5.6.22 – SSI
Integrators must prepare themselves as transactions utilizing cryptocurrency payments become more common, especially among affluent Millennials.
Integrators, get ready for the new reality of having to accept cryptocurrency payments from your customers, especially affluent Millennials who made a mint speculating in the decentralized blockchain network money.
It’s already here — according to recent study by Digital.com, 29% of U.S. businesses will be accepting cryptocurrency payments by the end of this year.
It seems like a scary proposition, especially since the media is flooded with details about the outrageous investment speculation in cryptocurrencies that cause its value to rise and fall dramatically.
Since “crypto” literally means “deceiver,” there is an inherent fear that must be overcome by educating yourself on the topic. Integrators should seek out advice on the subject from their broker, banker or other trusted source.
Remember when there was a time where most custom integrators did not accept credit card payments? Today, it’s commonplace to accept credit card payments and absorb the processing fees.
Likewise, it’s only a matter of time before your clients start asking to pay you in Bitcoin, Dogecoin, Ethereum, or one of the other popular cryptocurrencies on the market. Are you ready to ask yourself, “Should my business accept crypto payments?”
This Integrator Can Attest
It already happened to Randy Massey, owner of Electronic Home in Atlanta, and the transaction proved quite lucrative but risky. Last year, one of Massey’s previous customers asked if he would accept the payment for a project in cryptocurrency.
“He basically had been speculating in the crypto market and wanted to hide it from his wife,” chuckles Massey.
“At first, I was against doing it because you lose a percentage on the transaction, but we take credit cards and lose a percentage every time we do that. I also thought about asking him, ‘Why don’t you just go cash it in and bring me the money?’ But then I saw that Bitcoin was on its way up, so I decided to gamble. So, I let him pay me $400,000 in 10 Bitcoins.”
To handle the transaction, Massey set up a Coinbase account, which can take several weeks. Numerous notarized affidavits are required, since cryptocurrencies have been known to be used by nefarious individuals to launder money.
Coinbase, along with BitPay and others, work like credit card fees in that it takes a percentage when you sell the crypto. When you receive the payment, it can be converted to U.S. dollars at the current exchange rate at the time of the transaction.
At the time of Electronic Home’s transaction, each Bitcoin was valued just below $40,000.
“I purposely went into it knowing I was going to sell it. I had no intention of holding onto it long term. I was looking at a short-term hold, but still, it was a gamble. In about one month, it went up to $56,000 and I sold nine of the 10,” says Massey.
The result is that he made an additional $104,000 on the project! Pretty sweet, but pretty risky.
“It could have gone down just as easily as it went up. It went up so quickly that I was scared it was going to go down just as fast, so I sold it. I did not hit the high, but I hit it close to the high. It was pure luck,” he recalls.
“It was not based on knowledge; it was not based on being an expert in crypto. When the client first approached me, I didn’t know anything about crypto. I had to go find out how you even accept it.”
Would He Do It Again?
“Sure, but I would be very cautious and investigate how it is trending. At the time I did it, everyone was saying it was on the rise and was going to hit $100,000 per Bitcoin. But like everything, what goes up must come down, and it ended up coming down,” says Massey.
For most integrators, the idea of holding on to a cryptocurrency payment for a prolonged period is not feasible, especially since that money is likely needed to purchase the equipment for the project and maintain cashflow.
“I don’t have any other words of advice for integrators other than ‘Be careful,’” concludes Massey.
As crypto takes hold, you don’t want to be that person in the market still asking the client for a handwritten check.
This article first appeared on SSI sister site CEPro.com.