Cryptocurrency and Your Business
This is a writing sample from Scripted writer Curtis Fease
Everything you need to know to make crypto part of your brand
As a business leader or budding entrepreneur, reinventing the wheel may seem terrifying. You have a certain idea of how things should be done, and throwing in new innovations can sometimes feel confusing. This is nowhere more true than accepting payments within your business or organization. Perhaps you just came around to adding credit card processing into the mix, but regardless, you likely believe you’re good to go with just accepting card and cash payments.
In many ways, this is absolutely true. The majority of Americans pay for all their purchases and donations with credit and debit cards. Of course, there are some who also insist on dealing in cash. Since most entrepreneurs have all these folks covered with the payments they now accept, why would a business owner or organizational leader even consider throwing cryptocurrency into the mix? In reality, crypto has already become a permanent fixture in the payment landscape. It’s up to you to get your organization on board, and once you’ve done this, your customers will no doubt follow.
What Is Cryptocurrency?
If you're like every other person on earth, you've likely heard about cryptocurrency repeatedly in the news over recent years. Popular coins have climbed to heights never imagined, and every so often, they come back down to earth. We've also seen newer coins come out of nowhere and create millionaires overnight. Even as we're constantly inundated with such news, however, the complexity of this digital currency still makes it a bit difficult to understand. Hopefully, this won’t be an issue for you once you’re done with this section.
Cryptocurrency is a digital currency used by many decentralized networks for financial transactions. Also known as crypto, this virtual coinage is able to circulate without a central authority. Its decentralized nature has led to the saying that cryptocurrency gives “power back to the people.” Of course, there has to be some sort of security. This comes in the form of digital wallets (more on these later). Not only do these wallets hold currency, but they allow coin value to grow. This essentially makes virtual coinage an investment as well.
This partially explains why more than one-in-five Americans owned some form of cryptocurrency by 2022 — with these numbers projected to continue growing. Of course, nothing comes without downfalls. For crypto, the major drawback is volatility. One need only look to the most popular digital currency, Bitcoin, to see this. At the end of 2011, Bitcoin was worth a mere $4.25 per coin. By Nov. 10, 2021, it had reached an impressive $68,000 per coin. By June of the following year, it was below $20,000.
That’s quite the spread, and it may make you lean toward not accepting cryptocurrency as a business owner. However, it’s important to note that most company leaders are accepting crypto as a form of payment rather than investment. This can remove the volatility you may be worried about. For instance, FinWerx allows your company’s crypto payments to be immediately converted into real cash. This means it doesn’t matter what the crypto market does tomorrow — you’ll get paid exactly what you’re owed today.
What Is a Crypto Wallet?
The wallet you carry around daily holds your credit cards and cash. A crypto "wallet" is essentially a digital version of this that holds onto your crypto coins. A digital wallet is an absolute necessity for those who buy with crypto and those who accept it as payment. It's the only way to store, transfer, and receive virtual currencies. It serves as a record that you own your coins, and it even creates the public addresses necessary to process transactions. As these wallets are digital, they don't physically hold your digital assets. Rather, they're simply an intermediary that allows you to access your coins.
There are also many other differences between physical wallets and crypto wallets. For instance, if you lose the former, your identity is basically in the hands of whoever picks up your belongings. They'll have your driver's license and any other identifying documents you carry around. This is very different from a digital wallet — even though anyone in the public can freely view it whenever they want. While the blockchain used for digital transfers is decentralized and transparent, your wallet is not actually connected to your identity. Rather, a private key is utilized to serve as your password and digital signature for any crypto transactions.
Of course, this doesn't mean there aren't some risks — but the biggest risks are linked to unwise decisions by crypto owners. Private keys are just like ATM pin numbers in that they shouldn't be shared. If someone has an individual's private wallet key, they have access to their funds. It’s also important that you maintain control of your key, however, since losing it means you’ll have no access to your virtual coinage. These types of mistakes have resulted in single individuals losing millions when they forget the password to crypto wallets on physical storage.
