Discussing the subject of cryptocurrency in Ecommerce – diving in deep

Blockchain-based currencies are still pretty new in the financial world, but they have a great impact on all industries, including Ecommerce. Cryptocurrency is more than a virtual payment form; it’s a tool that can reshape Ecommerce in several ways, including increasing the number of customers, lowering the risk of fraud, cutting down transaction costs for vendors, and enhancing branding. 

Binance data shows that the interest in digital currencies has grown at a rapid pace, and both institutional and independent investors have declared their intentions to adopt blockchain-based currencies. This has brought digital currencies to the radars of online vendors. However, not all retailers are ready to integrate crypto payments into their operations because they don’t fully understand if it would be beneficial or how it could work for them. 

This article provides essential information about crypto in Ecommerce because it’s getting more challenging for companies to ignore its influence. 

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What is to know about cryptocurrency?

Cryptocurrency is a form of virtual money based on complex encryption that can be used to pay for services and goods and enables cross-border transactions. Investors have lately described it as a competitive asset with the potential to deliver high returns on investment due to its increased volatility. However, it’s also risky to use it because it doesn’t have a fixed value as traditional cash. 

Blockchain-based currencies rely on decentralized control; hence, no central authority or government controls them. Traditional, on the other hand, is dependent on a cumulus of factors. A decentralized network of thousands of computers verifies crypto transactions through complex encryption techniques. Digital currencies use distributed ledger technology, which is based on shared databases that record information about all transactions. Blockchain technology, at its core, is a distributed ledger made of a chain of blocks everyone can see. Blockchain technology is innovative in the way that no one can alter information once uploaded to the network. 

Benefits of using cryptocurrency for Ecommerce

The main reason online retailers decided to adopt crypto payments is to cut down transaction costs and boost their efficiency. As mentioned earlier, cryptocurrencies differ from traditional money because they don’t rely on third parties like payment processors, banks, and other intermediaries to complete transactions. Crypto payment integration allows online retailers to save money by paying fewer commissions and fees and lowering the risk of fraud, chargebacks, and processing time. In addition, cryptocurrencies are available worldwide, hence they enable cross-border transactions, so that companies can expand their customer base and address new audiences. 

Risks of using crypto payments

The use of cryptocurrencies in Ecommerce isn’t risk-free because digital currencies are still a new category of assets that are associated with numerous challenges and risks. The main risk investors agree upon is the increased volatility of the category. Crypto prices are unpredictable, even during bull phases, which could have a negative impact on the profit businesses gain when using them. Their volatility can also affect retailers’ cash flow. For example, when a vendor accepts a cryptocurrency as payment for their services, and its price drops before it converts it to their local currency, they can register losses. 

It’s also important to highlight that digital currencies aren’t accepted in all countries and are even the subject of regulatory disputes in some areas. 

A list of the most popular digital currencies accepted among the global marketplaces

Bitcoin

Bitcoin is the most popular digital currency. It’s the first blockchain-based coin created in 2009, and it has gained the public’s attention, becoming the largest cryptocurrency by market cap. Crypto enthusiasts often name it the parent of all other cryptocurrencies because it won financial markets before many of them were created. Unsurprisingly it assumed the role of a pioneer in the widespread adoption of digital currencies and now is the most used cryptocurrency worldwide. 

Most retailers integrating cryptocurrency payment usually adopt Bitcoin first and then move forward to adopting other cryptocurrencies. 

Ethereum

Even if Ether isn’t as popular as Bitcoin among retailers, it’s the second-largest digital currency by market capitalization, so it has a big audience. It differs from the pioneer in the sector as it’s focused on smart contracts, so it works well only on some marketplaces. Ethereum also powers the Metaverse, so it’s widely used for Web3 purchases. 

Bitcoin Cash

You might wonder if Bitcoin Cash is different from Bitcoin. The answer is that it’s connected to it, but it works as a separate digital currency, resulting from the hard fork of the main network. The two also differ in terms of transaction processing efficiency because Bitcoin makes it more challenging for individuals to make online purchases with bitcoins due to its low speed. But Bitcoin Cash is an upgraded version that enables cheap transactions.  

Crypto experts believe that all platforms that accept Bitcoin payments will also integrate Bitcoin Cash. 

Litecoin

You’ll notice that the list of cryptocurrencies popular among vendors includes cryptocurrencies that have similar use cases to Bitcoin, as most online stores first integrated it and then expanded the list. Litecoin is another digital currency well-known in the crypto sector, with a high market valuation. The main reason why merchants add it among payment solutions is that it enables quick transactions. 

Ripple

Initially Ripple was created to provide access to blockchain technology for financial organizations. However, online vendors have also found it attractive because it allows them to complete cross-border transactions without having to pay hefty taxes. 

Wrapping it up

The companies that decide to integrate cryptocurrencies like Bitcoin and Ethereum into their payment solutions should ensure that the process provides them with the necessary level of security. They must also educate their audience on how to create accounts on crypto platforms and develop strong passwords to protect their funds. 

Additionally, they also should research the sector to understand how different cryptocurrencies function and pick the ones that provide them with the best benefits. After selecting the payment solutions suitable for their operations, they need to integrate a payment processor that supports the cryptocurrencies into the store. And even if cryptocurrencies are usually associated with low taxes, they still experience fees. Hence, it’s essential to check them.