By Daniel Allen
Nov. 11, 2019
More and more businesses are steadily beginning to adopt cryptocurrency and adding digital currencies as a payment option for customers. (Photo credit): Gettyimages.com/
Cryptocurrency’s ecosystem is expanding, and more businesses are adding it as a payment option.
From Facebook’s announcement of their Libra cryptocurrency effort, to the Chinese government’s plans to issue its first digital currency, digital assets and electronic payments are becoming more widely explored as a form of financial transaction. There was a lot of buzz when bitcoin and other cryptocurrencies like Ethereum’s ether emerged in the digital scene, with many anticipating a big disruption in financial markets. However, the evolution of cryptocurrencies has been marred by trials and errors, from compromised exchanges and accusations of fraud, to volatile coin prices. The journey, albeit short, has not been an easy one for cryptocurrencies and the investors involved.
Today, however, more businesses and financial institutions are steadily beginning to adapt, adopt and become adept at cryptocurrency transactions. Among those are smaller businesses that have begun to include digital currencies as a payment option for customers.
“I have known and been intrigued by cryptocurrencies since 2012,” says Jennifer Whaley, founder of Fetch Portraits, a self-funded small business that photographs pets and accepts cryptocurrency payments. “I actually got the opportunity to speak at an international bitcoin conference in the beginners’ workshop in Chicago. I was asked to talk about how my app could help animal rescue groups using cryptocurrencies. We still have the project on hold because of a lack of clarity when it comes to taxes and regulations, so we hope 2020 is the year of regulatory clarification from the SEC.”
For Neil Bergquist, co-founder and CEO of Coinme, a worldwide leader in cryptocurrency financial services, the decision to base a business in digital currency came naturally. “I just saw digital currency as the next evolution of money,” he says. “It was an obvious concept because everyone is online nowadays. I believe that 50 percent of the world has internet access, and yet we’re still using physical money that was built for a non-digital world. So, when you look at blockchain and digital assets that leverage this technology and combine that with today’s global internet adoption, you really see an opportunity for financial inclusion.”
“When you look at blockchain and digital assets that leverage this technology and combine that with today’s global internet adoption, you really see an opportunity for financial inclusion”
(Photo credit): Coinme
The resurgence of digital assets and currencies
Enterprise blockchain and cryptocurrency adoption have seen an ebb and flow, given the novelty and uncertainty surrounding the technology. However, 2019 has been a year of resurgence for digital assets, with headlines indicating a more pervasive push for the innovation and use of fintech.
“Prior to Coinme, I was running one of the biggest incubators in the Northwest, with partnerships with companies like Microsoft and PayPal,” says Bergquist. “And everyone who worked there was really excited about this concept called bitcoin. That was back in 2012, which was actually a pretty [volatile] time for bitcoin in terms of prices, platforms shutting down…there was really no trust in the marketplace from mainstream consumers or future adopters.”
Cryptocurrency has come a long way since the first bitcoin transaction took place in 2009. “The fact that bigger companies and even China’s [central] bank has started investing in this technology means that the benefits of digital currencies are recognized by everyone,” says Irene Wong, founder and CEO of ixAsia, the company behind ixCrypto, Hong Kong’s first crypto index that reflects the performance of the cryptocurrency market. “If you look at our crypto index online, you’ll see that there is still a lot of volatility and free-floating market capitalization in the crypto universe.”
For Stephen Le, who personally owns and invests in various digital currencies, volatility is just part of the game. “You expect the deep drops and high gains,” he says. “It’s the only way to make the volume of money overnight.”
Le, who owns ether, litecoin and bitcoin, says that the currencies have yielded exponential gains. “I’ve managed to add at least an additional 0 to each coin, meaning that if I started at 10,000, I now have at least 100,000,” he says. “I haven’t cashed out these coins, but have been paying taxes on them.”
Bergquist believes that people are slowly growing to trust the cryptocurrency marketplace, and his business is at the forefront of establishing a stronger relationship between the consumer and the cryptocurrency universe. Coinme, which is a Seattle startup, recently reeled in $1.5 million in additional funding to grow its cryptocurrency ATM network across the U.S. After joining forces with Coinstar to allow consumers to purchase cryptocurrencies with cash, Bergquist is optimistic about the future of digital assets.
“When I first started Coinme, it was more of an experiment,” he admits. “I didn’t want to quit my day job over it because at the time, we really wanted to know why, how, and for what people were going to use this bitcoin ATM. We were also unsure about whether or not the regulatory environment would take a 90 degree turn.”
Those doubts were alleviated after Bergquist and his team met with legislators and engaged in a roundtable discussion on ways to create a sensible regulatory environment. Coinme went on to acquire a secure license and launched their first bitcoin ATM in May 2014.
“As a licensed entity, you have to go through lots of audits, from an annual financial audit, to multiple IT audits,” says Bergquist. “This ensures that anyone can walk up to our kiosk and put in up to $2,500 cash and get instant custody of digital assets anywhere in the world.”
Of course, the customer would have to pass a comprehensive background check to qualify. “Because our business uses kiosks, we learned that it created trust between the customer, which was one of the things that was missing in the marketplace. That trust comes in many forms, but one of those forms is simply that this was a familiar transaction experience for users and acted as a physical gateway to a digital world,” he says.
How to add cryptocurrency as a payment option for your business
“The digital currency payment system setup was really easy,” says Amit Josef, CEO of Enclave Mfg Co., a retail site that sells polarized sunglasses and watches. “It was a simple plug-in, and we linked it to our platform. Unlike many companies today that convert bitcoin to cash immediately upon receiving it, we actually like to hold onto the digital currency.”
Enclave, which has a loyal customer base around the world and especially in the U.K., ensures that transactions are safe and straightforward. “From a cryptocurrency standpoint, it’s very difficult for us to know where the digital payments are coming from, but we ensure that all of our products arrive to whoever is purchasing them and make sure we uphold very secure transactions,” Josef says.
Whaley agrees. “Setting up a payment system was super easy,” she says. “I used Coinbase and BitPay to convert to fiat quickly. Configuring a wallet was also simple and efficient. Payments peer-to-peer have always been timely depending on the network, and to date, I’ve never had a failed or troublesome transaction, which are easily confirmed in the block explorer (an online blockchain browser that displays individual bitcoin transaction histories and balances).”
(Photo credit): Gettyimages.com/Sarinya Pinngam/EyeEm
“Setting up a payment system was super easy. I used Coinbase and BitPay to convert to fiat quickly. Configuring a wallet was also simple and efficient. Payments peer-to-peer have always been timely depending on the network, and to date, I’ve never had a failed or troublesome transaction.”
While the user rate for cryptocurrency payments payments is lower than those for credit card or PayPal transactions, both Josef and Whaley believe that they are ahead of the industry curve when it comes to preparedness for digital currency adoption.
Bergquist adds, “I think that digital currencies are going to help a lot of people and encourage more financial inclusivity. I believe that cryptocurrencies are the future and can be an equal playing field that creates opportunities for everyone.”