Bitcoin’s Business Dilemma: Risk Management

In any business, holding volatile assets introduces a certain degree of risk. In fact, in daily business management, you need to assess risks and act based on the findings. Because Bitcoin is a hybrid of currency, commodity and property, the risks associated with Bitcoin are different from most other risky assets.

     For example, any business that sells goods or services to other companies faces the risk of bad debt expenses. The possibility of bad debt expenses is an inevitable risk of a credit-based business, but the risk can be reduced through analysts' risk assessment of the other company.

     Bitcoin is very different from the credit-based commerce mentioned above. First, to send Bitcoin, the user must actually control the funds, there is no credit. For businesses that buy company products, customers want to trade in N30 or N90 ( Net30 or Net90 ), that is, payment within 30 days or 90 days. For companies that do not sell to individuals, accepting Bitcoin becomes uneconomical, and the costs associated with managing Bitcoin are also a considerable expense.

     Companies that sell goods or services through Bitcoin need a way to cash out or safely store Bitcoin. If a company chooses to hold Bitcoin, it needs to constantly evaluate the risks of holding Bitcoin and ensure that it is held safely. Due to its volatility, Bitcoin risk assessment is very difficult, and therefore, most companies or businesses choose to accept Bitcoin exchanges because of the need to avoid losses or pursue maximum profits. For companies that choose to invest in Bitcoin, it is very important to know when to make small profits and when to stop losses. They need to report the profits and losses held and accurately track the results of the investment, which is very different from direct sales. For companies that hold Bitcoin and do not cash it out, Bitcoin taxation is also very complicated, which increases the risk and requires a lot of time to calculate accurate profits and losses.

     In general, most companies that choose to accept Bitcoin prefer to exchange it directly because holding Bitcoin increases risk and takes a lot of time to record the exact amount in order to calculate taxes.