- Bitcoin is a volatile but versatile payment system for flexible workspaces.
- Spaces could easily accept crypto payments using third-party providers.
- But market penetration rates are still low with slow transaction speeds.
Cryptocurrencies are flying high. At the time of writing, Bitcoin was trading close to $40,000. That’s roughly a tenfold increase since March 2020 when a single Bitcoin was worth around $4,000.
Other cryptocurrencies are seeing similar spikes in value. Others are not. And that’s the problem — the crypto market is still incredibly volatile. So, is it a good time to start accepting cryptocurrencies at your flexible workspace?
What is Bitcoin?
Bitcoin is a digital currency (or cryptocurrency). So, there are no physical bitcoins in existence. Instead, balances are kept on a decentralised, public ledger called a blockchain. Bitcoin is created, distributed, traded and stored on this ledger. Bitcoin uses peer-to-peer technology to provide payments, promising faster transactions and lower transaction costs. You can read more about Bitcoin and how it works here.
How can you accept Bitcoin?
To accept Bitcoin payments at your flexible workspace, you don’t need to be an expert. There are plenty of third-party providers, some of which will even deposit the money in your bank account once a payment has been made. But does that make Bitcoin a sensible payment option for your flexible workspace? Let’s look at some of the factors to take into account.
#1 Uncertainty reigns supreme
Traditional banks are wary of digital currencies. The UK’s Financial Conduct Authority recently warned anyone investing in cryptocurrencies “should be prepared to lose all their money”.
President of the European Central Bank, Christine Lagarde, also called for global regulation of cryptocurrencies to help combat their use in “totally reprehensible money laundering activity”.
However, there are early signs of mainstream confidence in digital payments. PayPal recently announced that its customers can buy and sell cryptocurrencies using their accounts, for example.
Bitcoin is also an attractive payment option for many startups and millenials. Lucas Robinson, CMO of Crediful, said: “With the majority of flexible working spaces being taken up and used by new companies, start-ups and people from younger generations who have grown up being more tech and online savvy, it is much more likely that you could see real interest and benefits to offering the ability to pay through Bitcoin.”
“With recent surges, we could be seeing a real growth market where Bitcoin usage becomes more common, and now might be the perfect time to get in on using this method before things start to really boom and become more expensive,” Steiner added.
#2 Market penetration is low but rising
There were 63 million Blockchain.com wallets in use at the end of December 2020. By comparison, some 500 million iPhone users have now activated Apple Pay. For flexible workspaces, it’s important to consider how your members want to pay you and whether Bitcoin (BTC) would even be a popular payment option.
Ben Perrin, host of the BTC Sessions, explained: “Flexible workspaces attract a wide variety of forward-thinking entrepreneurs, so it may seem intuitive to allow for alternative payment methods. Intermediaries like Opennode and Bitpay allow workspaces to accept BTC while side-stepping volatility and immediately converting to their local currency.”
However, “accepting Bitcoin is no longer the headline-grabbing PR opportunity it once was,” according to Perrin. “So, if that is the main motivation of any coworking space then they may find themselves putting in effort for very little payoff. With that said, newly introduced services and technologies mean that many workspaces may be getting paid via the Bitcoin network without even realising it.”
“In my opinion, the real question here is not if flexible workspaces should accept BTC payments for the good of their clients (they absolutely should) — but rather if the workspace has realised the value in this new asset and wants to accept it to keep on their balance sheet for the long term,” Perrin added.
#3 Volatility is a consideration
The volatility of cryptocurrencies remains a key concern for many financial experts. “Given their high volatility and the size of their past drawdowns, cryptocurrencies might be attractive to speculative investors, but they are neither a suitable alternative to safe haven assets nor do they necessarily contribute to portfolio diversification,” according to strategists at UBS Asset Management.
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But volatility only matters if you hang onto your cryptocurrency.
“By accepting cryptocurrency, flexible workspaces have the widest possible customer base”Rob Zel, founder of bitni.com
Rob Zel, founder of bitni.com, explained: “Accepting Bitcoin does not require holding on to Bitcoin. Any concern about volatility can be alleviated by simply converting the Bitcoin immediately to a more stable currency. Many new startups are working with cryptocurrency, and they will logically want to pay for their flexible workspaces in cryptocurrency. By accepting cryptocurrency, flexible workspaces have the widest possible customer base.”
Early adopters of Bitcoin could also keep one step ahead of the competition. James Page, crypto technical writer at Crypto Head, said: “The volatility of the Bitcoin market is surely a risk for flexible workspaces to accept Bitcoin as a method of payment, but it is exactly the same reason why these industries should start opening their doors to cryptocurrencies. If a large network like PayPal has acknowledged the volatility of Bitcoin and the positive side of engaging with the specific currency as early as now, then no doubt it’s surely a good investment.”
“Flexible workspaces should be strategic in using this volatility to their advantage. It’s always best to keep your industry ahead of the game especially given how fast paced and change-sensitive our current economy is,” Page added.
However, currency conversion issues must also be taken into account. Chris D’Costa, founder at Totem Live Accounting, explained: “As someone that has worked in the blockchain space since 2013, I have witnessed the problems businesses have in deciding to convert the currency to local currency or not as well. This poses additional accounting risks that are not seen by novices.”
“When a business accepts Bitcoin, it is measured at the market price at the time of the transaction. When it comes to reporting revenues, any variation in that price either implies a tax liability or a financial loss – sometimes the losses can be huge. Often businesses choose to convert Bitcoin to local currency to avoid such accounting issues which begs the question ‘why accept it in the first place?’.”
“All is not doom-and-gloom,” D’Costa added. “All cryptocurrencies have a number of big advantages that may be useful for flexible workspaces — the ability to make international transactions, for travelers and the ability to pay by the minute. These use cases may allow coworking spaces to rent out rooms and seats on a pay-per-use basis allowing new types of customers to dip-in-and-out even for short occupation.”
#4 Low transaction fees and slow transactions
Cryptocurrencies offer low transfer fees and no foreign exchange fees, compared to traditional payment options.
“If employees have flexible workspaces, they should also have flexible payment methods”Jordan Figueredo, consultant for Pelicoin
Danny Bluestone, CEO of Cyber-Duck, explained: “In a world where credit card payment providers charge merchants almost a 3% fee and more for each payment, crypto payments help you save some money on payment processing as the transfer fees of blockchain payments are considerably lower and it can easily be converted into fiat money by sending the money straight to the bank account.”
However, a number of factors come into play if you accept Bitcoin as a payment method due to the nature of the network. Transaction delays are one key consideration. D’Costa said: “When the prices are high and rising, network capacity limitations result in very high transaction fees for customers — orders of magnitude larger than bank transaction fees or the fees on other cryptocurrency networks. Will your customers agree to this?”
“Additionally the limited network capacity in times of high demand means that transactions can be very slow especially if the fees paid by your customers are not sufficiently high to ensure a speedy transaction confirmation. Some businesses may be waiting hours for the payment,” D’Costa added.
To summarise, Bitcoin is a highly volatile currency but it’s also a versatile payment option. There are many pros and cons for flexible workspaces to consider. But the economic diversification offered by Bitcoin is one “significant benefit to accepting Bitcoin,” according to Jordan Figueredo, consultant for Pelicoin, who concludes: “If employees have flexible workspaces, they should also have flexible payment methods.”