaches.

Hackers can also get access to BTC by altering the software applications on mobiles and computers, where the private keys are stored.

Even exchanges can be targeted for hacks, so small businesses using third parties for BTC storage must be wary of the risks.

BTC Is Now Taxed

Bitcoin investing and trading was straightforward in its beginning years.

Still, since the government is looking for ways to regulate it, the asset is not taxed, meaning small businesses must pay a certain fee if they make a certain amount of BTC in a year.

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Taxation laws vary globally, but they’re not correctly created and assessed, so most investors are confused about where they should pay the fees or what the necessary documents to file.

Unfortunately, these regulations are contradictory, requiring personal information when many investors use cryptocurrency anonymously.

Learn To Protect Your Small Business From Crypto Frauds

The best way to secure your small business from threats is to seek regulatory compliance, especially on Anti-Money Laundering and Know Your Customer.

These policies are prominent to implement because small companies can adhere to top standards to provide safety to customers.

For instance, approaching KYC ensures your small business can avoid regulatory fines and legal disputes while strengthening user confidence and loyalty.

However, crypto companies must settle risk assessment management and create risk profiles based on customer information when it comes to cyber-attacks and fraud.

This can be done efficiently with the help of AI and machine learning that can forecast risks through data analysis.

Therefore, detecting anomalies on the blockchain is possible by leveraging artificial intelligence.

Another popular safety solution is behavioral biometrics, a system that evaluates user behavior on multiple devices.

The technology then creates a unique user signature that acts as a highly secure authentication mechanism.

Behavioral biometrics detect certain patterns by checking keystroke movements and swiping patterns and help build an additional security layer.

Moreover, it can also detect bots, cloned apps and similar risks that can become more significant threats.

Final Considerations

Bitcoin is a popular cryptocurrency that gained considerable value over the years and it’s on the brink of worldwide adoption.

Individuals increasingly leverage the store of value assets and companies that want to expand their customer target.

Bitcoin has plenty of advantages, from offering low fees to rapid transactions.

Still, its massive volatility and fraud risks might hinder people’s interest since the government does not control it.

Therefore, small businesses must be careful when approaching BTC usage because it has its highs and lows, and they must be willing to assess risks.