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Updated Oct 24, 2023

What Small Businesses Should Know About Cryptocurrency

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Adam Uzialko, Business Strategy Insider and Senior Editor

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Since Bitcoin’s introduction in 2009, cryptocurrency has worked its way into mainstream conversations and consumer decision-making. The medium of exchange is now actively traded 24/7 and becoming more widely accepted as a payment form. 

But is cryptocurrency right for your small business? Several serious considerations must be taken into account – both technical and pragmatic – before deciding to accept crypto as a form of payment from your customers. We’ll weigh all the cryptocurrency factors small business owners should consider and examine how some blockchain startups are trying to push the space forward.

Did You Know?Did you know

According to Deloitte, 3 out of 4 retailers plan to accept cryptocurrency payments. Part of the motivation is helping their brand be perceived as cutting-edge – making crypto a tech trend that will influence marketing.

What is cryptocurrency?

Cryptocurrency is a digital medium of exchange that relies on peer-to-peer blockchain technology. It’s decentralized – no central bank or government regulates or backs crypto. Buyers transfer funds directly to sellers without the third parties traditionally used to process payments.

“Cryptocurrencies cut out the middleman in a transaction,” explained Chris Poelma, CEO and board director of PCS Software Inc. “Rather than store your money somewhere where you’re dependent on an organization to safeguard it, you hold on to it through an encryption only you have a key to. As we hear more stories of data breaches and hackers becoming more sophisticated, cryptocurrencies sound more appealing to consumers looking for a safer way to do business.”

Small businesses might accept cryptocurrency for many reasons:

  • It’s at the forefront of financial technology.
  • It can attract customers who use crypto for all purchases.
  • It eliminates certain kinds of fraud.

But is accepting cryptocurrency right for your business?


Encryption is a digital form of cryptography. It uses mathematical algorithms to scramble messages; the sender’s cipher or key is necessary for decoding the message.

What are the benefits of accepting cryptocurrency?

Compared to traditional point-of-sale (POS) systems, cryptocurrencies offer several primary benefits to consider.

  • Cryptocurrency has lower transaction fees. The lack of a central intermediary dramatically reduces transaction fees. Small businesses that accept credit card payments often incur credit card processing fees of around $0.25 for each card swipe plus 2 percent to 4 percent of the transaction total. These costs add up, which is why smaller stores often have credit card purchase minimums on their POS systems. Accepting crypto can reduce these costs to less than 1 percent of the value of each transaction.
  • Cryptocurrency can protect merchants. Crypto’s decentralized setup also protects merchants from fraudulent chargebacks and other types of payment fraud. The transactions, like cash, are final because no third party can reverse charges.
  • Cryptocurrency can increase sales. Crypto enables small businesses to expand and open their doors to international buyers who previously couldn’t access their products and services.
  • Cryptocurrency offers customer convenience. Accepting cryptocurrency offers customers additional ways to pay while providing an extra layer of protection for their information.

Experience working with blockchain development and engineering is becoming an in-demand career skill, as is familiarity with cryptocurrency and digital ledgers.

What are the risks of accepting cryptocurrency?

Cryptocurrency isn’t without its downsides. Here are some of the risks of accepting cryptocurrency.

1. There are technical barriers to accepting cryptocurrency.

Accepting cryptocurrency requires setting up a digital wallet on a digital currency exchange, which could be technically prohibitive for small business owners unfamiliar with the technology. Cryptocurrency is an information-dense field with a relatively steep learning curve, which can be a significant obstacle when you’re also trying to run a business.

“As it stands now, small businesses, in particular, would find it difficult to accept cryptocurrency,” noted Serge Beck, CEO and founder of blockchain ecosystem company Optherium. “And even without the technical obstacles, the volatility of crypto values still creates a disincentive for entrepreneurs to hold digital currencies.”

2. Cryptocurrency can be volatile.

Digital currency’s highest risk is price volatility, which makes its value extremely unpredictable. For example, Bitcoin was first valued in pennies in 2009; it rose to more than $64,000 per coin in February 2021 before dropping down to less than $28,500 per coin in May 2023.

“You will have to make some form of arrangement for translating your cryptocurrency back into your currency of record,” advised Areiel Wolanow, managing director of consulting firm Finserv Experts. “Cryptocurrencies are volatile, [so] you will want to do this quickly and regularly.”

Using a merchant services company like BitPay or Coinbase helps insulate small businesses against that volatility by immediately exchanging digital currency for its cash value. Through these services, cryptocurrency payments are made in real time for the currency’s current value. 

The only reason for a business to hold on to cryptocurrency would be as a speculative investment, Wolanow noted, but this essentially amounts to gambling with your revenue stream.

Did You Know?Did you know

While many speculate that digital payments like crypto will usher in a cashless society, it’s doubtful that digital transactions will become exclusive anytime soon.

