The recent increase in value of cryptocurrencies like Bitcoin have led to continued speculations about its stability, and the extent to which its recent meteoric price increases reflect speculation vs. its role as a transactional currency. In one month from January 9th, 2021 to February 9th, 2021 (the date of publication), Bitcoin dropped from $40,257 on January 9th to $30,418 on January 27th, then rose to $46,376 by today. That represents roughly a 25% drop followed by a 50% increase in the span of 30 days. Over the same period, Dogecoin, originally invented as a joke, was caught up in price fluctuations that also impacted stock prices. But over recent years companies have adopted cryptocurrency for uses beyond speculative investment.
On October 21, 2020, PayPal announced it was going to launch a new service. By allowing eligible PayPal customers the ability to buy, hold, and sell Bitcoin, the payment services provider opened up the cryptocurrency market for everyone. Visa and MasterCard have made similar statements, and it is opening the use of bitcoin for more than trading.
It’s clear companies have begun the process of taking cryptocurrency as payment for services or products. But, each company must weigh how (and if) to implement cryptocurrency based on its specific needs and customer base.
Some companies worldwide have been ready for the cryptocurrency surge and are already taking payments for goods and services for customers using Bitcoin.
Typically, major companies do not adopt new policies just because they are trending.
The first huge incentive for companies is that bitcoin has lower transaction fees. Consider this – the low end of the charges is 1.55% to 2.6% (Mastercard) to 2.5% to 3.5% (American Express). While methods of paying for crypto transactions vary, they generally start at almost 0 to max out at roughly 1%.
Online retail space is the most prominent industry that benefits from accepting Bitcoin. The credit cards we mentioned and large banks have seized upon the chance to support Bitcoin transactions even before the latest boom. Now, it is becoming commonplace to make all sorts of transactions using Bitcoin.
Over the last six years, various types of merchants have accepted Bitcoin as payment for products and services, including – healthcare organizations, cannabis-related businesses, and beer vendors.
COVID-19 has accelerated crypto adoption in some interesting ways. For its part, Coca-Cola is incorporating cryptocurrency into its new digital wallets supporting touchless transactions. Transferring crypto in a touchless manner has been one of its advantages since its inception, but a global pandemic puts that trait in a new context.
Bitcoin tourism is even becoming a thing. Bitcoin-friendly travel agents know what cities accept crypto for what services and products. You can even book a flight online with Norwegian Air and pay in bitcoin. And among commerce giants, Amazon, Starbucks, and Uber have all started to play.
Several mainstream businesses accept bitcoin for online purchases, too, for example - Whole Foods and Starbucks. You can even buy a car online using Bitcoin, and even Tesla doesn’t want to miss out.
Even Coinstar is part of the bitcoin game on a smaller scale. The everyday grocery shopper can now take their spare change and exchange it for Bitcoin.
In short, while the popular news around Bitcoin and other cryptocurrencies has been about its market value, proven companies are adopting it as a currency in the traditional sense.
Still, crypto is new and organizations continue to learn its risks.
One of the biggest risks is the one that is most high-profile — volatility. Stability in the value of Bitcoin can vary throughout a day, to say nothing of the monthly or quarterly revenue projections companies rely on.
Beyond this, however, Bitcoin “wallets” are easily lost, and the methods of securing them, such as with “paper wallets” in cold storage and spreading stored value across multiple wallets, require processes many organizations haven’t yet developed. And the public ledger, making transaction histories public to the world, is a security feature of Bitcoin but it also exposes information some companies and customers may not want to disclose.
Cryptocurrency has the attention of mainstream finance and is creating new enthusiasts and converting new believers. Financial institutes and traditional investors scoffed at Bitcoin for a decade but now accept it with open arms with little change and no regulation.
The quickly growing list of companies that accepts Bitcoin as payment for goods and services is becoming more diverse, and now includes names like PayPal, Amazon, Coca-Cola, and Tesla. But, each company is trying to answer the role cryptocurrency plays for its bottom line, and how to manage a new kind of transaction.
Fee-free online sales are a huge draw from some companies, but for others, Bitcoin is not worth the overall risk. Traditional investors continue to find Bitcoin volatile, which says a lot when a smaller business considers taking it on as a payment option.
No cut and dry antidote or cautionary tale exist yet. But, crypto is a daily ride that more and more companies are adopting. If it has changed this much over the last year, what will 2021 offer?