As cryptocurrency continues to make headlines, small business owners may be wondering what crypto is, the pros and cons of accepting digital currency, and how crypto can affect their business payments in the future. Read to learn more.

In April 2021, the value of the cryptocurrency market reached more than $2 billion, and numbers like that are difficult to ignore.1 Digital currency has been creating buzz among investors for the past few years, but it is now becoming a hot topic among banks that must debate whether to offer cryptocurrency services and business who question whether it is a legitimate payment method they need to adopt.

Small businesses may be more hesitant to adopt new forms of currency, as making changes usually involves upfront costs – and many small businesses operate with narrow profit margins with less tolerance for risk. However, as cryptocurrency becomes more mainstream, customers and vendors may eventually start asking for small businesses to accept digital payments, and business owners may find that cryptocurrency could be a good investment for their business growth.

Cryptocurrency is still puzzling to many people, but with more than a decade of history (Bitcoin was founded in 2009), rapidly increasing values, and global attention, it appears to have staying power. Which is why savvy business owners and investors should understand the basics about cryptocurrency, the advantages and disadvantages of accepting digital currency, and how cryptocurrency could affect their businesses and investments.

What is cryptocurrency?

Cryptocurrency (crypto) is digital money that can be used to purchase goods and services or traded for traditional currency. Crypto is secured by blockchain technology, which is a decentralized technology that organizes data and ensures its integrity. This technology is spread across many computers that manage and record transactions. Because blockchain uses encryption, the appeal of crypto is its security since is almost impossible to counterfeit.

There are a number of different types of crypto. Some of the most well-known include Bitcoin, Dogecoin, Ethereum, and EOS. New types of crypto appear regularly, and they raise money through initial coin offerings, also known as ICOs, which offer investors opportunities to purchase the currency upon its introduction to the market.

Why is cryptocurrency a hot topic?

Crypto’s market share growth has captured the attention of many investors and business leaders. Some appreciate that blockchain technology is decentralized and can provide more security than traditional payment systems. Others like that crypto doesn’t require the help of central banks to manage the money supply. And it is becoming increasingly mainstream. Large companies like Microsoft, PayPal, Starbucks, and Tesla now allow customers to make purchases using crypto as a form of payment.2 So far, fees associated with paying in crypto mean it makes more sense to use the currency to pay for large-ticket items, such as a car, rather than small items, like a cup of coffee, according to The Wall Street Journal.3 As a result, the type of business you’re in may dictate whether you should consider embracing crypto. If you own a small car dealership or electronics store, for instance, you may have more customers interested in paying with crypto than if you own a restaurant or coffee shop.

Banks are cautious about crypto and offering crypto services, but some financial institutions are experimenting with blockchain, crypto’s underlying technology. For instance, some banks are interested in the benefits blockchain technology can provide, such as improving security for their payments systems, helping them launch their own digital currencies, facilitating trade finance, or tracking loans and securities, reports Financial Times.4

Many financial advisors are starting to offer crypto investments to their clients. According to a recent survey conducted by the Financial Planning Association, almost half (49%) of financial advisors said clients have asked about cryptocurrencies in the past six months, up from just 17% in 2020.5

What are the benefits of cryptocurrency?

Digital currencies like Bitcoin are portable and transparent. They can be traded person-to-person and do not require the oversight of a central bank.

Crypto transaction costs are very low, and sometimes nonexistent. As a small business owner, imagine accepting non-cash payments from customers without having to pay any credit card transaction fees.

Also, accepting crypto can protect your small business from fraudulent chargebacks. Just like with cash, crypto transactions are final because no third party can reverse the charges.

And because crypto is decentralized and not tied to any government currency, small businesses that accept it can more easily attract international buyers. There’s no need to worry about foreign exchange rates and converting currencies; international buyers can purchase directly from you with cryptocurrency.

There are other advantages for businesses as well. For instance, crypto can offer businesses more security and control over their transactions and financial activities, enabling secure money transfers at the moment of transaction, enhanced transparency, and real-time revenue sharing.6 And as crypto becomes more widespread and growing numbers of retailers and payments providers use it, the advantages of transacting with them in cryptocurrency should increase.

What are some of the cons of cryptocurrency?

For investors, cryptocurrencies carry great volatility and risk: the potential for huge gains is offset by the potential for great losses. That means if a small business accepts crypto as a form of payment with the intention of selling the crypto to convert it into cash, timing will be crucial. Do your research and, if possible, avoid selling off crypto assets when the value dips.

Also, keep in mind that the supply of cryptocurrency is without limit. Even though many digital currencies, including Bitcoin, have a limited supply built into their protocols, new digital currencies will continue to be introduced. With limitless supply, there is a greater potential for cryptocurrency to decrease in value.

The lack of government oversight is appealing for some investors, but because there is no regulation of cryptocurrency, the market is open to exploitation by criminals who know there are no regulatory authorities watching. In fact, one study showed that almost half (46%) of Bitcoin transactions are associated with illegal activity.7

A lesser known fact is that crypto may have a negative impact on the environment. One study showed that a single bitcoin transaction can use as much power as an average American household consumes in a month.8

What is the future of cryptocurrency?

Crypto has already made an impact on the world of finance and may change the future of payments and investments. Younger investors and consumers have joined the trend. According to a CNBC survey, almost half of millennial millionaires have at least a quarter of their wealth and more than a third have at least half their wealth in crypto.9 As younger consumers become more comfortable with crypto, they are likely to expect to be able to use it to purchase goods and services, including those from small businesses.

While crypto may still be considered a speculative investment, its growth shows that the currency has reached a critical mass, indicating that it is more than just a passing fad.

Do you have questions about how you can leverage blockchain for your business or whether you should consider accepting payments in digital currency? Contact your Senior Relationship Banker or get in touch with Santander Bank today for more information on cryptocurrency for business.

1 Kharpal, Arjun. “Cryptocurrency Market VALUE Tops $2 Trillion for the First Time as Ethereum Hits Record High.”, CNBC, 6 Apr. 2021.

2 Walsh, David. “These Are the Major Companies That Accept Cryptocurrency as Payment.” Euronews, 14 July 2021.

3 Vigna, Paul. “Why Bitcoin Hasn’t Gained Traction as a Form of Payment.” The Wall Street Journal, Dow Jones & Company, 9 Feb. 2021.

4 Arnold, Martin. “Five Ways Banks Are Using Blockchain.” Financial Times, 16 Oct. 2017.

5 “2021 Trends in Investing Survey.” Journal of Financial Planning, FPA, Onramp, Mar. 2021.

6. “The Business Benefit of Using Cryptocurrency.” Deloitte United States, 28 May 2021, 

7 Foley, Sean, et al. “How Much Illegal Activity Is Financed through Cryptocurrencies?” OUP Academic, Oxford University Press, 4 Apr. 2019.
8 Kolbert, Elizabeth. “Why Bitcoin Is Bad for the Environment.” The New Yorker, 22 Apr. 2021.

9 Locke, Taylor. “Crypto Is ‘the Future of Finance’: Why Gen z Is Ditching Traditional Investments-but with Caution.”, CNBC, 22 June 2021.

This article is intended for informational purposes only. Readers should consult their own financial advisers, attorneys or other tax advisors regarding any financial or tax strategies mentioned in this article.

  Equal Housing Lender. Santander Bank, N.A. is a Member FDIC and a wholly owned subsidiary of Banco Santander, S.A. ©2021 Santander Bank, N.A. All rights reserved. Santander, Santander Bank, and the Flame Logo are trademarks of Banco Santander, S.A. or its subsidiaries in the United States or other countries. All other trademarks are the property of their respective owners.



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