Pros & Cons of Cryptocurrency: Should Small Businesses Invest?

Sections of this topic

    With more than one-third of U.S. small businesses accepting virtual payments, cryptocurrency is gradually making its way to the mainstream. But when we evaluate the pros and cons of cryptocurrency, we realize that the crypto market isn’t as stable as traditional financial markets. 

    The 2022 crypto crash is the most recent example of how unpredictable the virtual currency market is. However, despite the volatility, crypto is still a highly attractive investment avenue for small businesses. Even public companies including Tesla and MicroStrategy, both Fortune 500 companies, have invested billions in Bitcoin and other fast-growing cryptocurrencies

    So while cryptocurrency is all the hype nowadays, should you dip your toes in the water too?

    What are the Pros & Cons of Cryptocurrency?

    Is cryptocurrency a good investment for your small business? Should you start accepting virtual payments? These questions can only be answered when you weigh the pros and cons of crypto against each other and analyze their implications on your unique SMB. The table below gives an overview. Continue reading for an in-depth analysis of crypto investments.



    • Inherently secure technology
    • Decentralized 
    • Can be traded 24/7
    • Works globally
    • Offers high accessibility and liquidity
    • Highly transparent
    • High return potential
    • Inflation-resistant asset
    • Helps diversify portfolio
    • Highly volatile market
    • Unregulated
    • Transactions are irreversible
    • Not widely accepted
    • Commonly used for criminal purposes
    • Complex to understand 
    • Vulnerable to cyberattacks

    Pros of Investing in Cryptocurrency

    Investing in crypto brings a host of advantages. These include everything from highly secure transactions to trading markets that operate round the clock. Let’s take a look at each of these pros and discover them in detail. 

    Inherently Secure Technology

    Cryptocurrency is an application of blockchain technology, which is based on the principles of security and transparency. A blockchain is a decentralized record of transactions that shares each transaction with every computer present on its network. Every piece of information or transaction is shared across the blockchain, making it a highly secure and reliable store of data. 

    You can only make a transaction on the blockchain with your unique private encryption key. Once you make a transaction, it can never be erased from the blockchain. Unlike fiat money, you can’t create a counterfeit cryptocurrency. This decentralized security mechanism makes crypto a good store of value. 


    The traditional financial system, including stocks, bonds, and currency markets, involves each transaction going through a central regulatory body. This means you have to trust a bank or financial institution when carrying out every transaction. This also means you don’t have full control over your assets.

    The crypto market is decentralized in nature. There are no third parties or intermediaries involved and you are free to carry out transactions peer-to-peer. As a result, you have greater control over your assets and don’t have to pay payment processing fees.  

    Can be Traded 24/7

    Cryptocurrency is not bound by the limits of time and space. Apart from being accepted internationally, and maybe even on different planets, cryptocurrency can be traded 24/7. While conventional financial markets follow conventional working hours, crypto markets operate at all times. So if you want to trade capital assets after office, trade crypto. 

    Works Globally

    As mentioned in the section above, crypto isn’t bound by the limits of space. In other words, it works across borders and is a great solution for multinational businesses. Using virtual currency, you can transfer handsome amounts of crypto to another corner of the globe without having to worry about heavy international transaction fees and exchange rates.

    Bitcoin or any other cryptocurrency does not belong to a single country or government. Nor are crypto transactions overseen by any country’s central bank. This makes it a much better international payment method.

    Offers High Accessibility and Liquidity

    Anyone can enter the crypto market with any amount of money. As far as accessibility goes, you can invest in cryptocurrency anywhere as long as you have an internet connection. There are plenty of crypto exchanges out there for you to use. 

    When it comes to liquidity, the crypto market does offer a fair amount of freedom, especially because they’re tradable 24/7. However, it depends on the token you chose to trade. For instance, Bitcoin and Ethereum are two of the most liquid digital assets out there. Smaller cryptocurrencies can be less liquid. 

    Highly Transparent

    The increasing distrust in banks and other financial institutions is one of the reasons why more investors are turning towards the digital currency market. Crypto offers more transparency, as well as user anonymity than any other investment.

    Crypto investors can be identified with public keys. Every user has a unique public key one can be use to identify every transaction on the blockchain. This means although their real names aren’t shared, transactions can still be tracked for transparency. 

