Let’s find out what are the effect of cryptocurrency on business and the risks associated with it
With the successful debut of Bitcoin, cryptocurrency was introduced in 2009. Since then, other cryptocurrencies have entered the market, including Ethereum, Tether, Binance Coin, USD Coin, Cardano, XRP (XRP), Solana (SOL), Polkadot (DOT), Dogecoin (DOGE), and others. A secure decentralized virtual digital asset that may be utilized online is cryptocurrency. On January 12, 2009, the first known cryptocurrency transaction between two parties took place. The two users of Bitcoin were Hal Finney, a developer and crypto campaigner, and Satoshi Nakamoto, an anonymous user. Since then, there has been a growth in the use of cryptocurrency in commercial transactions. According to a recent poll, more than 2,300 US firms now accept Bitcoin for payment. The Pandemic has also contributed to a surge in the use of cryptocurrencies by businesses around the world. By embracing cryptocurrency, businesses are now quickly transitioning to a hybrid kind of economy.
Let’s Examine the Effects of Using Cryptocurrencies in Commercial Transactions:
1. Adopting cryptocurrencies provides opportunities to a new group of elite, international clients that demand transactional transparency and privacy. According to a poll, 40% of customers who pay with cryptocurrencies at businesses that accept them are brand-new clients. Additionally, they spent twice as much as they did use a credit card.
2. By using blockchain technology, cryptocurrencies make a guarantee that only the parties engaged in a transaction may see the specifics of a transaction. This guarantees that all participants in any transaction are completely anonymous. A complete auditable and legitimate ledger of every transaction is another feature of blockchain technology. These ledgers are impossible to alter or remove. This guarantees complete transparency in every transaction.
3. There are no additional processing or verification fees when there is no involvement of a third party in the transaction. This substantial decrease in transaction costs lowers overhead costs.
4. Every cryptocurrency transaction has the highest level of privacy, which means that no one other than the participants in the transaction can see any information about it. Additionally, blockchain creates an unchangeable record of every transaction that uses end-to-end encryption. This makes sure that no one is a victim of financial fraud when using cryptocurrency online.
5. With cryptocurrency, international commercial transactions have become simpler. Transactions are much faster than those made using any other international transaction method since there is no need to exchange currencies and there is no involvement of a third party.
Understanding the Risks of Cryptocurrency:
6. Since cryptocurrencies are decentralized, there is no governing body. As a result, there have been more instances of cryptocurrency-based money laundering, the majority of which are still undetectable. Cryptocurrency exchanges, for example, have emerged in India as the new tax havens that make it easier to launder illicit funds. The Directorate of Enforcement discovered several cryptocurrency transactions totaling more than Rs 4,000 crore in 2021.
7. Cryptocurrency’s value is determined by global dynamics of supply and demand rather than having an inherent value of its own. Cryptocurrency’s value has always been quite erratic.
8. Since there is no central regulatory body overseeing cryptocurrency, there is a constant worry that it would aid in money laundering and other crimes. Many nations have adopted unfavorable regulations to discourage the use of cryptocurrencies to undermine the democratic methods of financial transactions.
9. Crypto payments cannot be charged back or reversed from merchants if a transaction is made by mistake since there is no method to trace a crypto transaction. One of the biggest issues with cryptocurrency transactions is this. Any financial fraud can be prevented by the use of transaction reversal, but this is not possible with cryptocurrency transactions.
10. Cryptocurrencies are a sanctuary for illicit activity since they are completely anonymous and have no regulatory authority. With Bitcoin, a lot can go undiscovered, including the trading of illegal substances and weapons. In an investigation, the U.S. Government Accountability Office discovered that cryptocurrency is being used in the drug and human trafficking industry. The fear that cryptocurrency is unsafe for use in regular commercial transactions has been confirmed by the significant increase in crime committed using it.
Since more people are becoming aware of cryptocurrencies than just investors, bitcoin has been in the news quite a bit. Legislators around the world are looking for methods to create rules and regulations that would make cryptocurrency transactions safer for investors and less desirable for crooks. Unfriendly laws and repressive government actions are major deterrents, but full adoption of cryptocurrencies is the future of business transactions, and we can already see how the economy is changing thanks to the fiat Crypto hybrid method of transactions that is already used.