Is the crypto option for money transfers here to stay? Here is what you need to know
Cryptocurrencies have become the new normal of money transfers. It is gradually becoming a thing to request a cryptocurrency wallet address rather than a bank account number when trying to transfer funds between counterparties. The reasons are obvious.
Crypto payments are fast and secure due to the cutting-edge technology of the blockchain. Also, transaction costs are minimal, making it a good choice from a business perspective since both sides get to keep the part of the payments that would have gone to settling payment transfer costs in a regular wire transfer.
Crypto transfers seem to be here to stay given all their benefits. However, there are existing limitations you need to keep in mind before converting all of your cash to BTC or ETH.
Despite having been in existence for more than a decade, cryptocurrencies have still not been adopted globally by most people. As at the beginning of the second quarter of 2020, there were 50.71 million blockchain wallet users worldwide, in contrast to well over a billion regular bank accounts. At this point, one would realize that there is a huge gap to be filled.
This is something to keep in mind as most people do not have cryptocurrency wallets, and you can’t transfer to them without one. A suggested solution is to try to open the conversation with clients or suppliers or any other business counterparties, encouraging them to open a blockchain wallet and make your business transactions seamless.
This is a major issue with cryptocurrencies. Imagine getting a transfer of say 2 BTC worth $18,000, and just before you’re able to either pay for another product with it or convert it to a fiat currency, the value drops to $12,000, which is a $6,000 loss on a single transaction.
A way around this is to transact in the stable cryptocurrencies known as stablecoins. The USDtether, for example, is tied to the value of the US Dollar. Tether cryptos are not as subject to volatile swings in value as other cryptocurrencies and this makes it safer to use them for transactions.
Some countries have strict regulations that limit the volume or usage of cryptocurrencies by law. For example, Binance was created in China but had to move to Japan due to issues with regulators. Be sure to confirm if there are no restrictions on the use of cryptocurrencies either within your own country or that of your counterparty.
The safety of blockchain only guarantees that transactions and their history cannot be tampered with. Beyond that, your wallet is vulnerable to the extent to which you can protect your account. If malicious hackers gain access to your account passwords, your cryptocurrency funds will be lost. Hence, it is important to secure your wallet either through 2 Factor Authentication (2FA) or Authy.
As long as you keep the above factors in mind, the blockchain and cryptocurrencies ecosystem will make your experience with transferring money seamless even across borders.
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