Cryptocurrency has become an instant, low-cost and secure payment option, and small businesses who accept it could stand apart from competitors. Small-scale business owners might find it difficult to understand about cryptocurrency and its risks.
In contrast to traditional fiat currency that is issued and controlled by central government agencies, cryptocurrencies are decentralized and operate without an authority central to them. Blockchain technology is used to record transactions in an immutable secure ledger. That lack of a central authority can help lower transaction fees for businesses, which could be as low as 2 to 5 percent versus 4 percent for credit card transactions. Additionally, it prevents fraudulent chargebacks by removing the requirement for banks to check every transaction.
Demand and scarcity drive the value of cryptocurrency. For instance, the quantity of people mining Bitcoin increases the coin’s value because it decreases the amount of money available for spending. Some coins employ a technique known as burning to increase the value of their coins by destroying part of the total supply.
The cryptocurrency industry is rife with fraud and scams, and it’s essential for business and consumers to be aware of the risks. A legitimate business will never ask you to pay money via text message, email or social media to purchase products or services. In addition, never click on links that are provided in unsolicited emails. These are often phishing attempts to obtain your personal information or computer, such as your username and password.