Cryptocurrency is now one of the most lucrative industries in the world since bursting into the mainstream last year after Bitcoin’s rapid rise to nearly $20,000 per coin. This propagated a giant expansion of digital currencies and widespread interest in the blockchain-supported technologies that saw the number of Cryptocurrencies grow from just under 3000 in November 2019 to 7500 in 2021.
What is so impressive is how it has done so when digital currency is still in the infancy of its existence, made even more apparent when you go back to 2013 and find out that there were just 66 digital currencies in circulation.
The meteoric rise of cryptocurrency has also opened the door to other mediums of digital assets, none more so than NFTs. In short, an NFT or a ‘Non-Fungible Token’ is a unit of data stored on a digital ledger using blockchain technology. They usually take the form of an image, video or a piece of music created by an artist. What makes them so popular is that every last one of them is completely unique, hence ‘non-fungible’— they are not able to be replaced by an identical asset.
Although the origin can be traced back to 2012, the first NFT as we know it was created by Kevin McCoy, who minted “Quantumn”, a digital image of a fluorescent, pulsing octagon, in 2014.
If you are a sports fan, DraftKings have their very own NFT Marketplace where you can purchase tokens. There are five drops on DraftKings’ scheduled drop day and users must join the queue to purchase one. If they are successful, you can then view your NFT in the DraftKings Marketplace portfolio. It really is that easy. It is almost the natural progression for those who collected sports cards. Like other marketplaces, you can also sell your purchased NFTs to other DraftKings Marketplace customers. DraftKings is free to sign up for making it very easy to start browsing and building your portfolio.
As NFTs have entered pop culture, it has boosted the popularity of crypto even more. Everyday businesses have already adopted Bitcoin as a form of payment, with one study estimating the number to be around 2300.
When looking at the benefits of accepting cryptocurrency it becomes obvious why so many have jumped on the hype train:
Crypto may open business to people who were not customers previously. Those who use digital currency are often a savvier group of consumers who value the transparency in their transactions and will develop a sense of loyalty to merchants who offer crypto as a payment method due to its decentralized nature. In fact, one study found that up to 40% of customers who pay with crypto had never use the companies services/purchased goods before.
Many businesses will receive fraudulent chargebacks from consumers who make a purchase of goods or services only to request a chargeback from the bank who issued the payment after receiving them. With crypto, this risk is eliminated. Due to its decentralization, there is no middleman (in this case, the banks) to cancel the payment and every purchase is final.
Cheaper Transaction Fees
Merchants are responsible for paying transaction fees and setup fees for companies that process payments. For example, PayPal charges around 4% per transaction. Cryptocurrencies on the other hand offer fees that are much lower than most payment processors. In fact, some Bitcoin exchanges will offer lower than 1% for transaction and setup fees.
Additionally, businesses that work with customers overseas could avoid paying international currency payment fees as digital coins are not exclusive to any national banks or countries. This means that as a business you will not have to wait for a bank to clear your payment.
Tacking on to the previous notes on dealing with customers abroad and a wider demo, accepting cryptocurrency opens you up to customers from outside your country of origin. This is especially good for small businesses, who can expand their customer base from a local level to people from all over the world.
However, there are still some risks for business who open the door to accept cryptocurrency. If you are a small business owner who is pondering whether to make the move or not, weigh up these cons before you do.
The biggest risk facing any merchant or consumer using digital currency is market volatility. There are thousands of crypto companies all with varying prices and market caps. As such, holding company cash in cryptocurrency rather than liquid currency is very risky. For example, if a purchase is made for 1 bitcoin (around $65,000) there is no telling that the market could plummet for any number of reasons the following day, meaning you have lost money on the sale.
Ease Of Use
Or more importantly, the lack thereof. As mentioned before, we are still in the infancy of cryptocurrencies lifespan and a majority of consumers still are not fully aware of how to purchase or use digital currency. This could be an issue if the consumer base of your business skews towards a less tech savvy demographic.
Whilst the future of cryptocurrency looks promising to customers and merchants alike, there is of course an element of risk that should be acknowledged before going all in. That is not to say that these risks are concrete however, in that it is possible to escape the pitfalls of market volatility by using a service company to immediately exchange digital currency for its cash value. Its increased popularity means that most business may be resigned to accepting it as a form of payment whether they like it or not, but when looking at the benefits it offers there is plenty of reasons to believe that the future is bright for small businesses.