    All the transactions are permanently viewable on the blockchain. This not only gives you greater transparency but all data is also safe from breaches and fraud due to secure blockchain technology. 

    High Return Potential

    Crypto can turn people into overnight millionaires. There’s no doubt about that. But there’s also a high risk associated with it. 

    The market is very volatile and can make huge upward movements in very short periods of time. For example, Bitcoin was priced at a mere $975 in March 2017. It only took a few months for it  to increase to $20,089 in December of the same year. And from 2018, it rose to an all-time high price of $67,500 per Bitcoin in August 2021. 

    Don’t forget that the same digital currency crashed down to $30,000 in May 2022. So while there is potential for high returns, there’s potential for big losses too. But smart investing and technical analysis of each digital asset allows you to capitalize on the high returns while staying safe from losses.

    Inflation-Resistant Asset

    Cryptocurrencies do not belong to a single country’s economy or currency. Instead, they are a global store of value that helps investors deal with national inflation. Plus, national inflation is fuelled when central banks decide to print more currency. This is not a problem with virtual currencies because they have caps on the total supply of each currency. In fact, most cryptocurrencies are deflationary, which means they either reduce or limit their supply over time.

    Some cryptos have absolute caps and some have yearly caps on how many units of a virtual currency can be coined. This helps make crypto a great inflationary hedge that small and large investors alike can invest in. 

    Helps Diversify Portfolio

    If you already have invested in conventional capital assets like stocks, bonds, and fiat money, investing in crypto can be good for portfolio diversification. The market is rapidly growing and a  lot of quality assets are emerging with unique use cases. Small businesses should invest not only because of diversification but to attract new customers who prefer virtual payment systems. 

    Cons of Investing in Cryptocurrency

    We’ve seen plenty of overnight billionaire cases in the crypto world. But what we don’t realize is that more than half of cryptocurrency investors end up making a loss. This suggests that there are definitely more cons to investing in cryptocurrency than there are pros. 

    But that’s not the most accurate conclusion. In reality, most crypto investors end up underwater because they invest following a hype without technical analysis. Let’s look at the cons of investing in crypto to get a clearer picture. 

    Highly Volatile Market

    The volatility increases the potential to make huge profits but can also lead to huge losses overnight. Most virtual currencies including BTC have a cap on the maximum number of units that can exist ever. For Bitcoin, that limit is 21 million BTC. This gives it the attribute of absolute scarcity, which also means the only force driving BTC’s value is its demand. 

    With no supply force to balance out the changes in demand, most cryptocurrencies are extremely volatile. Plus, rumors and economic and geopolitical events have a profound effect on crypto markets. It’s only advisable to invest if you have a sharp eye out for global economic events and can act quickly to mitigate potential losses.


    Decentralization has its pros and cons. When it comes to the cons, the fact that cryptocurrency is not regulated by any government means investors are not protected by the law in case they fall victim to fraud. 

    Moreover, several countries including Qatar, China, Russia, and Bangladesh have placed bans on crypto. You can lose access to your investments if your country decides to ban crypto too.

    Transactions are Irreversible

    Crypto transactions are irreversible and final. This means if you send funds to the wrong crypto wallet, there’s no way to recover them unless the receiver agrees to send them back. 

    You can also permanently lose access to your cryptocurrency if you lose your private access key. There’s a very low chance to recover your crypto assets if you lose them by error, or if someone steals them. 

    Not Widely Accepted

    Bitcoin, the world’s first cryptocurrency, was introduced in 2009 but it’s still a relatively new form of payment. It’s no wonder that it isn’t accepted as widely as cash or debit cards. 

    Cities like Miami, Florida, and Amsterdam in the Netherlands have a considerable number of BTC ATMs and vendors that accept crypto payments. But the overall transition toward a virtual payment system is moving sluggishly. Ultimately, you will have to convert your crypto back to fiat money to make most purchases whether you’re buying for yourself or your business. 

    Commonly Used for Criminal Purposes

    The anonymous nature of crypto transactions makes it virtually impossible to trace them back to a real person. This is why black-hat hackers, scammers, and other criminals use crypto to receive ransom payments. 

