Should You Join the Crypto Craze?

BY BRIT MORSE, ASSISTANT EDITOR, INC.

In February, Tesla announced in an SEC filing that it bought $1.5 billion in bitcoin. The company said while its goal is to accept payments in bitcoin, it also bought the block chain-based currency for “more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.” Bitcoin boomed in 2020, rising 400 percent over the course of the year and topping $50,000 per bitcoin for the first time in early 2021, with Tesla CEO Elon Musk leading the Twitter cheerleading.

Should business owners follow in Musk’s footsteps and replace some of their working cash with crypto? The bitcoin run-up prompted Microsoft co-founder Bill Gates to sound a warning about swimming with the cryptocurrency sharks. “My general thought would be that if you have less money than Elon, you should probably watch out,” he said in an interview. 

One of the first questions to ask is whether bitcoin or blockchain technology will integrate well into your business. There are technical requirements. The more fundamental question is whether you have the assets–and the risk appetite–to put funds into such a volatile market. Here are a few things you should consider:

Mind the Volatility

Yes, bitcoin has had a huge run, but it remains subject to the vicissitudes of Musk’s mood and other trading influences. There’s far less risk (and potential return) in the dollar. Since bitcoin behaves more like a stock than a currency, it’s crucial to think about it in terms of risk and reward, says LJ Suzuki, founder and CEO of CFOShare, a Denver-based finance and accounting outsourcing company for small businesses.

Read More https://www.inc.com/brit-morse/bitcoin-crypto-blockchain-technology-small-business.html

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