Cryptocurrency is a frequently discussed but seldom understood concept. At its core, cryptocurrency is a digital or virtual currency that uses cryptography to secure the funds against counterfeiting and/or fraudulent spending activities. In practical terms, it is a way for individuals, businesses, and other entities to control their money securely without immediate government authority. Yet cryptocurrency remains highly speculative and the future is uncertain. This leads to the next obvious question: will cryptocurrency ever become mainstream?
To try and answer this question, today we will review a history of cryptocurrency, the state of cryptocurrency today, how large companies have adopted (or not adopted) virtual currency, and how small business owners can prepare to accept cryptocurrency.
A Brief History of Cryptocurrency
While the idea of alternative currencies is not new, the digital age has allowed technology backed cryptocurrencies to gain a footing in our everyday lives. Here is a very condensed history of how cryptocurrency was created then evolved to its current state:
1998: Wei Dai discusses the theories behind cryptocurrency, which he describes as “B-money”. The idea was to create a digital currency which would be a decentralized way to spend and earn money without the need for physical currency of any kind.
2010: the first cryptocurrency purchase is made when two pizzas are bought with 10,000 BTC. This day has henceforth been dubbed “Bitcoin Pizza Day”. 10,000 BTC is currently valued at over $80,000.
2011: Bitcoin experiences its first major security breach and 2,000 BTC is stolen through a computer hack.
2013-16: Another major hack occurs with 850,000 BTC being stolen in the attack. The value loss was nearly half a billion dollars at the time (current value over $3 billion). BTC value would not recover until 2016.
January 2018: Cryptocurrency values peak and many investors cash out. This is the first bubble burst in an industry that has long feared a collapse.
The Current State of Cryptocurrency
So where does cryptocurrency stand today? While bitcoin and other major cryptocurrency providers have recovered much of their lost value from January 2018, their values are still substantially lower than their highest peak today. This is due to a number of complicating factors including mainstream investors, Bitcoin ETFs, stablecoins, and a public that remains hesitant to adopt cryptocurrency.
There is no question that the bubble burst on the cryptocurrency market in early 2018. Yet much like the .com bubble bursting around the turn of the millennium only to return even stronger, there are many reasons to believe that cryptocurrency will survive and adapt to market changes. As of today, cryptocurrency remains hugely speculative and exists as a fringe option compared to traditional currencies.
Mainstream Cryptocurrency Adoption
Large companies always want to be the first to adopt the next big thing. So why aren’t there ads for McDonald’s accepting bitcoin or an option to pay with Bitcoin on Amazon? Because large companies are still not sold on the idea that cryptocurrency is as valuable as traditionally backed currencies. All security questions aside, the reluctance of major organizations to adopt cryptocurrency is a sign that there is still value in government-backed currencies for financial assurance. Despite all of this, Bitcoin has achieved enough of a foothold that some individuals are able to live off of cryptocurrency exclusively.
How Business Owners Can Prepare for Cryptocurrency and More
As a small business owner, manager, or employee, you might be reading this and think, ok, so what can I do to accept cryptocurrency payments? As far as nuts and bolts payment processing is concerned, accepting cryptocurrency should look and feel very similar to handling traditional credit card, debit card, or other electronic payment methods. On the back end, accepting cryptocurrency is somewhat more complicated.
Many cryptocurrencies require a plugin or other app to help process and track payments. Business owners can work closely with a qualified merchant service provider to make sure that they are equipped with the proper hardware and software to accept these types of payments. At the end of the day, the future of cryptocurrency remains cloudy. The best way to prepare is to stay up-to-date with industry trends and speak to a qualified payment processing professional for more information.
True Merchant Helps Small Businesses Accept Different Types of Electronic Payments
By partnering with Clover, True Merchant is proud to offer both point of sale (POS) and Enterprise Resource Planning (ERP) solutions for businesses of all sizes. With our focus on merchant services and secure payment processing, POS and ERP systems are a natural extension of our other features such as CardSecure, EBT Payment Processing, and much more. Whether cryptocurrency becomes the future of payments or falls by the wayside, True Merchant will be here to help small businesses and independent contractors accept payments to keep their business running smoothly. Lean on our experience to keep your business transactions secure so you can worry about more important things!