The evolution of payments goes back to the days of bartering and trading livestock to gold coins, paper currencies, credit cards, and mobile payments. It dates back thousands of years and will continue for thousands more. Cryptocurrency could be the latest game changer in the industry, but it’s still relatively unknown, with a cloud of mystery surrounding it. According to a Statista report done in 2018, “71 percent of adults had heard of Bitcoin (the most popular form of cryptocurrency), while 21 percent had never heard of any cryptocurrency.”
What is cryptocurrency?
Cryptocurrency is a virtual or digital currency, meaning it is created and transferred without the regulation of financial institutions like banks. Its history dates back to 1983 and American cryptographer David Chaum, who developed an electronic money called ecash, which set the tone for modern companies like Bitcoin. The “digital money” uses blockchain technology, which allows the digital information to be transferred but not duplicated in the process. This decentralization means that each individual piece of data has only one owner. Because of this there is no bank involved approving the transfer or taking a cut of the transaction.
Benefits of cryptocurrency
- Ease of use coupled with convenience. Cryptocurrency transfers can happen almost instantly while credit card payments can take days to be processed. In addition, these transfer fees tend to be cheaper than traditional credit cards.
- Protects against fraud and identity theft. Whenever a customer disputes a charge or claims a fraudulent transaction, the credit card provider demands the retailer make good on that loss. This is called a chargeback. They were intended to build customer trust in credit cards nearly four decades ago. Payments with Bitcoin or other forms of cryptocurrency can’t be counterfeited or reversed after the fact. Security is of utmost importance and cryptocurrency also prevents against identity theft due to its push mechanism, which allows the individual in control of the cryptocurrency to send the exact amount they want to the merchant or intended beneficiary with no added information.
- New form of accepting payments. Businesses are always looking for new ways to improve their bottom line. Remember the first time you accepted credit card payments or became EMV compliant? Each of those instances made purchasing products and services convenient for your customers. By catering to those who use Bitcoin or other terms of cryptocurrency, you are opening a new revenue stream.
- More accessible trade. As of now, cryptocurrencies are unregulated, which means there are no restrictions as to with who and what countries you can accept payments from. No interest rates, exchange rates, or transaction fees and charges. This makes it easier to do business internationally and take in payments in a variety of currencies.
- Earn a competitive advantage. While cryptocurrency is a relatively new form of payment, it is also an excellent way to become an early adopter of its use, stay ahead of the technology curve, and form a competitive advantage over other businesses and competitors.
Facebook Enters the Marketplace
While Bitcoin is the most popular cryptocurrency on the market, they aren’t the only one in the industry. Ethereum, Ripple, Litecoin, and Bitcoin Cash are also gaining traction. Even social media giant Facebook is getting in the game with Facebook Libra, also known as GlobalCoin, which is scheduled to launch in 2020. When Facebook moved their Facebook Messenger to a blockchain division, engineers quickly went to work the on Libra, which unlike most cryptocurrencies, would not be decentralized and would rely on an association as its de facto central bank.
Cryptocurrency isn’t taking over cash and credit card payments anytime soon, but it does have the potential to disrupt the payment processing space. Its ease of use, convenience, and fraud protection could all impact your business. Its technology is innovative, intriguing, and provides benefits that traditional payments don’t. Earn a competitive advantage over your competition and learn the basics of cryptocurrencies before it becomes mainstream.
