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What is Cryptocurrency?

And Why Small to Medium-Sized Businesses Need to Pay Attention

Between Elon Musk’s tweets/memes and all the ransomware attacks, I’m sure you’re wondering “is this cryptocurrency something I need to be thinking about for my business?” Well, if you’re a small to medium size business or software company that enables payments, the answer is a simple yes.

While the answer is simple, cryptocurrency is not all that simple to wrap your head around. If you’re a little unclear on what it is and how it works, you’re definitely not alone. The purpose of this article is to help you get up to speed on this topic. I’ll try to keep it less painful than an actual ransomware attack.

Cryptocurrency is a digital currency based on Blockchain technology

First, what is Cryptocurrency? Cryptocurrency is decentralized digital currency that can be used to buy goods and services but can also lose or gain value like stocks. Think of it as a digital version of cash that is an alternative to government fiat currencies (currencies that are backed by a commodity such as gold.) Blockchain is the technology that has enabled cryptocurrency, which essentially spreads all the recorded transactions across many computers all around the world. This is sometimes referred to a distributed ledger.

Blockchain as a technology has started to be used for other applications such as NFT (Nonfungible Token). You may have heard that the “Charlie Bit My Finger” You Tube video recently sold for over $700,000! Back to our scheduled program on cryptocurrency though. The most well-known cryptocurrency is Bitcoin which began in 2009. There are now more than 10,000 currencies with names like: Ethereum, Dogecoin and stablecoins. And, according to recently published research from, 12 percent of US consumers currently own one or more cryptocurrencies.

Customers drive adoption

The United States ranks in the bottom of adoption for cryptocurrency at roughly 6%. Customers ultimately will drive the adoption for cryptocurrency as it matures. Some of the perceived benefits to customers right now are:

  1. Avoiding transaction fees
  2. Avoiding long processing times
  3. Easier currency conversion

That said, there are downsides to consider:

  1. Cryptocurrency isn’t reversible
  2. Currently it’s taxed as a capital gain each time it’s used
  3. Value needs to be tracked each time it’s sold
  4. Anonymous means it’s ripe for bad actors, there is a reason ransomware requests payments in Bitcoin
  5. And probably the biggest is the volatility of the cryptocurrency. However, Stablecoins aim to eliminate the volatility by pegging it to something like a precious metal.

Lastly, I would say it is still an easier and a better user experience currently to use either a credit card or cash than the digital wallet for cryptocurrency. That said, there are increased efforts to make the technology adoption easier, such as PayPal allowing for cryptocurrency usage. Convenience always drives adoption. As a result, once digital wallets make cryptocurrency as easy to use as credit cards, we will see demand grow. Nevertheless, credit cards are currently the most ubiquitous payment method in the United States.

Businesses should continue to monitor the need for their business

Right now, I don’t see cryptocurrency being top-of-mind for small to medium sized businesses in 2021. The barriers and risks are still both high, but as it evolves, there will be greater adoption of and consumer demand for the acceptance of cryptocurrency as a payment method. And, it may happen faster than we think. Not as quickly as contactless payments, which saw a 40% increase in the first quarter of last year, but it will ramp up. According to that same research, as many as 46 million consumers would consider using cryptocurrency for retail purchases.

Even so, I think a lot of people are in the “wait and see” mode for cryptocurrency both from a customer and a business perspective. It reminds me of 2010 where we were running out of IP addresses, so we needed to move everything over to IPv6. Eleven years later we are at 35% adoption of IPv6 and we’re still not at a tipping point. Much like IPv6, I don’t see Bitcoin becoming the new default currency overnight. But if you’re thinking more long-term, 2022-2024 and planning a roadmap; I do think cryptocurrency needs a mention. My simple reasoning is after 20% adoption, businesses will want rethink payment acceptance for this evolving trend.

We at Wind River are keeping a close eye on this trend along with others. If you have any feedback or requests to share with us on cryptocurrency or other trends, we would love to hear it!

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