    Scams are also rife in the crypto world with dozens of phony projects offering huge returns for making a small investment. You should to move with extreme caution and always double-check online reviews before making an investment decision.

    Complex to Understand

    It makes financial sense to understand a capital asset and how it works before you invest in it. Not to say that fiat money and stocks are easy concepts to get your head around, but cryptocurrency has a touch of technological complexity that makes it hard to understand. This is especially true for many conventional investors.

    Vulnerable to Cyberattacks

    Blockchain technology is secure, but not entirely. You still need to take adequate measures to keep your digital assets safe including keeping your private key safe and storing your assets in a crypto wallet

    Your virtual currency holdings are vulnerable if you leave them on a crypto exchange or if you lose your private key. Cybercriminals can also target you with phishing or malware attacks in the absence of adequate cybersecurity. 

    Should Small Businesses Invest in Cryptocurrency? 

    Good financial health helps businesses survive tough times. You should always consider whether you have the financial freedom to invest in an asset before you commit funds to it. 

    Cryptocurrency is no doubt a good investment avenue, but only after you’ve analyzed the market and your business’s position. Whether it’s a good decision to invest in cryptocurrency depends on several factors including your financial situation, the type of industry you’re in, your location, and your target market.

    Consider Your Financial Health

    When done after a thorough technical and risk management analysis, your investment in Bitcoin or any other digital currency is likely to be profitable. But like any other asset, there is always a chance to go underwater. Follow the golden investment rule to only invest the money you can afford to lose. If you feel your business won’t be able to survive if you lose a particular amount of money, it’s better to not invest.

    Consider Your Industry

    It makes sense to see if your business can benefit from a crypto investment according to the industry you’re in. For example, it makes more sense for an ecommerce company to invest in crypto than it does for a barbershop. Evaluating the benefits of crypto industry-wise will facilitate your decision. 


    We can say that crypto is global and decentralized, but that is just theoretical. When it comes to the ground reality, it’s evident that some countries and cities are far ahead in adopting virtual currencies. For instance, a business in San Francisco or Miami would benefit more from adopting crypto because the cities are two of the most popular crypto hubs.  

    Target Market

    Small businesses that want to target the younger or more tech-savvy customer demographic can attract new customers by investing in crypto. 

    Benefits of Accepting Payments in Crypto

    If your small business invests in cryptocurrency, you should also consider accepting payments in it. There are quite a few benefits that can help your business grow if you start accepting virtual payments for your goods or services.

    • Fast transactions: Quicker transactions lead to a better customer experience. This can especially help if you have to deal with international bank transfers. With cryptocurrency payments you can complete cross-border transactions in minutes instead of days.
    • Lower transaction fees: Since there are no intermediaries involved, crypto transaction fees are much lower than other forms of payment. If you accept credit card payments, you incur fees of almost 25 cents with each swipe plus a 2-4% charge on the total amount. Accepting virtual currency can take this down to less than 1% per transaction.
    • Merchant protection: All transactions are irreversible and this is advantageous from a business standpoint. The decentralized nature of crypto protects businesses from fraudulent chargebacks. 
    • Increased sales: Accepting crypto helps SMBs to expand their reach to a much bigger customer demographic. A business can target international customers who couldn’t purchase their offerings previously due to international payment constraints. This will also attract younger, more tech-savvy customers to your business. 
    • Convenience for customers: You can offer your customers additional payment methods by accepting cryptocurrency. This not only provides an extra layer of security but also adds to your overall customer lifetime value.

    Frequently Asked Questions (FAQs) for Pros & Cons of Cryptocurrency

    If you’re going to invest, you likely have a lot of questions in your mind. Here are some of the most common questions people ask when it comes to the pros and cons of investing in cryptocurrency. 

    Bottom Line on Pros & Cons of Cryptocurrency

    Generally, there’s a lot that cryptocurrency can help small businesses with. This includes improving customer experience, increasing sales, and expanding your reach. But it also has plenty of drawbacks, the most glaring of which are market volatility and lack of regulation. Ultimately, the better decision for your business depends on how crypto can help your business grow and whether you will be able to deal with the associated challenges.

    Disclaimer: The content of this post is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for educational purposes only and does not take into account your individual needs, investment objectives, and specific financial circumstances.