How to use cryptocurrency with Construction

by | Oct 4, 2021

Some of the Stories about cryptocurrency’s (Blockchain) rising value are flooding news feeds these days. Of course, you may have only heard about cryptocurrency in the last couple of years. But it’s stood around for quite a while.

To speed up the payment of amounts and make it easier for their clients to pay, some vendors and contractors in the construction industry have already jumped on the crypto bandwagon. However, contractors waiting up to 83 days for payment, so anything that offers faster processing is worth the risk.

Should your business be next? Here’s all you want to know about accepting cryptocurrency in the construction industry.

What is Cryptocurrency?

Crypto is a virtual or digital currency secured by cryptography, making it nearly difficult to double-spend or counterfeit. In addition, many cryptocurrencies are decentralized methods based on blockchain technology—a spread ledger enforced by a diverse network of computers. Finally, a defining feature of cryptocurrencies is that they are commonly not issued by any central jurisdiction, rendering them theoretically immune to government interference or manipulation.

Benefits of using cryptocurrency for construction companies

Two significant benefits of using cryptocurrency to pay for goods and services are fewer fees and instantly available money.

Payless — and get paid faster.

Rather than paying bank fees for credit card processing or wire transfers, providers pay fewer than a cent per transaction. Plus, cryptocurrency can be immediately transferred into cash and deposited into your bank account, cutting down the time it takes to get paid. Offering crypto payments can get you delivered faster than the old paper checks or even quicker than other electronic payment methods.

Vendors have more control over their funds.

The purchaser cannot reverse transactions, which means that vendors have more authority over the funds in their accounts. If clients want to get their money back, they must demand it from the vendor, who can pay in local cash, cryptocurrency, or exchange for goods or services. Protects vendors from clients who make purchases and then cancel them and don’t return the commodities.

It’s easy to get started.

Setting up a crypto account is pretty straightforward. There are various service providers to choose from; once you sign up for an account, you get a virtual key to accept funds and wire them out. Check out service providers entirely before you sign up, as their terms and conditions will change.

International transactions are clarified.

For international entrepreneurs, using cryptocurrency avoids exchange rate calculations and converting cash into different money types. As a result, global payments are more manageable because everyone processes the transaction using the same kind of money, exchanging it for their local currency.

Cryptocurrency can gain in rate depending on the market. So, vendors can endure currency in their account, waiting for the deal to rise, and then cash it in for there to be again. But, of course, this also means that the currency can lose value, creating potential losses.

Cryptocurrency in Construction: Stuff to watch out for

The usage of cryptocurrency hasn’t hit the mainstream yet, so there aren’t a lot of clients that are going to be able to utilize the service. However, it is expectable to grow the value in the next several years, so you can expect an improvement in crypto sales as more people learn about the advantages of using this kind of currency.

Meanwhile, you’ll require to educate your clients about how cryptocurrency works and the advantages it offers.

No legal payment security for transactions

When clients pay with credit cards and other forms of payment, legal protections are the role of the contract between the customer and the payment provider. Unfortunately, cryptocurrency has no such legal protections for those who use it. As a result, vendors and customers must rely on trust when using cryptocurrency. Furthermore, once the payment gets sent, the client has no way to receive their money back other than to request a return, which has to be started by the vendor. This lack of security for consumers may dampen the use of cryptocurrency.

No government oversight

Part of the draw for using the cryptocurrency — in Construction and otherwise — is government error, but this can come at a price.

There is no government error on the use of cryptocurrency and no help available if something goes wrong during a transaction. That’s why you must research different service providers and know the terms and conditions of the contract for using their services.

Vendors may be subject to funds gains tax.

All deals made using crypto are taxable at the standard market cash value when the money is collected. Means vendors have to keep precise records of the currency’s worth every time they get a payment. In addition, they are subject to funds gains taxes on the income they may receive from an improvement in market value. As a result, accounting departments must trace the currency’s value and record those values when funds are received. That value will get reported on the company’s economic statements as taxable income.

Crypto’s cash value may still be volatile.

Right now, the cash value of cryptocurrency can be highly volatile.

For example, $100 in cryptocurrency bought in 2014 has a value of above $12,000 in 2021. Vendors can hold on to their crypto and assume it increases in value, but they could also lose an abundant amount. And those losses and gains are taxable as income, so we must report them to the IRS.