Fortunately, you don’t have to worry about this as much if you’re working with a crypto payment processing service. That’s because tools like FinWerx maintain your wallet and immediately exchange virtual coins for real cash at the market rate. That money goes directly to your bank account, so you never have to worry about currency sitting around. Many people who work with us, however, discover that there are multiple types of digital wallets during their research. This leaves them asking “what do different types offer,” but most importantly, which is right for you?
What Are the Different Types of Crypto Wallets?
There are dozens of blockchain platforms and more than 19,000 cryptocurrencies in existence. While crypto wallets aren’t this varied, there are several types to choose from. When looking at each of them, however, they all fall into one of three categories. These are hot wallets, cold wallets and warm wallets. These labels signify just how connected a crypto wallet is to the internet. This can affect how the wallet functions along with its security capabilities and vulnerabilities.
What Is a Hot Wallet?
If a digital wallet exists only on the internet, it is known as a hot wallet. The owner of the digital currency within it can only access it by using a smartphone, computer, or another internet-connected device. The primary benefit of such wallets is the ease of use. With everything already online, you can engage in crypto transactions conveniently and at a moment's notice. And since the internet exists just about everywhere, you'll have constant access to a hot crypto wallet. Unfortunately, such convenience comes with some disadvantages. The main concern is security.
Even though no one is likely to ever guess a private key, there's always some new online threat facing our devices. A simple piece of malware could be enough to get your sign-in information and empty your account. This is why many hot-wallet owners choose to hold small amounts in these wallets while storing the bulk of their virtual coins in more secure cold wallets. Additionally, hot wallet providers require you to provide identification since all cryptocurrency transactions above certain thresholds must be reported to the IRS.
If you opt for a hot crypto wallet, your typical options will be:
Web-based
Desktop-based
Mobile-based
Software-based
What Is a Cold Wallet?
A cold wallet is the exact opposite of what we described above. It has no connection to the internet whatsoever. Instead, the wallet is stored on an external drive, USB device or a similar piece of physical hardware. These wallets come equipped with their own software so that users can set up everything without ever connecting to the internet. This creates a level of security that you simply can’t achieve when something is connected to the World Wide Web.
Essentially, cold wallets are like bank safes. Yes, they’re more complicated to get to. Like accessing funds in a safety deposit box, you have to go through extra steps to get to your cryptocurrency. This could be something as simple as plugging in your external hard drive, but the fact remains that it’s not as easy as simply signing onto your smartphone or similar digital device.
While cold wallets certainly offer more security, they also have their own potential drawbacks. For instance, do you remember the folks we discussed earlier who lost millions in virtual coinage by forgetting their passwords? This happened because they lost the passwords to their cold wallets. Of course, you could avoid this potential outcome by recording your wallet on a single piece of paper. Simply writing your security keys down will serve the same purpose as a wallet, but at that point, your “paper key” is at risk of getting lost or stolen.
Warm Wallets: Meeting in the Middle
A warm wallet is an attempt to combine the best aspects of hot and cold wallets. It can exist on external hardware or a software download, but most will have a password that's required to garner access. You won't need a personal ID, however, and the wallet can be used online but also disconnected. This combines the ease of online transactions with the security of offline storage. Unfortunately, these are still relatively new in the crypto world. We'll have to see just how effective they are at serving as a "happy medium" between the two primary wallet types.
Why Is Cryptocurrency So Popular?
Even though its volatility is well-known, cryptocurrencies continue to increase in popularity among consumers. There are various reasons your customers may choose to invest in this digital coinage. These include:
Looking toward the future: Many people who invest in digital coinage truly believe it's the future of currency. These people aren’t alone. Some countries have already adopted Bitcoin as a national legal tender.
Getting away from banks: There are those out there who believe that banks have far too much control over our financial system. A decentralized system is seen as a way of getting around this.
