The use of cryptocurrency has been on the up and up in the past few years, as individuals and companies scramble to make sense of this new form of money. No longer a fad, cryptocurrency has seeped into the mainstream financial markets where billionaires, celebrities and the general public are acquiring it as an asset and even using it for day-to-day online transactions. Major corporations like Microsoft, Facebook, Subway, Virgin, PayPal and over 13,000 others across the globe have also started accepting crypto as an alternative method of payment.
According to a CNBC report, the cryptocurrency market value hit over $2 trillion dollars in the first quarter of this year, a 180% increase compared to April 2020. Bitcoin, the most widely known of all the digital currencies in use, commands a 50% market share and went for roughly $61,000 per unit at the time of the report. In February, maverick entrepreneur and owner of Tesla, Elon Musk, started accepting cryptocurrency as a method of payment for his cars (although he later suspended it later over climate change concerns). Despite this, cryptocurrency is in all respects the future of money.
But due to its volatility, vague regulations, a global fraudulent scheme, a lack of technical know-how, and a general apprehension over intangible money, some people are still hesitant to accept it as a method of payment. However, seeing as it can be used for seamless cross-border transactions without the need to pay high fees charged by banks and other financial institutions, cryptocurrency could revolutionize online payments. Freelancers and entrepreneurs, especially those who deal with multiple currencies, could realize significant savings if they switch to cryptocurrency, since they are spared the hassle and costs of changing their money to different currencies before getting it in their local fiat.
How do cryptocurrency payments work?
The major difference between traditional payment methods and crypto, is that a digital wallet instead of a credit card is used to transfer funds. So, if you want to receive payment for your gigs in cryptocurrency, you must have an operational digital wallet housed in an app or online software. These digital wallets are like “decentralized” bank accounts that aren’t controlled by any government or financial body. This is why crypto is great for transactions involving different countries.
There are two types of digital wallets: single currency wallets that only link to one type of currency, like Bitcoin, Ethereum, Litecoin, etc and a multicurrency wallet that accepts a range of payment options. If you have a digital wallet, when your client makes their payment in crypto, you receive your funds in crypto as well.
One advantage of receiving payment in crypto is that the transaction fees are not set by a controlling entity but by the user themselves. If you transact in Beta-C (Bitcoin) for instance, higher transaction fees expedite the arrival of funds to your account. But this challenges the use of crypto in everyday transactions, as miners tend to cater to larger transactions first as their fees are higher. However, third party platforms offer a solution to this. One such provider, Coinbase, holds coins for all its users, so people can pay and receive funds without delay.
What are the benefits of accepting cryptocurrency?
A survey conducted by Deloitte last year showed that over 80% of business executives in the U.S see blockchain technology as a strategic priority. What this means is that more businesses are looking to expand their scope to include cryptocurrency as a means to diversify their assets and increase their reach. As a freelancer or entrepreneur looking to grow, adopting cryptocurrency will ensure that you can offer your services to more clients all over the world while at the same time keep up with technological advancements.
Here are the pros of being crypto-ready:
No take-backs, no refunds
Think of all the times you’ve been hesitant to offer your service to a new client because you’re unsure whether you’ll get paid. With crypto, however, you can rest easy knowing that when your customer makes a purchase, they can’t revert the funds back to their accounts. Once a transaction is made, it is final.
Low transaction fees
Transferring money across borders is expensive! And over time, these transactions add up, eating into your profits margins. Although payment platforms such as Payoneer offer significantly cheaper rates, they are no match for crypto transactions that were as of 2020 the cheapest way to transact over the internet. These dramatically reduced costs can be attributed to the lack of regulatory intermediaries.
Banks are notorious for subjecting their users to that excruciating “2-5 business days” wait as their money gets moved from one account to the next. But with reputable third-party sites like Coinbase gaining popularity in the recent past, you can receive crypto payments into your wallet instantly without having to rely directly on miners.
Increased client base
Since cryptocurrency is universal, you can receive payments from wherever your client may be across the globe. This will diversify your client base and offer a secure, reliable billing alternative for users who for one reason or another cannot use standard payment channels.
Risks of cryptocurrency
Like every good thing, cryptocurrency has its downsides. Most notable is the high volatility of digital currency, which may work to your advantage or disadvantage. For example, if you design a book cover and receive $100 dollars’ worth of Bitcoin in payment, if its value falls compared to the dollar, it means that your payment is now of lower value in fiat currency. But if it rises, so does the value of your money. To avoid this uncertainty, experts advise that you convert your crypto to your local currency as soon as you receive payments.
Will cryptocurrency become a major way to receive payments?
The benefits of crypto-payments are apparent. But will it make the leap to mainstream or remain privy to the tech-savvy? That is left to be seen. As long as the value of digital currency remains unstable, a majority of people will still be wary of accepting it as the only method of payment. This volatility has played out recently, when Elon announced he acquired $1.5 billion worth of Bitcoin for Tesla, increasing the value of the currency from $39,000 to $46,000 in just one day. The value plummeted in the same design however, when Mr. Musk announced that Tesla was no longer accepting BTC.
That being said, blockchain transactions still hold great potential for freelancers. As a supplement to cash payments, it can help you receive your payments fast, securely and at minimal costs.
Sign up on Ureed.com for speedy smooth freelance transactions!