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.

"People tend to focus too much on the reward side, and that's what often happens with crypto," says Suzuki. It's easy to look at 400 percent growth and have a little fear of missing out, he adds, but if the price of bitcoin were to fall 40 percent in a day--not unrealistic--your business needs to be able to absorb that hit.

Some businesses, such as, have hedged their crypto exposure. The Midvale, Utah-based online retailer has accepted bitcoin as payment since 2014. But to limit its downside risk, Overstock retains no more than 50 percent of that bitcoin sales revenue in crypto and converts the rest to dollars. ( declined to disclose current bitcoin holdings.) 

The lure for Overstock is that crypto transactions are cheaper. "Cryptocurrencies are a valid and legitimate form of payment, and a good store of long-term value," says Jonathan Johnson, CEO of "Cryptocurrencies are an efficient means for peer-to-peer transactions, cutting out fees associated with banks, financial advisers, credit card processors, and other expensive intermediaries."

Consider your business model

You may be wondering whether it's worth getting bitcoin to use as an option for payment, like Musk. Currently, bitcoin is not scalable in the way that Visa or Mastercard is, in the sense that it just doesn't do enough transactions to run the U.S. economy right now, says Bryan Routledge, associate professor of finance, and bitcoin and blockchain technology expert at Carnegie Mellon University's Tepper School of Business. The blockchain that runs cryptocurrencies is not built for billions of tiny transactions; they don't clear fast enough.

This means that using crypto makes more sense for businesses without rapid turnover. Cryptocurrency transactions are slower than credit card swipes and can take minutes as opposed to seconds, notes Suzuki. So the technology makes more sense if you're selling one or two $50,000 cars in a day; less sense if you're selling a cup of coffee every few seconds. "At one point in the future, paying for a $3 cup of coffee with bitcoin will probably make sense," Suzuki says. "In my opinion, we're not there yet."

To get a decent level of payment efficiency for any cryptocurrency, your business is also going to have to invest in software systems that support the transactions. Business owners can sign up on Coinbase Commerce and other payment processors such as BitPay that allow e-commerce businesses to accept bitcoin as a transaction. Platforms like Etsy and Shopify use this technology as well.

Make a bet, but don't do it for the hype

When small-business clients come to Suzuki asking about crypto, he asks them a simple question: If you were to replace the word crypto or bitcoin with one for another appreciating currency, say, Japanese yen, would you still invest in it? 

He asks this question to dissuade clients from buying bitcoin simply because it's hot or because other businesses are doing so. If changing the word alters your fundamental feeling of value of the investment, he says, then you should double-check your motivation for investing in the first place. 

Regardless, Routledge believes that while cryptocurrency investing is risky, it will likely be a component of our financial future. "One of those coins may turn out to be the one that figures out how to be the value player," he says, noting that one currency may likely be common in the future. "And that's essentially what you're betting on."