Business activity || CRYPTOCURRENCY VOLATILITY : How businesses that accept cryptocurrency payment can handle it
Cryptocurrencies have become a global alternative means of payment since it was introduced. Aside from individuals using it for peer to peer transactions, various world class businesses have adopt this unique method of payment including Elon Musk’s companies i.e Space X and Telsa.
Many countries have embark on the race of legalizing this alternative method of payment but yet, many individuals and businesses still counter the opinion and prefer the traditional method (fiat currency) because of the major cons of using it which is Volatility.
Volatility of cryptocurrency means the fluctuations (rise and fall) of a cryptocurrencies as a result of demand and supply within a specific period of time. Whenever the buyers dominates the market, the price increases but when sellers dominate, the price decreases. Cryptocurrencies volatility have a great impact on businesses that accept cryptocurrency payment. Although some people focus on the benefits which is increase in value, decrease have eject many people into massive lost and businesses are not left out.
Source🔗 Screenshot showing volatility of Bitcoin (BTC)
For instance, businesses that accepted Bitcoin or Steem payment since November last year have counter severe lost for more than 4 months because of a decrease in price value if they business owners didn’t make immediate use of the token. Luna coin holders remains the most disastrous experience among all.
A critical observation is on businesses that received 1SBD on November which was equivalent to NGN 3,000 but the price is now NGN 1600.
This means that the business owner is liable to encounter lost which is half the initial price if he/she wants to sell the SBD today or wait till the price increase of which is not proper in a business sustenance.
Source🔗 Screenshot showing negative fluctuations of Steem
How businesses can handle Volatility
Solving volatility challenges evoked the idea of creating a none-volatile cryptocurrency known as Stablecoins.
A Stablecoin is a cryptocurrency that it price value is pegged with certain fiat currency or commodity.
A Stablecoin price is always 1:1 or a slight difference from the assert. Stablecoins are used as backup to save volatile cryptocurrency holders from decrease in price value as received coin can be swap to it immediately.
Examples of Stablecoins are;
- Tether - USDT
- USD coin - USDC
- Binance USD - BUSD
- USD Decentralized - USDD
- Liquity USD - LUSD
Other Stablecoins can be seeing on coinmarketcap
Using a Stablecoin coin for every transactions have demerit as well. The business owner misses an opportunity of increase in value because it is not a volatile coins. However, since the goal of every business owner is to maintain a rapid profit and less loss (if any), swapping into stablecoin is a nice choice for every transaction made except the received coin is on uptrend move.
It is lack of awareness of it existence that still trigger the criticism of accepting cryptocurrency payment. I strongly believe that if there is any method that can be used to create the awareness, many people will opt for it immediately. Lastly, It is a great privilege that top Binance have pair Steem with a Stablecoin which gives Steem coins holders opportunities to swap their coin easily.
Thank for reading my business posts.
About my business
| Business name | LeoMat Venture |
|---|---|
| Service | POS and instant exchange etc |
| Currency | Sbd, steem and Nigeria Naira |
| Manager | @reporter-ann |
| Address | Itu LGA, Akwa Ibom state |
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@ozenozge
Thank you very much sir