What is Cryptocurrency?
Cryptocurrency is similar to digital money, but it is not governed by a single powerful entity, such as banks or governments. Instead, it operates without the aid of a central server and makes use of complicated codes. All cryptocurrencies use a system called Distributed Ledger Technology (DLT), which is like a shared database that keeps track of all the transactions all the time. The most common DLT is called blockchain. It’s like adding blocks of transaction info one after the other, creating a chain that everyone can see. Once information is in the blockchain, it can’t be changed or erased.
Popular Cryptocurrencies in 2023
Currently, there are over 4,000 cryptocurrencies worldwide, but Bitcoin stands out as the most prominent and dominates the cryptocurrency market. In fact, ‘Bitcoin’ is often used interchangeably with ‘cryptocurrency’ due to its overwhelming influence. While Bitcoin remains at the forefront, here are a few other cryptocurrencies worth noting:
Ethereum: This is the second-largest digital currency by market capitalisation, and it operates on a payment system using a token called Ether. Ethereum goes beyond simple financial transactions, serving as a platform that utilises advanced blockchain technology to create and host decentralised applications
Litecoin: Litecoin, which was developed in 2011 by a former Google developer, is quite similar to Bitcoin. However, according to its developers, transactions happen more quickly since blocks are generated more quickly
Ripple (XRP): Ripple, often known as XRP due to its encryption technology, was created for users handling more complicated and expensive transactions.
Price alert : Bitcoin’s price is surging, surpassing the $25,586 resistance, showing signs of a cautious recovery. Ethereum, too, is rebounding from losses, though breaking the psychological $1,800 barrier may pose challenges. Ripple’s price has confidently broken out of its bearish channel at $0.4600, but uncertainties loom on its path ahead.
Cryptocurrency for Consumer Payments
As mentioned earlier, cryptocurrencies are making their way into the world of online shopping, generating excitement among both retailers and consumers. Could the use of digital currency for payment become the new norm in business if more companies do so?
A recent development from PayPal strongly indicates this trend. In March 2021, PayPal introduced ‘Checkout with Crypto,’ allowing its U.S. customers to easily use cryptocurrencies like Bitcoin, Litecoin, Ethereum, or Bitcoin Cash to make purchases at numerous online retailers. Without paying any additional transaction fees, users have the option of converting their cryptocurrencies into conventional fiat currencies like euros and dollars. Retailers can seamlessly integrate this feature without incurring extra costs. PayPal plans to expand Checkout with Crypto to its customers in Europe and other regions, marking a significant step toward mainstream cryptocurrency adoption.
Just a few weeks ago, online marketplace eBay signalled its openness to accepting cryptocurrency as a payment method in the future. The company has previously expressed enthusiasm for the potential of cryptocurrencies to ‘enhance global e-commerce, making it more convenient and cost-effective for consumers.’ It seems certain that this vision will come to pass.
Tech giant Facebook, with its expanding influence in social commerce, has also embraced cryptocurrencies. Facebook confirmed plans to launch its own cryptocurrency, Diem, in 2021. This move aims to introduce an advanced blockchain-based payment system that facilitates real-time e-commerce transactions with Diem stablecoins.
Several retailers have already officially adopted cryptocurrencies as a payment option. For instance, thanks to a collaboration with Coinbase, the online travel operator Expedia now takes Bitcoin. Lush, a high-end cosmetics company, accepts bitcoin payments on its website, while Wake, a millennial and Gen Z-focused skincare brand, also offers this option on its Shopify-powered store. In addition, Bitpay is used by well-known UK merchants like Tesco, John Lewis, and Marks & Spencer to take gift cards.
Benefits of Accepting Cryptocurrency on Your Ecommerce Store
Swift Transactions
Unlike traditional methods that can be sluggish, blockchain technology enables swift and direct transactions, streamlining your business’s cash flow. Due to the instantaneous processing of cryptocurrencies, orders placed by customers can be dispatched right away, satisfying the growing demand for quick shipping.
Market Expansion
Embracing cryptocurrency transactions can broaden your customer base and attract new traffic. Additionally, for brands eyeing international growth, cryptocurrencies simplify, reduce the cost of, and speed up cross-border transactions.
Enhanced Security
Thanks to their robust encryption, cryptocurrencies are highly resistant to theft and counterfeiting, minimising the risk of fraud in digital transactions.
Reduced Fees
Some cryptocurrencies come with significantly lower third-party service fees, which benefits e-commerce sellers, especially those burdened with additional transaction charges associated with credit cards and other payment methods. Lower transaction costs can boost your business’s profitability.
Clear Data
Blockchain technology maintains cleaner transactional and customer data. This heightened accuracy is vital for retailers’ marketing efforts, facilitating more effective targeting and cost-saving by avoiding wasted spending.
Potential Drawbacks of Cryptocurrencies in Online Retail
Price Fluctuations
Because of their price volatility, cryptocurrencies are known to be unreliable for both businesses and consumers. Returns, in particular, can become complex if the cryptocurrency’s value has changed since the time of purchase.
Abundance of Choices
With thousands of cryptocurrencies in existence and new ones emerging regularly, selecting a digital payment method for your e-commerce website can be a daunting task.
Trust Concerns
Despite increasing adoption, cryptocurrencies and the associated blockchain technology have faced negative media coverage, impacting public trust in these digital payment methods.
Disrupted Cash Flow
Handling incoming revenue in cryptocurrency while managing outgoing payments in traditional cash can potentially lead to operational challenges.
How to Accept Cryptocurrency Payments on Your Ecommerce Website
Payment via Personal Wallet
By selecting this option, you can receive payments straight into your personal digital wallet, which you can keep on a variety of gadgets including PCs, smartphones, or hard drives.
Payment via Third-Party Processors
In this case, transactions are handled on your behalf by third-party services like BitPay, Coinbase, or NOWPayments. The ‘Payment providers’ section of your Shopify admin allows you to enable one or more of these alternative payment methods if you’re a Shopify merchant looking to accept cryptocurrency. Once activated, you’ll be able to accept payments in more than 300 digital currencies, including Litecoin, Ethereum, and Bitcoin.
Conclusion
For e-commerce retailers seeking to expand their market share while providing customers with a quicker and more convenient payment option for their products and services, cryptocurrency presents a compelling solution. Despite lingering scepticism about the widespread adoption of cryptocurrency and its potential impact on e-commerce, indications from the retail sector suggest a growing acceptance and utilisation of digital currencies. Whether you’re fully convinced of incorporating crypto payments into your e-commerce platform or not, staying informed about cryptocurrency trends will position you to swiftly adapt your e-commerce strategy and gain a competitive edge. This blog at any point does not recommend the usage of cryptocurrency for your e- commerce website. Make sure to do your research before investing in cryptocurrency.
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