Cryptocurrency Profits and Risks
Published on March 4, 2025
Does your marina or boatyard accept or use cryptocurrency or other so-called “digital” currencies? With many businesses accepting the change, and others getting ready to, cryptocurrencies are an increasingly popular, controversial and little-understood method for transactions.
Small businesses aren’t missing out on the action, with many jumping onto the cryptocurrency bandwagon. Transferring digital funds is becoming easier thanks to growing use of technology.
Today, even at its young age and facing regulatory uncertainties, cryptocurrencies are being used by businesses, large and small, to pay for equipment or supplies as well as accepted in customer transactions.
What are Cryptocurrencies
Cryptocurrencies are an online digital currency created at a predetermined rate via an open source computer program that began running in 2009. Each cryptocurrency consists solely of a coded internet address that can be stored in an online “wallet” created by each owner. Cryptocurrencies, such as the popular Bitcoins, are created by a process called mining in which computers are used to solve complex mathematical problems.
Cryptocurrencies are not backed or regulated by any government, central bank or other legal entity. Thus, no one has to accept cryptocurrency as money. However, a growing number of businesses are accepting it.
Meanwhile, people have been buying and selling cryptocurrencies for dollars on online exchanges, much like gold. The value of a cryptocurrency in traditional currency, like dollars, is not fixed by a bank or anybody else and can fluctuate wildly on online exchanges.
Cryptocurrencies can be directly transferred anonymously across the internet. This can make cryptocurrencies an inexpensive way to settle international transactions because there are no bank charges to pay or exchange rates to deal with.
Some claim cryptocurrencies are safer than traditional currency because the currency’s value can’t be manipulated by central banks or governments. Unfortunately, this also makes cryptocurrencies an attractive way to purchase illegal goods or launder illegal money.
Cryptocurrency Payments
Three things can be done with cryptocurrencies: they can be used to purchase or acquire goods and services; they can be accepted as payment; and they can be held as an investment in the hope their price will rise.
The first retail transaction is attributed to Laszlo Hanyecz, a computer programmer in Florida, who in May 2010 persuaded someone to order two pizzas for him in exchange for 10,000 Bitcoins.
More recently, several online retailers have started accepting cryptocurrencies. According to published reports, over 15,000 businesses worldwide accept cryptocurrency. In the United States, about 2,300 businesses accept this new form of payment.
Using Cryptocurrencies
Cryptocurrency is an information-driven field with a relatively steep learning curve that has kept some from accepting it. Even without the technical obstacles, digital currency’s biggest risk is price volatility, making its value extremely unpredictable.
That volatility continues to create a major disincentive for many marina and boatyard owners and operators to hold digital currencies. However, utilizing merchant service companies such as PayPal, BitPay or Coinbase can insulate the business against that volatility by immediately exchanging digital currency for its cash value. In this way, cryptocurrency payments are made in real time for the currency’s current value.
The IRS Versus Cryptocurrencies
Under the latest IRS rules, virtual currencies are taxed like property, not currency. That means cryptocurrency investors, whether a business or an individual, will be treated like stock investors. Cryptocurrencies held for more than one year and then sold would face lower capital gain tax rates. If they increase in value, capital gain taxes would be paid when sold. If they lose value, a capital loss usually results.
Cryptocurrency or other digital currencies can’t be used to pay the tax bill. However, any digital currency used by a marina or boatyard to pay for goods or services can qualify as a business expense with the recipient required to report it as income using the fair market value at the time of the transaction. Someone receiving wages in cryptocurrency would be taxed at their fair market value at the time they were paid.
Security Issues
It’s an unfortunate fact of life that many business owners and operators first encountered cryptocurrency when dealing with the growing problem of extortionists taking control of their operation. These so-called ransomware attackers usually demand cryptocurrencies.
Many businesses, even mom-and-pop businesses, are storing virtual currencies, so they can quickly meet ransomware demands rather than lose their valuable data. Although these virtual currencies facilitate one-to-one transactions, buy goods and services and exchange money across borders without involving banks or other third parties, law enforcement officers worry about criminals using them to avoid detection.
While cryptocurrency transactions eliminate many cyber threats, it isn’t completely safe from cybersecurity threats. With no way to completely prevent cybercriminals from gaining access to users’ wallets, cybercurrencies are potentially even more dangerous because, unlike currencies such as the U.S. dollar, cryptocurrencies are not backed or insured by any government.
Cryptocurrency as a payment method can encounter high price volatility, potential for fraud, limited acceptance and a need for specialized knowledge about how to use it. Fraudsters can hack into the technology platforms used for crypto assets, such as cryptocurrency exchanges, to steal keys and gain access to a boatyard or marina’s wallet and crypto assets.
On the plus side, cryptocurrency is considered more secure than credit or debit cards. When a payment is made with cryptocurrency, the data isn’t stored in a centralized hub where data breaches commonly occur. Rather, the information is stored in a crypto wallet with a blockchain general ledger used to verify every transaction.
Benefits Galore
Compared to more traditional transactions in so-called “fiat” currency (money that is issued by a government and not backed by a physical commodity such as gold or silver), cryptocurrencies offer many benefits. A marina or boatyard business might choose to accept cryptocurrencies for a number of reasons. It’s at the forefront of technology; it can attract customers who use digital currency; and it eliminates some types of fraud.
There are also lower transaction fees. A business accepting credit card payments often incurs fees of around 25 cents plus as much as 40% of the transaction amount. Cryptocurrency’s decentralized setup also protects sellers from fraudulent chargebacks. The transactions, like cash, are final because no third party can reverse charges.
With privacy an increasing worry, the Blockchain on which cryptocurrencies exist helps protect user privacy. Unlike fiat payment forms, such as credit cards or bank accounts, Blockchain and cryptocurrencies don’t associate with any personally identifiable information.
Easy Recordkeeping
With all digital asset transactions, records documenting their use generally requires the purchase, receipt, sale, exchange or any other disposition of the cryptocurrency. The fair market value as measured in U.S. dollars for all assets received as income or as a payment in the ordinary course of business must also be documented. The fair market value of any digital asset is its value when acquired.
As for the IRS, the tax regulations require all taxpayers to maintain sufficient records to establish the positions taken. That means the type of digital asset, date and time it was acquired, the amount of the digital asset acquired and, of course, its basis or book value when it was acquired or disbursed.
The Bottom Line
Cryptocurrencies are a new form of money. People and businesses are investing in them, using them to pay for goods and services and even using them as loan collateral. The image of cryptocurrencies continues to improve as large retailers enable customers to pay with it. While some digital currencies might be a mere flash in the pan, in general, there is a tsunami underway in the economy. Today, cryptocurrency is becoming more than a tool for speculators or a marketing fad.
In the End
Owners or operators looking to join the growing world of digital currencies for their boatyards or marinas should begin by educating themselves about the field and deciding just what they expect.
Obviously, the use of cryptocurrencies for conducting business presents a number of opportunities and challenges. Researching both the ever-changing regulations and the many entities involved when making and accepting cryptocurrency payments should be a requirement for every business owner and operator.
Not too surprisingly, professional assistance is strongly advised for guiding any boatyard or marina owner or operator wishing to reap the potential profits offered by cryptocurrency transactions.
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