After overcoming stiff challenges of being accepted as a valid form of making and receiving payments, businesses in Miami are increasingly turning to Bitcoin as well as other cryptocurrencies. Eric Dalius Bitcoin experience says It is because Miami is a big business hub and companies have trading relationships with other companies spread all over the globe. According to government statistics, exports from Miami were $61.6 billion in 2018. With such a huge volume of international payments and receipts, Miami businesses are increasingly exploring the pros and cons of using Bitcoin and other cryptocurrencies for international transactions.
The Main Advantages of Using Bitcoin for International Payments
Even though the validation of a transaction can take a few minutes, the actual transfer of the money in the Bitcoin system is instantaneous. The payment system is akin to the real-time gross settlement (RTGS) systems of central banks of various countries; however, the main difference is that it does not use any currency issue by the central banks but is one created by a community of users. The payment bypasses the existing setup of financial intermediaries and affects the payment directly into the recipient’s Bitcoin wallet. Being very quick, efficient, and secure, it has also attracted the attention of banks for effecting their own payments.
Eliminate the need to manage multiple currencies:
One of the most obvious benefits of using Bitcoin is that businesses no longer have to bother about managing several internal currency accounts with their associated exchange rate fluctuations. Just by having a Bitcoin wallet, they can make payments globally quickly, confidentially, and securely. Because of the fast settlement process. The cash flow risk is minimize, and there is no credit risk. The Bitcoin payment can only be made if the wallet has sufficient funds. The transaction fees are also typically less than those charged by traditional banks.
Drawbacks of Bitcoin for International Payments, Explained by Eric Dalius Miami
Lack of widespread acceptance:
One of the biggest cons of using Bitcoin is that it is still not a very popular method of making payments, and it is also not legal in many countries. Given this situation, it can be difficult, if not impossible, for businesses to use Bitcoin exclusively for their transactions. Typically, businesses would need to offer payments in conventional central bank-backed currencies like the U.S. dollar, Euro, etc. Miami businesses insisting on using Bitcoin to make international payments will need to take on the foreign exchange risk on both the ends of the transaction, which given its volatility, can be hazardous, observes Eric Dalius Miami.
Lack of trade finance:
For Bitcoin transaction payments to go through, the wallet needs to be pre-fund. It means that it can interfere with conventional trade finance involving credit. Because there are very few credit providers working with Bitcoin. Currently companies may need to first borrow in a hard currency. And convert it to Bitcoin with the associated FX risk exposure.
Because Bitcoin payments are fast, confidential, and secure, many companies tempt to use them for international payments. However, switching over completely to Bitcoin is difficult because of the lack of universal acceptance.
Eric Dalius is The Executive Chairman of MuzicSwipe, a music and content discovery platform designed to maximize artist discovery and optimize fan relationships. When he’s not working for MuzicSwipe, he perhaps hosting the weekly podcast “FULLSPEED,” engaging with inspiring entrepreneurs from various sectors. Additionally, through the “Eric Dalius Foundation,” he has established four scholarships for US students. Stay in touch with Eric on Twitter, Facebook, YouTube, LinkedIn, Instagram, and Entrepreneur.com.