A life without adversity is one without growth. We must establish that early because we will examine why more businesses haven’t begun accepting cryptocurrency. When you read through some of our opinions and reasons why it isn’t more pervasive than it is, don’t view them as reasons why a new form of currency can’t become more mainstream. Instead, think of them as hurdles they will be forced to overcome to get there. The U.S. dollar has been our official currency since 1792 when the Coinage Act established it. Since then, its stability, which is primarily a reflection of our economic strength, has led to it being used worldwide.
It Is Based on Trust
The U.S. Dollar was initially backed by gold and was part of the gold standard system. From 1879 to 1933, the dollar was directly tied to a fixed amount of gold. If you had a certain amount of money, it could be exchanged for a physical commodity. Consumers trusted the dollar because they believed in the value of gold. (This unofficially ended in 1933 because of the Great Depression, and President Nixon formally terminated the gold standard in 1971.)
Why isn’t there more trust in cryptocurrency? One such reason is its price volatility. When you trade a good or service for something as intangible as a specific currency, the seller must be confident in what they receive. When a currency isn’t stable, it is difficult for a business to set prices for its products (or services) while also maintaining its own financial equilibrium.
Is the Demand Limited?
Deciding to accept cryptocurrency may be the easiest step in the process. A company has to determine what kind of currency they want to receive, e.g., Bitcoin (BTC), Ethereum (ETH), etc. Each currency is surrounded by questions such as the coin’s market liquidity, transaction fees, and how compatible it is with payment processors. Additionally, they must set up a wallet while assessing security and ease of use. For example, companies and individuals use BitPay, CoinGate, and Coinbase Commerce as payment processors.
Businesses would then have to promote that they accept the currency, train their employees to use it, and implement appropriate security measures to counteract fraud, hacking, and unauthorized use. Everything we have just mentioned requires an investment of time and resources. With cryptocurrency comes legal and regulatory compliance concerns. Companies will remain hesitant until people understand how to accept cryptocurrency while complying with taxes and other reporting requirements. Most businesses will only be willing to commit once they know enough demand exists in their customer base to make these changes.
Speak to an Innovative Business Law Attorney
Again, these are obstacles rather than roadblocks. The World Economic Forum discusses a survey where 53% of Americans believe that “cryptocurrencies are the future of finance.” Having confidence in the form of currency is a prerequisite for its implementation. Quantum Lex was formed to serve the legal needs of blockchain-backed companies while drawing on our extensive experience with business law. To continue this conversation with an attorney, contact Quantum Lex to schedule your consultation.
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