The first Bitcoin white paper was released back in 2009 – by the as-yet undeciphered Satoshi Nakamoto pseudonym – and since then, the industry has been growing, with approximately 22,932 crypto tokens now operating on blockchain, including Ethereum, Binance, Polygon and Monero. With the amount of users also growing, a number of businesses have found a way to assimilate blockchain into their own processes. This is especially true for those who operate predominantly through an e-commerce website, where users are able to pay for products or services with their digital tokens rather than traditional fiat currency.
But the nature of cryptocurrency means that the market is often volatile. While, at one moment, an investor might be sitting on a portfolio worth $250, a sudden change in the market might drop that value down to a cent – Solana, for instance, has recently dropped 3.87% in just 24 hours.
Back in 2021, the entire market valuation was sitting at $3 trillion back. Just a few months later, however, the value collapsed to just just under $1 trillion. The market itself is currently going through what is known as a “crypto winter”, where a number of negative influences – such as the Tether depegging – caused values to drop across the board; the second time this has happened during crypto’s short, thirteen year existence.
For this reason, there are plenty of online retail businesses who have been wary of dipping their toes into the water, with some either believing that cryptocurrency is a “phase” that users will grow out of, or the volatility is so much that it could affect the revenue of their business negatively.
In 2023, however, it is quite clear that cryptocurrency is not just a phase that users are going to be growing out of. The innovation of blockchain is such that the entire online world has changed, with many believing blockchain itself will be the backbone of Web3 when it arrives somewhere in the next decade.
This is most evident in two studies that have been conducted across the US. In 2015, it was found that 48% of Americans had heard of cryptocurrency, with 1% reporting that they had invested in some form. In 2021, however, the same survey discovered that this percentage had grown to 86%, with 16% having invested in some form. The rise of the user base, then, remains bullish, even if the market has bearish tendencies. As such, the most savvy businesses have decided that crypto is one of the top things to review, with 75% stating that they are choosing to take a bet and support crypto payments during 2023.
For the businesses who have invested, however, it is not exactly a “bet”. In fact ,there are many advantages to adopting crypto payment options in 2023. For online retailers, the point of building a business online, with users paying through an e-commerce website, is that the process of finding the business and then making a purchase is streamlined, making the whole experience for the customer far easier and faster too. Cryptocurrency payments can only improve this experience.
According to a recent study, 70% of online retailers believe the speed of crypto payments can revolutionise their business model, especially with a more simplified process for international customers. As well as this, blockchain technology also offers strong security. When it comes to the purchase itself, copies of the relevant data are made on several computers, all in real-time, meaning all transactions are tracked and traceable – with data unable to be manipulated.
Smart contracts have also made it possible to streamline transfer processes. In essence, this allows digital contracts to be created between buyers and sellers, all of which are stored on blockchain. With smart contracts, all automated transactions are handled as soon as they are made, meaning there is no intermediate step to trigger the payment, which will eliminate any fees or costs that usually comes from doing so.
That is not to say that crypto payment options have no disadvantages. As mentioned previously, the cryptocurrency space is highly volatile. One moment the price of Bitcoin can be on the rise, but then an external event occurs in the market and Bitcoin can fall to a five-year low. No one knows how well a coin is going to perform at any given time, which creates an instability amongst customers who invest in it, and can drastically decrease profits without warning.
As well as this, there are a number of tax implications that come with accepting crypto payments. Although it was originally thought that cryptocurrencies would incur less tax, it has become essential that all crypto gains are classified as gross income, which is based on the fair market value at the time. This adds complications to payments and revenue, which is only exacerbated by the fact that not every country has clear regulations and rules behind crypto in the first place.
Above all, however, integrating crypto payment options into an e-commerce website opens up a whole new audience. Acquiring new customers, especially in 2023, where business confidence is down and the financial climate is shaky, can be the difference for online retail companies. According to a recent study, interest in cryptocurrency for online purchases is especially high among age groups between 18 and 35.
Cryptocurrency, then, has been opening up a whole new target group for the businesses who have already integrated it. This is why its future in the market looks certain. As mentioned before, blockchain technology – even beyond simple payments – offers online retailers a new way to interact with customers. As the user base of cryptocurrency rises, so too will the online retailers who see the opportunities that blockchain technology can bring, as it helps them to build their own user base and elevate the experience for every customer.
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