Cryptocurrency is a form of digital currency which uses encryption techniques to regulate the generation of units of currency and to confirm the transfer of funds. Bitcoin, the first and biggest cryptocurrency in terms of market cap, has captured the attention of regular consumers in the past couple of years because of its rising value. Small businesses that operate online are also expected to be significantly affected by the rise of cryptocurrencies, no longer needing to have the best computer brand or even the latest and most expensive equipment in order to start using cryptocurrencies for their business.
Cryptocurrencies are not regulated by any financial authority such as a central bank. With cryptocurrencies operating independently of a central monetary authority, it can be easy to see why so many Wall Street investors are concerned. In fact, experts predict that cryptocurrencies are all set to transform the way that our financial systems operate. They represent more than just another form of currency without a regulating body, they also constitute a transformation in the way that our present financial systems operate. Consequently, cryptocurrencies also have a massive influence on vendors, merchants, online stores, and the software that they use.
When cryptocurrencies undergo a mass integration into the way we do business online today, an entirely new system will most likely emerge. Because the transfer of cryptocurrencies generally involves zero to minimal transaction fees, merchants will be able to take advantage of the considerable savings on their business expenses. With lower expenses, merchants will be able to sell their products at a much lower price, comparable to the Aliexpress discount that people use to be able to purchase items at a more cost-effective price. Both buyers and sellers benefit in this kind of marketplace.
Vendors will benefit from the eradication of extremely high middleman fees that are typically charged by online marketplaces such as eBay or Etsy. In addition to those fees, credit card companies also charge 3% and more in processing fees. These fees definitely add up. Both retailers and consumers are expected to save more when they choose cryptocurrency transactions. BitPay, for example, the leading Bitcoin payment provider, only takes a flat 1% settlement charge for Bitcoin payments. The CyberMiles blockchain, on the other hand, waives transaction fees for a lot of common operations.
More importantly, using cryptocurrencies means faster transactions. Getting paid quickly can determine the life or death of a small business. Merchants who accept cryptocurrencies have a new avenue of accepting payments that is faster than the traditional credit card payments. Merchants who accept credit card payments typically have to wait a week or more in case there is a chargeback. In contrast, CoinBase allows purchases that are made with a credit card or a USD wallet to be made available instantly. Most blockchain networks can also now facilitate a higher number of cryptocurrency transactions per second.
One of the most important benefits of choosing to use cryptocurrencies for e-commerce transactions is protection against fraud. Many online merchants are forced to turn away good business because of the increasing fears over credit card fraud. For instance, some stores refuse to accept international payments as credit card fraud is more prevalent in global transactions. By using cryptocurrency, merchants are assured that the transactions are more secure. Because the payments take place on a decentralized blockchain, it involves a level of encryption that is virtually impossible to break.
For merchants, the best part about accepting cryptocurrencies as a method of payment is that any transaction that is completed on the network is final. No customer will be able to claim for a chargeback later on. Chargebacks actually represent a serious concern for online merchants. On top of having to pay additional fees and navigating the administrative red tape, online sellers also have to deal with banks that will use such chargeback fees to evaluate merchant reliability. With cryptocurrencies, the power shifts from the customer to the merchant since chargebacks are essentially impossible.
Cryptocurrency payments are irreversible, since all transactions are documented on the blockchain and their funds are secured by a public key cryptography system. They are digital. Not can they not be reversed arbitrarily, they also cannot be counterfeited. Any transfer is secure and cannot be undone once it is completed. Merchants can then sell in any place in the world with confidence.
With the creation of new marketplaces which use cryptocurrencies as the main form of payment, a new level of autonomy for buyers and sellers alike will also emerge. Based on the cryptocurrency principle of a lack of monetary authority, these marketplaces also feature a setting where no central entity or company holds control over the merchant store data. Without a central authority, using cryptocurrency means that your money belongs to your absolutely, without any fear of getting your account frozen arbitrarily.
Existing payment platforms today, such as PayPal, are able to unilaterally and arbitrarily freeze merchant accounts if they have somehow decided that you have violated their terms of service. This kind of scenario is basically a nasty surprise for any e-commerce store. A frozen bank account essentially constitutes a business nightmare – you cannot use your money, outstanding checks will not clear, and you may be held responsible for certain charges as well. Whether or not your account deserves to be frozen, you still lose all access to all of your assets and your business operations will most likely be frozen as well.
With cryptocurrency-based marketplaces, no central authority will impose sanctions on your account and you will not be forced to abide by their rules and regulations. Your money is yours, absolutely. However, because of the lack of central authority, this kind of system is also vulnerable to abuses. Without any rules, anything can be sold and bought and it will be difficult to stop a malicious store from offering illegal or immoral products and services. This means that this new e-commerce marketplace will have to create some basic safeguards against cryptocurrency abuse.
Novo Benaojan has always been passionate about technology and where it is taking the human race, and in the case of Blockchain, he is particularly hopeful with regards to its potential. To this end, he has been trying to spread information about the emerging technology to those who are interested.