Cryptocurrency has grown from strength to strength as favourites such as Bitcoin, Cardano and Solana show increasing gains, yet many are still sceptical. Bitcoin recently surpassed $100,000 per Bitcoin, a fantastical number likely to rise further as institutional investors begin to pile into digital currencies.
Entrepreneurs are under increasing pressure to show growth and innovate, however, there is underlying uncertainty about crypto that needs to be addressed.
In this article, we look to address the ten common fears entrepreneurs and small businesses have regarding the adoption of crypto.
1. Volatility
Crypto is well known for huge price movements, in some cases overnight drops of ninety percent are not uncommon. Unsurprisingly, many hesitate to invest in such a volatile class of assets.
Solution: One way you can reduce the impact of volatility is not to invest a high percentage of your capital into cryptocurrency. Entrepreneurs should look to invest 1-5% of their available resources into digital assets, that way should the price collapse the impact will be minimal.
Entrepreneurs should resist the urge to ‘go all in’ and ‘win big’. Such mindsets will only result in brutal disappointment should the market turn against you.
Taking regular profits and converting your crypto into stable coins (digital assets pegged to the US Dollar) or fiat currencies should be a major consideration in order to protect any gains accumulated.
It goes without saying that if you are considering trading on leverage (a method of multiplying gains using a credit facility or margin), you should proceed with extreme caution as your losses too will be multiplied not only your gains.
2. Complexity
Many find crypto intimidating and hard to understand. Entrepreneurs should not be afraid to embrace the technology.
Billions use the internet every day with little understanding as to how it works. Today we take it for granted that we can access any piece of information directly in our handheld devices. Yet, very few of us can explain how this technology actually works, we just use it.
Much the same with crypto, entrepreneurs should grasp the concept that crypto allows for global financial transactions without middlemen and at a much-reduced cost.
It means everyone around the globe can transact financially regardless of whether they have traditional bank facilities.
Cryptocurrency opens the doors to a global network for financial transactions. Think of it as a financial ‘internet’.
If you are new to cryptocurrency and want to find out more, read this article here:
3. Regulation
Unfortunately, cryptocurrency can be a regulatory minefield. The rules change from country to country and new regulations are often enacted which can cause much uncertainty in the market.
In addition, government organisations such as the US Securities and Exchange Commission (SEC), have been known to arbitrarily crack down on certain cryptocurrencies adding more fuel to market uncertainty.
Solution: Stay informed about international crypto regulations. Seek legal advice on any new territories you are looking to enter into.
Ensure you use reputable exchanges that adhere to regulations to avoid losing access to your crypto should the regulatory climate change.
4. Security
Since crypto is both digital and financial in nature it’s a prime target for hackers, fraud and theft.
Since there is no middleman in the process of transacting it means that once a transaction is initiated there is little to no chance of reversing the transaction.
This understandably, creates fear for many new entrants. However, there is a silver lining. Every crypto transaction is stored forever on a digital ledger called the blockchain.
What this means is that any fraudulent transactions can potentially be located and traced to an individual digital wallet and seized by authorities.
Solution: The solutions are simple and relatively straightforward. Avoid clicking on suspect links and downloading unverified software.
Avoid storing passphrases or keys on your computer or storing them in places where they can be accessed easily.
Use security measures such as multi-factor authentication (MFA) to add an extra layer of security to access crypto wallets and platforms.
Consider using an offline hardware wallet to store your valuable crypto assets. If you have a large amount of cryptocurrency consider spreading them across multiple wallets to to de-risk should you be hacked.
5. Customer Demand
Some entrepreneurs may fear their customers may not be interested in cryptocurrency payment methods,
Although a worldwide phenomenon, crypto has yet to see true mass adoption by the general public.
Some surveys state that around 7% of US adults own crypto while others state up to 40%, own or have owned crypto in the past. Whatever the figure, it’s growing.
Solution: It’s important to ask your customers to see if there is a demand for additional forms of payment. Highlight the benefits of crypto payments such as lower transaction fees. Consider offering crypto payments in addition to traditional facilities.
6. Integration Challenges
Integrating cryptocurrency payments into your website and systems can be challenging.
Solution: Consider using crypto-friendly payment gateways such as PayPal Crypto, BitPay, or Stripe.
7. Taxation
Handling taxes and accounting for cryptocurrency transactions can be intimidating.
Solution: You should aim to use accountants familiar with crypto to assist you with crypto taxation and regulation. You should consider using crypto accounting software like CoinTracking to simplify tracking your portfolio.
8. Environmental Concerns
Cryptocurrencies like Bitcoin are often criticised for their high consumption of energy in order to create or ‘mine’ an individual Bitcoin.
This is due to the computational resources required by the network operators (miners) to operate and run their power hungry computers to generate Bitcoin and secure the network. This is called a Proof of Work (PoW) mechanism.
Solution: Fortunately there are other options than the power-hungry Proof of Work mechanism within the cryptocurrency ecosystem.
Blockchains such as Cardano, Solana and Ethereum following a software upgrade (The Merge) operate on what’s known as a Proof of Stake (PoS) mechanism.
What this means is that these blockchains are secured and miners are rewarded according to the amount of crypto they hold rather than their CPU power. This results in a much more energy-efficient system.
9. Liquidity
Some entrepreneurs may worry about how to convert their crypto assets into cash quickly when needed.
Solution: Entrepreneurs should use secure platforms such as Coinbase to convert cryptocurrency into their fiat currency of choice. Decentralised Exchanges or DEXs can also be used to convert crypto assets to stablecoins. That can then be converted to fiat currency.
10. Reputational Risk
Entrepreneurs may worry that associating themselves with cryptocurrency may raise concerns about legitimacy from potential customers.
Solution: Ensure you educate your audience about the benefits of cryptocurrency. Emphasise that crypto has been accepted by many major companies and thought leaders including Elon Musk and Tesla, Michael Saylor of MicroStrategy, Paypal and Black Rock’s Bitcoin ETF.
Final Thoughts
Cryptocurrency adoption if we are realistic has many challenges. However, with those challenges come huge rewards.
If entrepreneurs are careful and adopt crypto by investing no more than a fraction of their available assets, the opportunity to overcome fears and make large gains is entirely feasible.
Just avoid the temptation to go ‘all in’ and take profits along the ride and you should be good to go.
Good luck!
Disclaimer: This article is not financial advice and is given for informational purposes only. Readers should conduct their own research and not invest more than they can afford to lose. As stated in this article crypto is extremely volatile, and as such can drop in value considerably without notice. You should always seek legal advice to understand if the use of crypto is allowed in your country.
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