If you don’t already have a crypto wallet, you’ve likely at least entertained the idea of investing your money in Bitcoin or another cryptocurrency. But have you ever considered incorporating cryptocurrency in your subscription business?
The concept of digital currency has been a buzz since 2009, when an entity under the pseudonym Satoshi Nakamoto formally launched Bitcoin, the most well-known of all cryptocurrencies. In the last decade, the potential for cryptocurrency has grown, and many who’ve invested in it have reaped the rewards.
Tesla, for instance, added a net cashflow of $1.2 billion related to Bitcoin to its bottom line in its Q1 2021 earnings because of the major investment the company made in Bitcoin. Tesla, like many other companies, is starting to expand the forms of payment it accepts to include Bitcoin and other currencies its customers carry in their crypto wallets.
Read on to learn how integrating cryptocurrencies into your subscription-based business could position you for increased profits and as an adaptive and enterprising provider.
A Quick Lesson in Cryptocurrencies
In brief, a cryptocurrency is a decentralized form of currency that allows for users to make unified monetary transactions. Here are some common forms of cryptocurrency you might find in your customers’ crypto wallets:
- Dogecoin is unique in that it started as a joke and has over 129 billion coins in circulation, unlike its finite rival Bitcoin. It also continues to produce new coins annually.
- Ethereum is meant to be accessible to anyone and everyone regardless of faith, nationality, or race. Its goal is to increase access to financial security for those who may not otherwise have it.
- Fiat is a government-issued currency, just like the U.S. dollar.
- Litecoin is similar to Bitcoin in that it’s based on an open-source international-payment network, but it lives within a faster block-generation rate, offering faster transaction confirmation than its counterpart.
- Polkadot allows for developers to create their own blockchains under the provided security of Polkadot’s chain, otherwise known as shared security.
Cryptocurrencies are constantly emerging and evolving, so it’s important to do your research and keep up to date with crypto trends. If your subscription business is considering opening its own crypto wallet, you can mitigate the financial risks by opting for a currency with a bit more stability (like Bitcoin).
How Do Consumers Feel About Cryptocurrency?
Unlike tangible money, cryptocurrency is more of an abstract concept stored in an abstract place: consumers’ crypto wallets.
When considering consumer attitudes toward digital currencies, think about how cryptocurrency has become tantamount to the stock market and investment play. Essentially, consumers are purchasing a theory and making money on that theory.
But like stocks and investments, customers may not prioritize opening their crypto wallets for businesses like they do cash and credit cards. Cryptocurrency has only recently become more palpable through major transactions and investments.
The benefit of people’s general hesitancy to open their crypto wallets for everyday purchases is that you have the opportunity to position your business as more of an investment to generate a greater customer lifetime value (LTV). Introducing crypto as a payment method could prompt customers to see subscriptions from a new perspective.
The Volatility of Cryptocurrency
Because the value of cryptocurrency can change so fleetingly, prepaying into this investment is ideal for the consumer; however, this puts the subscriber in a constant dilemma: to hold or to convert? People may not feel comfortable locking themselves into such a volatile investment.
Even though we understand that the value of a dollar fluctuates, we don’t consider it in terms of weighing that value against what’s already in our pockets.
On the other hand, the value of a crypto changes by the minute, and for consumers who are learning of these changes from social media, for example, that uncertainty can feel risky and unstable.
Offering your customers the option of an annual or a quarterly subscription, then, can create some stability and increase your business’s LTV, thereby yielding a stronger brand–buyer connection.
The Implications of Crypto Wallets
Cryptocurrency is certainly not without its risks, so it’s important to understand what you’re getting yourself into and discuss your risk tolerance with your team or business partner(s).
You can reduce some of the risk by allowing your customers to prepay for their subscriptions using cryptocurrency and then converting your crypto to dollars after you’ve received payment.
There’s also a reduction in risk for your subscription business since accepting crypto currency can come with decreased fees. Also, payments are irreversible from the merchant side, meaning there’s no chance of a declined payment for your business.
Despite the uncertainty, though, opening cryptocurrency payments to your customer base could have some positive impacts, too. For instance, providing consumers with another payment option positions your brand as accommodating, flexible, and forward-thinking.
You’re also creating an opportunity for a longer-term relationship with your customers — especially if you choose to offer annual or quarterly subscriptions. Ideally, cryptocurrency is best suited for businesses that want to invest in their long-term growth.
Crypto Wallets & the Future of Subscription Services
Crypto wallets open up a whole new world of opportunity for subscription businesses. Because we’re still in the early adoption curve for crypto wallets and their currencies, people may see crypto as a form of currency to explore and play around with rather than a concrete representation of money like cash or credit.
Beyond a transactional standpoint, blockchain technology is used to power non-fungible tokens (NFTs), which are unique digital products that are transferred from seller to buyer via cryptocurrency payment. For example, the other day, I bought an exclusive digital DeLorean to decorate my virtual suits showroom!
In the future, kids will be able to play with their toys in virtual homes that are decorated with virtual, one-of-a-kind artwork. The future of crypto wallets goes hand in hand with that of virtual and augmented reality.
Subscription-based businesses would be remiss not to consider the opportunity to expand their subscription offerings and incorporate the use of crypto wallets to support the needs of their user base. Even Time Magazine has announced their adoption of crypto.
Before diving head-first into accepting cryptocurrency as a form of payment, weigh the cost benefits of crypto wallets with your team and contemplate how it will position your subscription business — for better or worse — in the market.