Virtual currency is becoming increasingly popular among individuals looking for an investment that’s reliable and regarded as a more long-term store of value. Many know that, unlike your fiat currencies, cryptocurrencies like Bitcoin, have a limited supply to go by that’s controlled by mathematical algorithms. For this reason, there’s no intervention seen by any government agency or political body to attempt to dilute its value through influences like inflation.
As a business, it’s within your best interests to make cryptocurrencies like Bitcoin available to your consumers as a payment service for them to use to purchase goods and services. At this point, your business should have considered all the benefits that come with incorporating Bitcoin within your business practices; however, an equal effort also needs to go into understanding the risks involved in wanting to do so as well. And while such a milestone may trend for your business like headlining sports news, you should ensure that enough research has gone into looking at both the good and the bad.
In this article, we’ll be providing you with key points to keep in mind concerning some of the risks associated with incorporating Bitcoin into your business practices.
Bitcoin Risks For Business
Constant Changes In Price
It’s a well-known fact that the value of any cryptocurrency, including Bitcoin, fluctuates all the time. This means that even though your business may be in the business of just allowing customers to pay using Bitcoin, the balance or trade value of the crypto could drop or surge at any given point and this could affect the value of your business revenue anytime.
Business Hours
Taking into consideration that the value of Bitcoin fluctuates all the time, your business could be affected by market hours. With platforms that buy and sell cryptocurrencies, they may be unable to account or take any responsibility for not taking the necessary steps to buy or sell your Bitcoin after market hours. This means that in the case of the Bitcoin dropping or surging drastically, no action will be taken to save the coin in cases of loss or collect profits in cases of gain.
Liquidity
There are liquidity risks that your business may encounter regarding trades. Your business can find itself completely unable to settle a trade, find it difficult to settle a trade, or find itself only able to settle the trade at exorbitantly adverse prices that will depend on what the market situation will look like at the time. The market volume can also influence it.
Bitcoin Network
Bitcoin transactions that are authenticated on the blockchain are held for a certain time until an adequate trade amount confirms that it’s been received. This means that your business won’t be provided a guarantee that the crypto has been received, and there is a possibility that your request can be canceled and declined on the blockchain.
Losing The Password Or Private Key Of The External Wallet Service
Should your business have an external wallet, there may be instances when you can’t access your Bitcoin. In the case of your business losing its private key or password, platforms that help your business buy and sell Bitcoin cannot be held accountable for any losses.
The System
Some of your business transactions may be affected by issues concerning system failures from external influences like changes in the outside environment. During this time, customers may be unable to place orders on your online platform and if they can, there may be issues concerning delays and the likes. This may not be too good for business as opportunity loss could result in a loss in profits that could have been obtained if the business had used another, more stable, payment method. At this point, no third party will be held accountable for any of the losses that your business may incur due to issues concerning cryptocurrency systems.
Bankruptcy
In cases when your business cannot commence due to instances like changes in the external environment, your business could run the risk of eventually becoming bankrupt if this affects the business drastically in the long run. In this case, all processes that also include how customer assets will be treated will be dealt with according to various laws including, but not limited to:
- Insolvency law
- Corporate rehabilitation law
- Corporation law
- Civil rehabilitation law