Should Retailers Accept Cryptocurrencies?

A checkout screen flanked by cryptocurrencies

What do BMW, Home Depot, and Starbucks have in common? They all accept Bitcoin as payment methods. 

This is just the tip of the iceberg of retail’s move into crypto. More than 15,000 businesses accept payment in Bitcoin and other digital currencies, according to Fundera. And the list is only growing, 

So is Ecommerce cryptocurrency a trend or a flash in the pan? And more importantly, should you accept it in your online store?

For the answers to these questions and more, read on.

What are cryptocurrencies?

Let’s answer the fundamental question: What are cryptocurrencies? Cryptocurrencies are a type of payment that exists independent of any central monetary authority such as a government or bank. 

Instead, they are secured by cryptography, making it difficult to counterfeit or double-spend. Cryptocurrencies live on decentralized networks based on blockchain technology, a distributed ledger secured across a disparate network of computers. 

Cryptocurrencies can be used as a medium of exchange for acquiring goods and services. They may also be used as a store of value. 

The most popular cryptocurrency, Bitcoin, was founded in 2009 by an anonymous programmer known as Satoshi Nakamoto

While Bitcoin is primarily used as an investment vehicle, Ethereum, the second most popular cryptocurrency, is used as a currency for buying and selling goods and as an investment. 

Cryptocurrencies can be traded or purchased on exchanges and stored in crypto wallets, such as Coinbase, Binance, or Kraken.

The role of blockchain in cryptocurrencies

Key characteristics of cryptocurrencies are: 

  • Their decentralized model 
  • They’re not backed by a central bank 

So how could retailers verify transactions, avoid counterfeiting, and prevent double-spending? It comes down to blockchain technology.

Blockchains are append-only systems, meaning data can only be added in a sequential order. They’re then cryptographically secured, making it difficult to change or manipulate prior transactions.

This creates a secure public ledger that ensures transaction privacy. And since the blockchain is publicly managed, it becomes difficult for fraudsters to duplicate crypto.

Private and secure at the same time

Traditionally, monetary transactions and contracts are verified with a signature.

It’s usually easy to verify that a signature is authentic and recognizable by the signer, so no one can deny having agreed to the contract.

Cryptography techniques and encryption keys work the same way. They use advanced mathematical methods to securely store and transmit data so only the intended receivers can receive, read, and process the information.

This ensures transaction authenticity, just like a signature.


The final defining characteristic of cryptocurrencies is their decentralized nature. Fiat currencies (like the U.S. Dollar or Mexican Peso) are backed by central banks like the Federal Reserve. By contrast, cryptocurrencies have no centralized authority. 

What that means is there are no third parties in a transaction. In a typical transaction, a bank or exchange will act as an intermediary between the two consenting parties. By comparison, decentralized markets like cryptocurrencies let buyers and sellers connect directly. 

Ecommerce and cryptocurrency: the advantages 

Let’s look at three key advantages of accepting cryptocurrencies at your online store:

Advantage #1: Decentralized  

Decentralization is one of the most attractive aspects of cryptocurrencies.

Cryptocurrencies have no third-party banking authorities holding up the transfer of funds and charging transaction fees. And cryptocurrency transactions can potentially be more secure than credit or debit card transactions. 

“When a customer pays with cryptocurrency, their data isn’t stored in a centralized hub where data breaches commonly occur,” said Emily Heaslip, writing on behalf of the U.S. Chamber of Commerce.

Advantage #2: Access to a larger market

Ecommerce companies interested in growing their business know the importance of opening up new, untapped markets. 

This is the key premise in W. Chan Kim and Renée Mauborgne’s book Blue Ocean Strategy. They contend that you can drive growth more effectively by identifying and dominating new markets in blue oceans, avoiding markets that have turned scarlet red by the sharks in a feeding frenzy.

Cryptocurrencies are a new currency. By accepting it as a payment option, you can broaden your market to tech-savvy consumers, especially the Generation Z cohort.