Popularity of blockchain: People enjoy the idea behind the blockchain record of transactions. Decentralization means no one has disproportionate control over value.
Seen as investment: If someone gives you $10 today, it will likely be worth roughly $10 a year from now. An investment of $10 in cryptocurrency, however, could grow exponentially in value.
By now, you’re probably wondering whether your customers will actually adopt cryptocurrency and use it as payment. The great thing is that — with the right tools — the level of adoption among your clients doesn’t matter. For instance, you’ll never pay for a crypto wallet through FinWerx. You’ll only be charged if a customer actually pays with a digital coin. If none of your clients ever want to purchase something with virtual currency, you’ll never spend a dime on the service.
The Growth of Crypto in the Business World
It’s easy to look at the current state of cryptocurrency for businesses and think this is a new trend. While adoption of this payment method has escalated quickly in recent years, the majority of U.S. businesses still don’t accept crypto as a form of payment. Of course, current trends show that this will soon change. Unfortunately, some progress has been slowed by business owners slow to adopt due to a lack of information. They think that only small businesses are driving growth, but in reality, this couldn’t be further from the truth.
The fact is, accepting crypto for business payments is nothing new. Back in 2014, there were only a few restaurants, car services and bars that accepted Bitcoin as a form of payment. That all changed when Microsoft and Paypal jumped onto the Bitcoin train. Overstock was also an early adopter. Each of these companies had their own rules and procedures in place for crypto transactions, but their adoption shows that major corporations saw the potential even when virtual currencies were virtually unknown.
Since that time, many other major companies have adopted some form of cryptocurrency transactions. These companies include:
Home Depot
Twitch
Etsy
Whole Foods
Starbucks
Newegg
AMC Theatres
AT&T
Dish Network
As evidenced by these successful companies — and the fact that crypto payments for businesses have been around since at least 2014 — accepting virtual coinage isn’t just a trend. If companies and organizations are going to succeed in this world, they must be willing to adjust to new changes and developments. Cryptocurrency as a form of payment is here to stay, and those who can market this option to their clients will stand out among all their competitors.
Fortunately, accepting such payments is much easier than it once was. Can you imagine the difficulties companies went through before there were processing firms like FinWerx to help out? The accountants at Paypal and Microsoft were probably pulling their hair out! Fortunately, you don’t have to go through what they went through. In fact, you don’t even need an accountant to handle the process. With crypto payments through FinWerx, you can have your digital wallet set up for you — free of charge — and start accepting Bitcoin and other virtual coinage today.
Cryptocurrencies Were Inevitable, And They’re Here to Stay
Understanding the advantages and disadvantages of crypto is certainly important. However, there's one reason that stands out among all others that justifies companies accepting crypto. That reason is that cryptocurrency is here to stay. You can watch how the technology has evolved and grown over the last decade, and it becomes clear that alternative currencies such as crypto have become the norm. Many entrepreneurs have already realized this. That’s evidenced by the fact that one-third of American businesses were already accepting crypto coins as a form of payment by the end of 2021.
Of course, accepting these payments and receiving these payments are two different things. After all, businesses located in states that recently turned gold into legal tender didn’t suddenly get an influx of payments via precious metals. Fortunately for business leaders who have chosen to accept digital currencies, however, customers seem to already be on board the crypto payment train. In fact, Visa’s crypto-linked payment card reached over $2.5 billion in payments in just the first quarter of 2022. This equates to 70% of the payments the company saw in all of 2021.
Perhaps the most surprising aspect of this all, however, is that cryptocurrency is not likely where this ends. Since digital coins became so popular, other virtual assets and tokenized resources have also become the norm. For instance, you no doubt heard of non-fungible tokens (NFTs) over the past year. This is another potential area of payment, and since NFTs are visual in nature, they create a potential new area of inventiveness and revenue for artists and creatives. The digital revolution in currency is happening right before our eyes. Getting involved while virtual coinage is still increasing in use is much like jumping in on the ground floor.