How to get started with cryptocurrency in the Construction

Getting started with cryptocurrency in Construction is pretty straightforward. As always, we advise that you research providers accurately and look at reviews before opening an account. Unfortunately, the industry is not regulated, and there’s no recourse if something goes wrong.

Get a cryptocurrency wallet The initial step is to sign up for a cryptocurrency wallet. It’s related to a real-life wallet in that it is where you deposit all your currency. Then, you use it to buy, sell, store, and exchange crypto for cash. The wallet comes with a secret key, which is a private number used to obtain your funds. The key can be saved online in the cloud, on an external hard drive, or your local computer, depending on the service provider you wish. No matter where it’s stored, the protection of the key is up to you. If you lost the key, there’s no way to recover it, and you lose access to your wallet, except your provider has provisions otherwise.

How to get started with cryptocurrency in the Construction

Getting started with cryptocurrency in Construction is pretty straightforward. As always, we advise that you research providers accurately and look at reviews before opening an account. Unfortunately, the industry is not regulated, and there’s no recourse if something goes wrong.

Get a cryptocurrency wallet The initial step is to sign up for a cryptocurrency wallet. It’s related to a real-life wallet in that it is where you deposit all your currency. Then, you use it to buy, sell, store, and exchange crypto for cash. The wallet comes with a secret key, which is a private number used to obtain your funds. The key can be saved online in the cloud, on an external hard drive, or your local computer, depending on the service provider you wish. No matter where it’s stored, the protection of the key is up to you. If you lost the key, there’s no way to recover it, and you lose access to your wallet, except your provider has provisions otherwise.

1. Sign up with a payment processor

The following action is to sign up with a payment processor that will enable you to sell using crypto. More existing payment processors are continuing this to their services, so you shouldn’t have difficulty finding one. The processor is applied at your point-of-sale to create the business between your customer and your company.

2. Make sales using cryptocurrency.

Now you’re able to start making sales via cryptocurrency! 

You start by inserting the information about the transaction into the payment provider software or app. will include the local cash amount of the sale and the customer’s data. Then, the processing software will formulate a QR code that the client scans with their cryptocurrency wallet app. 

Once the customer approves the transaction through their app, the cryptocurrency gets transferred to your account. At this point, you can keep it in crypto form or exchange it quickly for cash. The transfer of funds is almost instant, so there’s no waiting.

The risks of cryptocurrencies

No new technology is reliable, and there are risks associated with cryptocurrency. Nonetheless, these are minimal and can be decreased further by carefully planning and analyzing the following factors.

While it has been around for a while, cryptocurrencies are new enough that regulation is inconsistent. Therefore, it is in the user’s sufficient interest to keep updated on any law developments about them.

And since cryptocurrency gets deregulated, some authorities regard it as property for tax. So if a business starts using cryptocurrency to pay for services or materials or accepts it as a form of payment, it needs to know any potential tax liabilities.

Then there is the problem of valuation, and While their value has generally improved over time, cryptocurrencies are amazingly volatile compared with traditional forms of currency. Thus, if a company does decide to start using or allowing cryptocurrency, it will need to allow for a specific level of risk tolerance. But then this goes both ways since the chosen cryptocurrency might immediately inflate in value, enabling the user to cash in at any point.

Cryptocurrency is likely to play a fundamental role in the rapidly evolving construction industry despite its possible benefits. While we are still in the early adopter phase of utilizing such technologies – and the risks certainly must be assessed – forward-thinking businesses could gain a meaningful competitive benefit by considering and performing these solutions now.

Conclusion

Starting with cryptocurrency in Construction is much simple, and it offers less expensive payment processing than bank credit cards or wires. First, however, contractors and vendors should research providers carefully, choosing widely utilized and trusted ones. New providers will indeed spring up as the use of cryptocurrency earnings in popularity.

You’ll want to ensure that your terms and conditions of trade with your customers are transparent and that you get as much data about them before they purchase as possible. For example, you may need the data later if there’s a payment dispute.

Cryptocurrency may be the tomorrow of payment processing, especially when it gets backed by blockchain, which allows automatic payments based on the growth of the work. More suppliers and contractors are bound to accept these payments because they speed up the processing time and are less expensive.

However, no matter how contractors get paid, they will still need to defend their right to payment by addressing preliminary notices and supporting their right to file a lien if they aren’t get paid. The demand for these protections will never go away.

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