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Nov 3, 2021

How to Begin Using Cryptocurrency in Your Business: 10 CFO FAQs

Should your company start using cryptocurrency, and if so, how?

1. Why should I accept cryptocurrency as a payment method?

It's getting more commonplace. According to YouGov Omnibus data, nearly half of millennials believe cryptocurrency will be extensively used for legal transactions within the next ten years, while 68 percent of high-net-worth individuals have already invested or plan to invest in cryptocurrency by 2022, according to a global study.

This might also be your first step toward preparing your organization for the future of digital money.

2. Do buyers actually use cryptocurrency to make purchases?

The amount of transactions on digital asset networks is rapidly expanding. In 2019, Facebook, Visa, Mastercard, Paypal, Uber, Ebay, and others revealed their intention to launch Libra, a digital currency. Meanwhile, large retailers like AT&T, Whole Foods, and Starbucks accept cryptocurrencies as payment.

3. What is cryptocurrency, exactly?

Cryptocurrency is a type of digital money that is based on blockchain technology. Because digital money transactions do not require a chain of intermediaries to settle, they can benefit from minimal transaction fees. Transactions are instead carried out in a (pseudo) peer-to-peer method.

4. Is it safe to do cryptocurrency transactions?

There are a few risks. Here are some suggestions for mitigating them.

How can I protect myself against hacking, theft, or loss?

To begin, you will require a safe custody solution for your newly acquired digital assets. A combination of cold storage (offline wallet) devices like as the Ledger, KeepKey, or Trezor with hot storage (an online digital wallet) such as COINQVEST or Stellar Wallet can considerably lower your risk. Second, you'll need to implement controls around the custody solution to further reduce your risks.

What if the cryptocurrency's value plummets to zero?

Make sure your environment is configured to allow for immediate conversion to US currency (USD). Furthermore, there are cryptocurrencies known as "stablecoins" that are designed to keep a consistent value, such as TrueUSD, Gemini Dollar, USDC, and Tether.

5. Can I accept cryptocurrency payments without ever holding the cryptocurrency?

Yes, but this solution has inherent limits. COINQVEST, a crypto payment gateway, will automatically convert your receiving bitcoin payments into USD in exchange for a small transaction fee. This could be a viable short-term option. Consider having an email address that connects to a printer and automatically sends a letter for each email received.

6. Okay, I'm ready; where do I begin?

A Crypto to Fiat gateway that connects to your existing financial infrastructure is required. A payment processor, such as COINQVEST, falls into this category. The payment processor manages the transaction's technical aspects, automates manual processes such as liquidation to USD or transfer to another wallet, and enables for invoicing. The exchange is where cryptocurrency is sold (or bought). Finally, you'll need a custody solution (cold storage is advised), suitable controls, and a policy to avoid any unfavorable tax consequences.

7. Why am I unable to leave the coin on the exchanges?

One of the crypto industry's commandments is "not your keys, not your currency." You'll require a wallet solution. Hot wallets on your computer or phone are ideal for quick payments, but they still expose you to risk. Consider them to be checking accounts. Cold wallets (external devices) are particularly secure because they do not have access to the internet. Consider them to be savings accounts.

8. I received my first bitcoin payment; do I need to make any additional accounting entries?

Once the volume becomes significant, you should break out transaction costs as well as any winnings or losses in excess of the USD amount (typically a transaction adjustment or foreign exchange account).

9. What if I keep these cryptocurrencies?

If you decide to keep your cryptocurrency, you may need to create a new balance sheet account (digital assets) and figure out how to account for unrealized gains and losses (mark to market or test for impairment).

10. I have some cryptocurrencies; is it possible to automate the accounting process?

Yes! To price your transactions, track them straight from the blockchain, and tag the transaction for accounting purposes, COINQVEST offers a detailed transaction history record.

Get Started Accepting Cryptocurrencies Today

If you would like to start getting paid, please sign up for a merchant account and have a look out our guides for non-developers and programmers.

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Martin Dominic Banguis Head of Marketing