Many people have never heard of cryptocurrency. Others have and believe that cryptocurrency is not only here to stay, but will become more commonly used in the near future. Businesses are already started to accept cryptocurrency. There are several reasons for this, of course.
Because of its encryption, this digital form of currency is difficult to both forge and steal. Furthermore, it isn’t heavy to carry or dirty like paper money and coins are. Fees are almost non-existent since banks are not necessary in order to complete monetary transactions.
But even if you have heard of cryptocurrency and know about its advantages you may still want to know more about it. For example, you may wonder how to accept cryptocurrency in your business.
1. Understanding Cryptocurrency
If you want to accept cryptocurrency in your business you must first understand that its values in the past have had some wild swings. This means if you decide to begin accepting it, what you get paid today could be worth nothing tomorrow. Of course, it could also be worth thousands.
Transactions are secured by using blockchain, which is a way of digitally recording them using cryptography. In addition, they are not recorded on one central server but instead on a network of many computers. This is why it is so secure.
However, just because it’s more secure doesn’t mean cryptocurrency can’t be stolen at all. In the recent past cyber thieves have made off with millions of dollars of digital currency.
Unfortunately, since cryptocurrency is not backed by any bank or the government, losses from theft are not covered. In addition, the encryption makes it much harder to catch a hacker who steals it.
2. How to Accept Cryptocurrency
One of the first things you must do to accept cryptocurrency is to set up a virtual “wallet”. Each of the wallets has different security features such as backup systems and identification methods.
There are wallets that are available free to users while others must be paid for. Blockchain and Coinbase are a couple of options you could choose from to set up a wallet to hold your cryptocurrency.
Next you must advertise so your customers know they can pay using cryptocurrency. For starters you could put up a small sign that shows that you accept bitcoin. And you can advertise in other ways too, such as over the internet.
Finally, to accept cryptocurrency in your business as payment you may need to set up an app on your computer or phone. The app generates a quick response code, or QR code, that is used in the transaction.
BitPay and CoinBase are two types of payment processors you could choose to complete your cryptocurrency transactions. They may have fees attached, so check out the features of each thoroughly before you decide on one.
3. Is it Legal?
Currency in the U.S. was backed by the gold standard up until 1971. Since then it has been backed by fiat meaning it has value because of government declaration.
However, digital currency such as cryptocurrency is not backed by the government. It only exists through digital transactions.
Regardless, that doesn’t mean it isn’t legal. It just isn’t backed by anyone. That may be one reason not all countries accept it. But that doesn’t preclude you from accepting it as payment in your business.
4. How to Pay Taxes
The IRS does not classify cryptocurrency as money. However, if you intend to accept cryptocurrency in your business you should likely pay taxes on it the same way you would on other income.
Talk to your accountant or tax preparer to make sure you comply with tax rules and regulations.
As cryptocurrency becomes more widely used you may want to start accepting it as well. Now that you know how to accept cryptocurrency in your business you can do so and ensure your business continues to grow in the future.