What to Know Before Your Business Accepts Crypto Payments
Most companies that try to get you to accept crypto payments hope that you’ll give them an immediate “yes” and move on. It’s all about their own profit to them. At FinWerx, we want you to understand whether going this route is right for your organization or business. With that in mind, we’ve compiled the most frequent questions we hear from our parteners — along with the following in-depth answers.
What happens when someone pays with cryptocurrency?
When you accept digital coins as a form of payment, there's not much difference than if the customer had paid using cash or a card. This is at least the case with FinWerx. That's because the payment is immediately converted to legal tender and deposited into your bank. If you've accepted crypto payments without going through a service like FinWerx, however, it's important that you work with someone who is experienced in the crypto space and how the transactions work. This could be a bank professional, lawyer, or accountant. Unfortunately, the time wasted going through such process could result in a loss of value in the payment.
How does taxation work?
Although cryptocurrencies have been around for a while now, they're still relatively new in the economic sense. Due to their insane increase in popularity recently, however, governments have worked fast to regulate these transactions. There are even tax rules that have been established for both businesses and consumers. For instance, the fair market value of a crypto payment is ordinary income for taxation purposes. Yes, this includes self-employment taxes.
Additionally, there are now also reporting requirements for consumers who engage in crypto transactions. However, digital coinage is seen as a form of property rather than currency for consumer taxation purposes. Fortunately, this isn’t something business owners need to concern themselves with. All rules regarding cryptocurrency taxation for those who buy virtual coinage — including the new rules that are very likely on the horizon — are the responsibility of consumers themselves to keep up with.
How Will Your Refund Policy Work?
Unlike card payments, consumers don’t have the option of doing a chargeback on crypto purchases. This means you can still set your own refund policy without fear of losing out. The important thing is to make your policy clear. If you don’t offer refunds at all, let consumers know. If refunds will be paid only in fiat currency, be open and honest about it. As a side note, refunding in fiat is very likely the way to go if you offer refunds. If you use FinWerx to immediately convert crypto payments into fiat currency, you shouldn’t run into any problems quickly issuing refunds when appropriate.
Can You Hold Onto Crypto Instead of Converting to Fiat?
Absolutely. If you have a skilled individual who deals in cryptocurrency working for your business, you could easily store crypto payments and keep them as an investment. However, it’s imperative that you have a professional handle this. They can ensure you remain compliant with the IRS. Additionally, they may be better able to identify when you should sell crypto holdings and when you should hold. When going this route, though, don’t forget the risk you’re taking. Volatility with digital coinage remains high, and that’s why many merchants use tools like FinWerx for immediate fiat conversion. This means you never have to worry about price fluctuations!
What Types of Cryptocurrency Can Merchants Accept?
If you’re accepting crypto payments without using a service like FinWerx, you can essentially accept any virtual coin you want. Of course, some of these are not nearly as stable as others. This is why most businesses only accept certain types of crypto. Bitcoin, Ethereum and Tether are the most commonly accepted. If you utilize a crypto payment processor for your business, the service itself will dictate which coins are acceptable. With FinWerx, you’ll be able to accept over 15 different virtual currencies. This includes major currencies along with lesser known coins such as Polkadot, Ripple and Compound.
Make Crypto Policies Clear From the Start
The last thing you want to do is disappoint a client. This is why you should be very clear with all your crypto policies from the start. For instance, use signage at your store and content on your website to directly state which forms of cryptocurrency your business accepts. Having someone get excited at the prospect of paying with their virtual wallet — only to discover you don’t accept their digital asset types — can let down a client and sour them on your company.
As discussed earlier, you should also be very clear on your refund policy. The last thing you want is an upset customer trying to get back the exact amount of crypto they paid after the coin has doubled in value. If your policies are publicly listed, consumers will be less inclined to try and “get one over” on you. And even if a dishonest customer does attempt this, your clear policies will prevent them from succeeding. Such policies combined with an inability for consumers to use chargebacks can make crypto payments even more secure than traditional transactions.
