Cryptocurrency is the new reality of the world, which has now started to affect every element of the economic system. With time, the level of acceptance by governments and other financial institutions for digital currency is augmenting. This has become possible owing to the interest of the traders and investors in it. If you are interested in Bitcoin, you may find the rise of Bitcoin ATMs to be an interesting development in the cryptocurrency industry
Businesses are most affected by the popularity of cryptocurrency. Be it a small-scale business or a massive one, it is surely impacted by the inclination of the general public towards cryptocurrency. However, as per financial experts, small-scale businesses have been the most impacted elements of the economic system ever since cryptocurrency found its way into the world.
In this article, we shall explore some major ways through which Cryptocurrency affects small-scale businesses positively or negatively.
Positive Effects Of Cryptocurrency On Small-Scale Businesses
Increased Business Prospects With Cryptocurrency Payments
Even though cryptocurrency is becoming quite popular across the globe, there still are not many businesses that accept it as a regular form of payment. Some business owners are still sceptical about choosing cryptocurrency as a preferred mode of payment. On the other hand, business owners who have accepted the reality of cryptocurrency being a popular currency offer their customers crypto payment options.
By offering the option to pay through cryptocurrency, small business owners can extend their customer base skillfully.
Massive Saving Options With Low Processing Fees
It is an accepted reality that transaction fees involved in crypto payments are way less compared to the free involved in transactions through traditional banking. This is one major reason why customers and businesses prefer crypto payments and transactions compared to banking transactions. Small businesses can save a lot of money by paying reduced processing fees.
Extensive Profit Margins Through Investment
Cryptocurrency has the ability to turn regular people into millionaires overnight. It has been able to do so with small-scale business owners as well. Businesses can earn a massive return on investment by investing the profit generated from regular business activities into cryptocurrency.
Having said that, it is also important to mention that it is a risky shot as the profit margins and loss possibilities depend on the turns and twists of the market. The crypto market is highly vulnerable and can alter the scenario quickly.
Negative Effects Of Cryptocurrency On Small-Scale Businesses
Uncertainty Due To Weak Regulations
Cryptocurrency is a decentralized system of digital currency which doesn’t have a central authority overlooking its activities. This is why regulating and managing its activities within a certain boundary of rules and regulations is difficult.
Owing to the absence of regularity and clarity associated with it, small businesses find it tough to trust it completely. This is one of the biggest financial implications for small-scale businesses accepting it as a regular form of payment.
Unclear Tax Laws
As mentioned earlier, there is no central authority overlooking the working and activities of cryptocurrencies, which is why it is an unregulated part of the economic system. The tax laws associated with cryptocurrency and its transactions are unclear. For businesses, being knowledgeable about all the aspects of taxes is crucial to stay within the lawful means of working. With ambiguous tax regulations associated with the currency, small businesses try to avoid this option to be safer.
Highly Volatile Form Of Investment
One basic way of growth for small businesses is by investing the profit into assets and making additional money. However, investing in cryptocurrency has often led to huge losses for small business owners.
This is because of the highly volatile nature of this investment and the vulnerability offered by the market to investors. At times, these cryptocurrency investments have become extremely lethal for small business owners, washing them out completely.
Final Thoughts
Small businesses struggle to accept a new economic concept as they are highly vulnerable to a massive shift from the regular course of action. Mostly, the customers of small businesses need to be made aware of cryptocurrencies and this mode of payment. This makes it difficult for the business owners to gain customers’ trust when offering them an alternate source of transactions. However, if things are taken forward systematically, using cryptocurrency in business processes can surely help small businesses expand gradually.
