Businesses around the world are starting to embrace crypto. Big companies like Facebook, Microsoft, Samsung and Microstrategy have already made big games or talked about the underlying blockchain technology. The growing acceptance of Bitcoin among these institutions has boosted public confidence in cryptocurrencies as an asset class. As a result, small and medium-sized enterprises (SMEs) are starting to seek a seat at the table, according to a new study by the Strawhecker group.
Payment gateways to facilitate money transfers, decentralized storage for data security, and smart contracts could help streamline the business models adopted by SMEs.
Bitcoin adoption on the rise
According to the study, which looked at more than 600 companies in 2021, less than one in ten companies had adopted cryptocurrency as a payment method. However, just over a third of companies said they accepted crypto payments in 2021, which the study said “signals a future wave of potential acceptance.”
Up to 49% said the reasons for their growing interest were due to a desire to meet consumer demand, reducing fraud, the current popularity of Bitcoin, and falling transaction fees. The increased knowledge about crypto, along with the growing ownership of business owners, has also reportedly contributed to the adoption of crypto. Among business owners who use cryptocurrency in their business, 92% said they own it – while 17% of business owners who don’t accept it said they own digital assets.
Of the majority of SMEs that do not use cryptocurrency, 20% have a favorable disposition for future adoption, 26% are unsure, while 54% are unlikely to accept it. The reasons for this improbability are: insufficient knowledge of payment methods (71%), uncertainty as to how to accept it (66%), doubt that it would increase their sales (58%) and fear of too great a risk (43%).
The research has revealed a clear division on the issue of security. SMEs that adopt cryptocurrency felt that it was a more secure payment method than other traditional methods, and those that did not adopt it felt the opposite. Meanwhile, Bitcoin (93%) is the most popular cryptocurrency used for payments, with Ethereum (61%) and Bitcoin cash (51%) rounding off the top three.
Growing importance of SMEs
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Globally, SMEs are the backbone of the economies of many countries. Their function is essential to global economic and social growth, with more than half of the world’s population employed by them. In the United States alone, more than 30 million SMEs account for two-thirds of all employment opportunities over the past ten years.
The importance of these SMEs is quite deep; they champion inclusion, create job opportunities and grow economies.
While the adoption of cryptocurrency in SMEs is a welcome development, it needs to be done with great care. Despite the many opportunities it offers, Bitcoin is still in its development stage and presents potential risks that SMEs should prepare for. For now, SMEs can keep an eye on the space and prepare for the potential that cryptocurrency has to be adopted more widely by merchants as a form of payment.
Do you think SMBs should embrace cryptocurrency now, or bide their time? Let us know in the comment section below.
About the Author
Tim Fries is the co-founder of The Tokenist. He has a BSc in Mechanical Engineering from the University of Michigan and an MBA from the Booth School of Business at the University of Chicago. Tim was a Senior Associate in the investment team of RW Baird’s US Private Equity division, and is also a co-founder of Protective Technologies Capital, an investment firm specializing in detection, protection and control.