3. Cryptocurrency has security issues.

Although cryptocurrency transactions eliminate cyber threats like stolen credit card numbers, the currency still isn’t 100 percent safe from cybersecurity threats. So far, there is no way to completely prevent cybercriminals from getting their hands on users’ digital wallets. This is particularly dangerous because, unlike fiat currencies like the U.S. dollar and the euro, cryptocurrencies are not backed or insured.

However, companies are working on measures to protect against cryptocurrency security issues, including the following: 

  • Some companies are insuring cryptocurrency. Some companies are working to insure and back crypto. For example, Coinbase holds less than 2 percent of customers’ digital currency online; in the event of a breach, the company fully insures losses. All fiat currency maintained on Coinbase is subject to FDIC insurance up to $250,000, just like conventional banks. However, these protections don’t apply if your personal wallet is hacked or affected by a data breach; it’s still your responsibility to secure your personal account. Still, you can rest easy knowing that if the company suffers an attack, your funds are safe. 
  • Wallet security is being explored. Companies are also working on solutions to address wallet security. According to Beck, Optherium employs a biometric verification method that identifies users based on their facial structure to grant wallet access, significantly reducing a thief’s ability to steal someone’s assets. This method also helps users reconstitute their wallets when access is lost. However, some cryptocurrency wallets require only a password for access, and if you forget your password, there is no way to recover the wallet. You will lose your entire ledger.

If your SMB plans to accept crypto, improve cybersecurity by enabling multifactor authentication, securing and maintaining your private keys, and considering taking your crypto offline by putting it in cold storage.

4. Cryptocurrency faces regulatory uncertainty.

Cryptocurrency’s regulatory landscape is poised to change as lawmakers craft new regulations. Once regulations are in place, they will likely evolve further, meaning business owners must be ready to adapt to changes in the cryptocurrency ecosystem.

“Because cryptocurrencies are relatively new, there’s much uncertainty around how the government will work out kinks in its regulation,” Poelma explained. “[Cryptocurrency] won’t be universally accepted until businesses are certain they know how to report gains and pay proper taxes on cryptocurrency transactions.”

Changes in cryptocurrency regulation will likely continue as cryptocurrency’s adoption expands and new problems and difficulties emerge. As there are no significant current regulations, crypto firms are moving abroad to establish trading desks while also working with the Securities and Exchange Commission to prevent flouting securities laws. Additionally, the IRS classifies cryptocurrency as “property” or a “digital asset,” so anytime you sell or exchange crypto, it will be taxed.

Key TakeawayKey takeaway

Business owners who accept crypto should carefully monitor ever-changing local and state business regulations, particularly related to online business laws and data privacy regulations like the GDPR.

How do you accept cryptocurrency?

If you decide to move forward and start accepting cryptocurrency, you must make some decisions and take a few steps. Overall, the process is similar to getting set up with a credit card processing company.

First, you must decide whether to use a processor to accept payments or accept them manually.

  • Payment processors: A processor will simplify the process; you must register with a company like BitPay or PayPal to start accepting payments.
  • Manual crypto acceptance: Alternatively, you can accept cryptocurrency payments to your small business manually. However, the process is a bit more complicated. You must create an account on a crypto exchange (such as Coinbase) so customers have somewhere to send your payment. Then, you can add functionality to your website (like a QR code) so customers can send crypto to your exchange account. Finally, you must take steps to withdraw your crypto from your exchange account. You’ll either move it to a digital wallet or exchange it for dollars and transfer the funds to your business bank account.

Crypto will be one of many options for customers in the future

As more customers invest in crypto, digital wallets will increasingly become a preferred payment option for your customers. If you decide to add cryptocurrency to your customer payment options, you must learn about the technology, set up a digital wallet and advertise crypto acceptance to customers. 

However, you must also ensure you understand the risks. With legislation that could interrupt the crypto payment acceptance process – including the possible creation of a governing organization to monitor cryptocurrency firms – you may face challenges. Caution is always advised with the adoption of any new financial technology.

Tejas Vemparala and Dock Treece contributed to this article. Source interviews were conducted for a previous version of this article.

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Adam Uzialko, Business Strategy Insider and Senior Editor
Adam Uzialko, senior editor of Business News Daily, is not just a professional writer and editor — he’s also an entrepreneur who knows firsthand what it’s like building a business from scratch. His experience as co-founder and managing editor of a digital marketing company imbues his work at Business News Daily with a perspective grounded in the realities of running a small business. Since 2015, Adam has reviewed hundreds of small business products and services, including contact center solutions, email marketing software and text message marketing software. Adam uses the products, interviews users and talks directly to the companies that make the products and services he covers. He specializes in digital marketing topics, with a focus on content marketing, editorial strategy and managing a team.
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