Nearly 48% of Zoomers and Millennials have owned or currently own cryptocurrencies, and 46 million consumers say they plan to use cryptocurrency to make purchases, according to a recent Cryptocurrency Payments report.

Advantage #3: Transactions are more secure

Attempted fraudulent transactions rose 35% in the early days of the pandemic, according to The U.S. Chamber of Commerce. The target? Small business credit and debit transactions.

While traditional transactions are vulnerable to fraud, crypto transactions are less so. Cryptocurrencies are more secure than other payment methods because the data is stored in a merchant’s crypto wallet instead of online servers at third-party institutions. 

Additionally, the blockchain general ledger verifies and records every transaction publicly, rendering identity theft nearly impossible.

Advantage #4: Instant conversion to fiat currency

When customers pay with cryptocurrency, you can save it in its current form or use it to pay bills and purchase other products. You can also convert coins into dollars, euros, or pounds using third-party processors such as Coinbase, BitPay, or CoinGate.

Ecommerce and cryptocurrency: the disadvantages

Before deciding to accept payments in cryptocurrencies, it’s important to understand the downsides. Here are five reasons why you may choose to wait.

Disadvantage #1: Volatile

Unlike traditional currencies like the U.S. dollar, cryptocurrencies have experienced rapid price appreciation and depreciations in short amounts of time. In the past two months, Bitcoin plunged from an all time high of $70,000 to a recent low of $35,000, as of January 25. 

Disadvantage #2: Tax reporting

Different countries have different reporting regulations, so it’s critical to understand what your government requires. 

In the U.S., the IRS views cryptocurrencies as property for tax purposes. If you receive cryptocurrencies in a transaction, however, you must report it as gross income, measured in U.S. dollars on the day it was received. You’ll also need to report any capital gains or losses when you exchange cryptocurrency for U.S. dollars. That means you’ll need to track every crypto transaction to ensure you’re accurately reporting your taxes. 

Disadvantage #3: So many to choose from

The two principal cryptocurrencies in use for Ecommerce transactions are Bitcoin and Ethereum. But as of this writing, there are more than 6,000 cryptocurrencies in circulation. Some promising newcomers include LItecoin, Cardano, Polkadot, and Bitcoin Cash. It may be difficult to decide which cryptocurrency suits your business needs. 

Disadvantage #4: Still not widely in use

Because cryptocurrency isn’t mainstream yet, the infrastructure is still being built out. A few things merchants should consider: 

  • Would you use a personal wallet or integrate a third-party payment processor like BitPay or Coinbase?
  • Would you hold or convert immediately?
  • What will the regulatory environment look like in the next few years?

There were approximately 46 million cryptocurrency users at the start of 2022. While that sounds like a lot of people, it’s only 2.3% of the 2 billion Ecommerce shoppers worldwide. You’ll need to consider whether that’s a big enough market to justify the extra work of accepting this type of payment.

Disadvantage #5: Uncertain legislative future

No one knows the future of crypto. 33 states and Puerto Rico currently have pending legislation regarding cryptocurrencies. And in the last few months, the U.S. Federal Reserve and SEC expressed concern over the lack of cryptocurrency regulation. The U.S. may not ban cryptocurrencies like China has, but it’s still early days for the digital currency. 

What’s the future of cryptocurrency for Ecommerce?

No matter where you stand on the matter, cryptocurrencies face a long road to acceptance. Motley Fool laid out its best-case scenario: regulators around the world develop a global framework for regulating crypto. They also foresee a negative scenario where cryptocurrencies fail to become mainstream.

So should you accept cryptocurrency for your online store? It’s your choice.

If you believe there’s a future in cryptocurrency, accepting them sooner rather than later might be the prudent path. 

Consider the bet Jeff Bezos made when he launched Amazon in 1994. Everybody thought he was crazy, but who’s laughing today? Clearly, there’s power in getting ahead of a trend. 

ThinkShop by Bolt does not constitute professional tax or financial advice. Contact your own tax or financial professional to discuss your situation.