In the ever-evolving digital economy, cryptocurrency payment adoption has transitioned from a novel concept to a strategic business necessity. Bitcoin continues to reign supreme as the most recognized digital currency. Alternative cryptocurrencies, or altcoins, dwarf Bitcoin in transaction volume are quickly becoming the digital native payment of choice. To stay ahead in a competitive landscape, understanding the breadth and depth of these alternatives is crucial. Here’s an exploration into the world of altcoins and how diversifying your business’s payment options can be a game-changer.
The Rise of Altcoins
Altcoins, a collective term for cryptocurrencies other than Bitcoin, have surged in popularity and utility, offering unique advantages and challenges for businesses. From Ethereum’s smart contract functionality to the speed and low transaction costs of Litecoin and Ripple, altcoins are redefining what’s possible in the crypto payment space.
Benefits of Integrating Multiple Digital Currencies
Broader Market Reach: Accepting a variety of cryptocurrencies enables businesses to cater to a wider audience, especially tech-savvy customers who prefer specific altcoins.
Enhanced Payment Flexibility: Different cryptocurrencies offer unique transaction speeds and fee structures, providing more options to suit various business models and customer preferences
Innovation and Brand Perception: Businesses that adopt multiple cryptocurrencies are often viewed as forward-thinking and innovative, enhancing brand perception among consumers.
Reduced Reliance on Traditional Banking: Cryptocurrencies can offer an alternative to traditional banking, reducing transaction fees and eliminating currency conversion complexities for international transactions.
Challenges to Consider
Volatility: Cryptocurrency prices can be highly volatile. While Bitcoin is known for its price fluctuations, altcoins can be even more unpredictable.
Regulatory Uncertainty: The regulatory landscape for cryptocurrencies is still evolving, and businesses must navigate varying regulations across jurisdictions.
Technical Integration: Integrating multiple cryptocurrencies requires technical know-how and potentially complex adjustments to existing payment infrastructures.
Security Concerns: With greater adoption comes increased risk of cyber threats. Businesses must ensure robust security measures are in place to protect against theft and fraud.
For companies that are not crypto-native firms, the most useful approach to this is minimize holding volatile cryptocurrencies on your balance sheet. Upon accepting a crypto-payment, consider converting it do a stablecoin (an altcoin pegged to a fiat currency) nearly immediately, reducing the risk of volatility. You can then bring your cryptocurrencies into your fiat accounts as necessary. Just like you move money into your payroll account to cover payment, you can move your cryptocurrency into fiat as you need to fund business operations, only using your cryptocurrencies to manage your accounts receivable and accounts payable with partners that accept cryptocurrencies.
Choosing the Right Altcoins for Your Business
When considering which cryptocurrencies to integrate, evaluate each option based on the following criteria:
Market Capitalization and Liquidity: Higher market cap coins tend to be more stable and easier to convert into fiat currencies.
Transaction Fees and Speed: Consider how quickly transactions are processed and the associated costs.
Customer Preference: Research which cryptocurrencies your target market is most likely to use.
Support and Integration Tools: Ensure there’s sufficient technical and community support for integrating the cryptocurrency into your payment system.
Implementing a Diverse Crypto Payment Strategy
There are two approaches to accepting crypto payments that make sense for an existing business. The simplest solution is to utilize a payment service. These companies will provide a custodial wallet solution, and help you “convert to fiat” i.e. your normal currency and ACH it to your bank. This makes accepting Bitcoin and other cryptocurrencies much easier. Some banks are more accepting of Cryptoconversions, so you may need to relocate your operating account or otherwise open an additional bank account.
The more “crypto-friendly” approach is to set up a non-custodial wallet. In this case, you simply create a wallet that is managed like a bank account in your general ledger. You receive payments in crypto currencies, and treat them like cash.
If you are only accepting the occasional crypto payment, a custodial payment solution may make sense. It comes with higher fees, but may be easier to explain to your accounting department. If you are looking to expand your business, particularly internationally, with cryptopayments, learning to self custody the wallet can be critical to your success.
Web3 Enabler supports both options, allowing you to use any Wallet-connect compatible EVM Wallet solution. You can manage it in whatever manner works for your business. You designate your accepted tokens and their exchange rate within Web3 Enabler. You can then setup Salesforce notifications to notify other parts of your organization that need to take action.
Educating Your Team: Ensure your sales and accounts receivable staff understands how to process and manage crypto transactions. This may be simply receiving notifications from your payment gateway, from Salesforce, etc., but they should know how to verify that the payment occurred and notify the finance department.
Accepting Cryptopayments is a huge marketing coup. It shows that you are at the cutting edge of international business. While only a small percentage of your existing customers know anything about crypto payments, this shows them that you are a tech savvy firm, and opens you up to new customers. Make sure you integrate these payments into your existing payment workflows, so customers are treated well based on these payments.
Conclusion
Diversifying your business’s payment options to include Bitcoin and various altcoins offers a competitive edge in today’s digital-first economy. While challenges exist, the potential benefits—ranging from reaching a wider customer base to enhancing payment flexibility—are significant. As the CEO of Web3 Enabler, I’ve witnessed firsthand the transformative impact of integrating multiple digital currencies into business operations. Embracing this shift not only positions your business as an innovator but also opens the door to unprecedented growth opportunities in the global market.