Market Your Crypto Payments!
If you sign up with FinWerx, we’ll create your crypto wallet for you. If that’s all you do, however, you shouldn’t be surprised if payments don’t start rolling in. After all, your clients need to know they have the option to pay with Bitcoin and other currencies. As this guide has mentioned several times before, the majority of businesses still don’t accept crypto. That means that any customer who walks through your doors — unless they’ve been informed otherwise — will likely assume that your company cannot accept virtual coinage. The following strategies can help you change that:
Post to Your Website
Consumers love a good online presence. If nothing else, they’ll check your reviews prior to visiting. Of course, many will also visit your website directly. This helps them seek vital information that they can’t find on the front page of Google. This is why you should make it clear that your company now accepts crypto payments. Post it at the top of every page; offer it as an option for online checkout; type up a blog about the types of crypto you accept. A company’s online presence is everything in the modern world, so make sure your big crypto news is front and center.
Post Clear Signage
While many consumers interact with their favorite businesses online, there’s a good chance they’ll never visit your website. In fact, anyone who just happens to walk in because they were passing by likely never saw your online presence. This is why posting clear signage at your physical location is also ideal. You don’t want to overdo it and seem like you’re marketing digital assets, but a sign at the front window and at the payment counter can do wonders. If nothing else, it will alert clients that they can unload crypto they may have forgotten at your company. And since FinWerx will immediately convert this to fiat cash, you’ll have money in the bank in no time.
Post to Social Media
Social media pages are where consumers can get the most information about a company. In addition to common information — such as store hours, locations and other important facts — they can also see the latest news via your posts. This is why you should announce your new venture on Facebook, Twitter and your other social accounts. In fact, it wouldn’t hurt to even drop $5 or $10 to promote the post and ensure all your clients see it. Otherwise, social media algorithms may get in the way.
Add Info on Customer Receipts
If you’ve ever gotten a receipt from a CVS pharmacy, you’ve no doubt seen that many companies place pertinent information right on customer receipts. Sometimes to a fault. Why not take a page out of their book — although not to a CVS-esque extent? Although customers are increasingly requesting digital receipts — which can also include a message about your crypto acceptance — the majority of people still prefer paper receipts. Use this to your advantage while you still can! A simple “We now accept cryptocurrency payments” at the bottom of a receipt can go a long way.
Cryptocurrency and FinWerx
FinWerx makes adding cryptocurrency to your list of accpetable payments simple and easier than ever. There is no signup fee or even a monthly fee for using the service. You merely pay a small transaction fee — which is on par with other platforms and even more affordable than certain credit card fees — for every payment that goes through. While this makes our platform similar to others in many ways, FinWerx is also very different since it offers the ability to accept cryptocurrency and provides processing for every transaction. This lets you quickly access real money after a payment has been made.
We're also very proud of our platform's ability to generate reports to show how much revenue is coming in via virtual coinage. There's no limit to the number of crypto payments you can accept, so you can watch your profits grow in real time. It will also make accounting much easier. All you have to do is sign up. After that point, FinWerx will create your digital crypto wallet, accept and process payments for you, and convert them to cash that your business can then receive via the method of your choosing.
Let FinWerx Do the Hard Work For You
Successful businesses must be able to identify and respond to trends as they occur. While crypto may have once seemed like nothing more than a novelty, there's no denying that it's become mainstream. Fortunately, it’s never too late to get on the crypto trend. In fact, you could say we’re still on the ground floor of merchants accepting crypto payments. Most stores you visit today still only take traditional payments, but this will no doubt change in the coming years.
Crypto with FinWerx is the easiest and most streamlined way to accept cryptocurrency for businesses. We don't believe in hidden fees — our goal has always been transparency. Take a step in the right direction today and become one of the first merchants in your area to accept crypto payments. FinWerx can set up everything you need to get started and succeed. The only thing left for you to do is to do what you do best: make your business a success.
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