For those new to crypto, one of the first questions that come up is: but what can I do with crypto? Today’s answer is, just about anything. You can buy a car, bedsheets, video games, plane tickets, and even convert it back to fiat currency (but be aware of the tax consequences of doing so!).
This was not always the landscape for crypto. A few years ago, there were very few companies that would accept crypto as a payment method. The financial infrastructure necessary to make it a logistically sound option for businesses hadn’t been developed yet. But a lot has changed in recent years.
At the time of writing this article, we have giants like Tesla, Microsoft, and AT&T that accept crypto and countless more small businesses that have decided to take crypto as a payment option.
Now the question to ask is, should YOU accept crypto? This article gives an overview of whether crypto is suitable for you or not.
It’s important to remember that crypto is still new technology. As such, it’s fascinating to see updates, developments, and breakthroughs reasonably often. But since it is so unique, there are still several unanswered questions about how the technology will impact how you do business.
To give you a complete landscape of the cryptocurrency panorama, here’s a list of pros and cons for you to consider in your crypto-adoption path.
Here are some additional considerations if you are thinking about accepting crypto. These are neither pros or cons, but rather just the way things work in the crypto space at the moment.
The people and institutions who have made the most significant gains have been successful because they hold on to their crypto for long periods. That is why the HODL acronym is popular amongst crypto adopters. HODL stands for hold on for dear life because due to the volatile nature of crypto, many have gotten out and missed out on significant capital gains. Whatever strategy you choose, it’s essential to think of crypto as a long-term investment rather than a way to make quick financial games.
Figuring out how much your crypto is worth, converting it to fiat currency, calculating your tax obligations, and exchanging one coin for another are just some of the extra tasks that you will have to take on if you start accepting crypto. In a nutshell, it’s more work. So if you don’t have the bandwidth at the moment, you should make the necessary adjustments so that you can onboard the work involved in the implementation and management of your crypto assets.
Using crypto as currency is only the tip of the iceberg when it comes to blockchain technology. There are myriad other aspects of it that you can take advantage of, such as DeFi, smart contracts, lower transaction fees, and so on.
Since you’ll be invested in crypto, exploring these other avenues can help you make the most out of this strategic move.
Crypto is taxable, and the laws around how crypto taxation works are new. This means that there are still plenty of gray areas regarding how the IRS views crypto. Most of the confusion comes from the fact that the IRS catalogs cryptocurrency as a financial asset like stock and not as currency.
Here are three aspects to look into when it comes to crypto accounting:
Being an early adopter of crypto has the potential to transform your business for the better. We’re only just starting to see what’s possible with this new financial technology, and the future seems bright.
However, if you want to see that future, your tax obligations must be met. This makes crypto-asset tracking and accounting an absolute necessity if your business is going down this path.
If you’re ready to take your business in the crypto direction, book a free consultation, with Founder’s CPA, to speak with one of our crypto experts.