The economy today is dynamic, and innovation is one of the keys to staying competitive. Cryptocurrencies provide avenues to make transactions easy, cut costs, reach a global customer base, and enhance security for your payment gateways. However, most small and medium businesses don’t know how to start using crypto. Let’s explore why and how to onboard cryptocurrencies and related technology to the business.
Why Cryptocurrencies?
Cryptocurrencies are digital assets that are secured by cryptography. They operate in a decentralized blockchain that does not rely on centralized authorities to manage its distribution and volume. Central management comes with added transaction costs, and this can erode your slim profit margins. Many cryptocurrencies charge less than 1% as a transaction cost, compared with 2% to 5% for many fiat methods.
Additionally, cryptocurrencies are also fast and convenient. Most customers can make payments straight from their wallets and avoid the delays in bank transfers. Since most customers are looking for convenient ways to make payments, this would be a good way to position the business as easy to transact with.
Cryptocurrencies also open up areas where you may not support local fiat currencies or payment processors. For example, offshore online casinos can reach many countries around the world by cryptocurrencies without having to set up an office or get a local operating license. So, players can enjoy their roulette games with ease after Roulette.Guide assists them to simulate a roulette game.
How to Implement Cryptocurrencies in Your Business
Research on Tax and Legal Implications
Cryptocurrency regulations vary by country. If you are operating in the UK, you must register with the Financial Conduct Authority (FCA) by 2026 to offer crypto services. In the US, the IRS treats cryptocurrencies as property. Therefore, it subjects them to capital gains tax.
Your SME should consult tax professionals to ensure compliance, especially for cross-border transactions. This way, they avoid penalties and possible legal challenges. You should also consider using crypto tax software, like CoinTracker, to simplify reporting by tracking transactions automatically.
Pick the Right Platform
Do research for reliable crypto exchanges or payment gateways that you can use. Pick a gateway that accepts most of the popular altcoins and stablecoins, is easy to operate, and charges low fees. Common ones include Gate.io, Gemini, BitPay, Coinbase, and Coingate, among many others. You may also consider decentralized exchanges like Uniswap. However, these require some technical expertise to operate well.
Set Up Your Crypto Wallet
You need a secure digital wallet to store cryptocurrencies. You have a choice of either hardware or software wallets. Hardware wallets use physical devices like Ledger Nano S and Trezor that store private keys offline in a secure chip. They look like USB devices and connect to a computer or phone only for transactions. On the other hand, software wallets are digital applications or programs (e.g., MetaMask or Coinbase Wallet) installed on devices like smartphones and computers or accessible via browsers, storing keys online or on-device.
Hardware wallets are highly secure due to offline storage. They are also immune to online hacks, phishing, or malware since private keys never leave the device. These are ideal for SMEs holding large crypto amounts long-term. Unfortunately, they are less convenient, as they require a physical connection to a device for transactions.
On the other hand, software wallets are highly accessible. They allow instant transactions via apps or browsers. Great for SMEs needing quick payments, like a beauty brand processing customer crypto orders. However, they are vulnerable to cyberattacks, phishing, or device compromise if connected to the internet. Security depends on device safety and user practices.
Educate Staff and Customers
You need to educate both the staff and customers on cryptocurrencies. Hold in-house training on the processing of crypto payments and risks that your staff must navigate. On the other hand, offer FAQs, tutorials and step-by-step guidelines to enable simple transactions for your customers.
Mitigate Volatility Risks
Volatility is one of the biggest risks of using cryptocurrencies. Prices can move up and down in an instant, which may affect your cash flow. However, there are several ways to mitigate the risks.
First, you may consider converting your payments to stablecoins that are pegged to major fiat currencies. Conversations are quite cheap. Second, you may convert cryptocurrencies to fiat money via payment gateways. Most crypto payment providers have this option.
Other Areas to Use Cryptocurrencies
Crypto payments may aid your SME in other financial programs, like the following:
Loyalty and Affiliate Programs
You can use cryptocurrencies to enhance affiliate marketing and customer loyalty programs. Consider such rewards as tokenized discounts or exclusive NFTs. Here is an example: a music startup could offer Ethereum-based tokens for fans promoting concert merchandise. If you use affiliate marketing to spread the word, crypto payments can simplify processing.
Decentralized Finance Funding (DeFi)
DeFi platforms can provide you with alternative funding options. Unlike bank loans with stringent requirements, DeFi allows you to access liquidity through crypto-backed loans or crowdfunding via Initial Coin Offerings (ICOs). You could issue tokens to fund a new collection and offer investors future discounts or revenue shares.
Supply Chain Transparency
Apart from making payments, you may use the blockchain technology to enhance your supply chain transparency and efficiency. All you need is to record transactions throughout the supply chain on a public ledger to track raw materials and products from the source. This may also provide product authenticity for personal products like skincare lotions.
Conclusion
Cryptocurrencies offer you a competitive edge through lower fees, faster payments, and access to new markets. You can use them side-by-side with fiat payment methods. Just ensure that you understand its legal and tax implementation and look for secure storage and processing gateways. You may also consider using it in DeFi fundraising and affiliate marketing. Blockchain technology may also help streamline other departments like procurement and order fulfillment.
