“Why should businesses be crypto friendly?"
I’ve mentioned a couple of times how crypto has become more of an investment method rather than a currency to be used to buy goods and services. Getting everyone to use crypto for many seems impossible or a faraway reality. I believe an excellent way to start massifying crypto and its daily use is to involve businesses in the crypto world. Having more crypto friendly businesses may open a spectrum of visibility that is needed within the crypto world.
Nonetheless, in regards to risks involved with this initiative, According to Forbes, "...there are three primary risks of accepting crypto: (1) you don't know how to keep your crypto safe; you or your business are risks averse. (2) Cryptos are highly volatile — just look at Bitcoin's price chart this year; (3) the regulatory and tax schemes are confusing and depending on where your business is located”.
In order for a business to become crypto friendly, many things may be difficult at first. I believe there has to be an understanding of how crypto works and its numbers; I'm sure for many newcomers those endless decimals in cryptocurrency can make you feel lost. Having no knowledge before accepting virtual currency can be tricky.
On the other hand, how can businesses handle the volatility in bitcoin (BTC) and not lose in the process of accepting this type of payment?
1) Nowadays, you may choose to work with a payment processor such as Bitpay or Criptocompra (Chile); and give customers the option to pay with BTC and cash it out immediately; not betting on the market changing.
2) Davinci Jeremie, CEO of Davinci Codes advises using BTC as an investment strategy for your business, "It is true you are taking a double risk on your business and crypto; if BTC does not perform and your business does not perform it is more likely that your company will go bankrupt a lot faster than only using dollars. Nonetheless, leveraging your business with bitcoin will produce a faster result of financial success as well; this option increases your probabilities."
How can businesses take this risk?
1) One way may be a debt to cover your daily expenses for a year or two because as of right now you may be able to take out low-interest loans.
2) Another option if loans are not a possibility or not your thing; you may create a Security Token Offering (STO). This will allow you to sell partial ownership of your company to the public, or you can keep the sale of the token within the legal limit of 50 people; this way you can raise capital to cover your expenses and save BTC for the future when it is a lot higher. Cointelegraph about an STO, "Similar to an initial coin offering (ICO), an investor is issued with a crypto coin or token representing their investment. But unlike an ICO, a security token represents an investment contract into an underlying investment asset, such as stocks, bonds, funds and real estate investment trusts (REIT).”
3) If you have access to Venture capital (VC Money) this a great option as well, Investopedia, "Venture capital funds are investment funds that manage the money of investors who seek private equity stakes in startup and small- to medium-sized enterprises with strong growth potential.”
4) Or you can use Kickstarter; where you promise a future product, and people pay for it in advance. Your company can use the funds to operate until BTC increases. According to Kickstarter, "Kickstarter helps artists, musicians, filmmakers, designers, and other creators find the resources and support they need to make their ideas a reality. To date, tens of thousands of creative projects — big and small — have come to life with the support of the Kickstarter community.”
5) An ideal option would be to use your savings and avoid dealing with other people's money.
Should business start now?
Yes, because you are accepting bitcoin at an 80% discount and saving it. Bitcoin´s price has gone down significantly enough for businesses to use this at their advantage.
According to Davinci the main reason, to leverage BTC saving for future growth is because it can be seen that BTC will be valued over 50 thousand in the next 3 to 5 years. The best way to manage and lower your risks and avoid getting trapped in the frenzy of BTC moments is to sell half of your BTC savings when your average acceptance price doubles. This way you receive your initial capital back, and you still have BTC to sell in the future, in other words, a win-win situation.
These are just some ideas we spoke about with DavinciJ15, if you have better ones, please let us know on the comment section below.
I hope you enjoyed it!
Twitter: @carolinaninap