Accepting cryptocurrency for dermatology services comes with benefits, risks
Key takeaways:
- Cryptocurrency is a digital or virtual currency secured by cryptography and existing primarily on decentralized networks.
- Physicians must weigh benefits and risks before implementing.
In response to an inquiring dermatologist, a group of dermatoethicists presented the benefits and risks of accepting cryptocurrency as a form of payment for services.
In the current digital age, financial experts often throw around the term cryptocurrency when discussing the future of monetary transactions. But what exactly is cryptocurrency?
According to Investopedia, cryptocurrency is a digital or virtual currency secured by cryptography and existing primarily on decentralized networks using blockchain technology, which is a distributed ledger enforced by a disparate network of computers.
According to Sach Thakker, BS, a medical student at Georgetown University School of Medicine, and a group of authors that penned an article published in the Ethics Journal Club in the Journal of the American Academy of Dermatology, there are quite a few benefits for accepting the currency as a form of payment in dermatology offices, the first of which is the appeal of privacy and security to high-profile clients.
“As a fully digital, borderless option, cryptocurrency appeals to those who prioritize privacy and prefer alternatives to the insurance system,” the authors wrote. “While cash provides anonymity, it is impractical for large transactions, and credit cards carry privacy risks.”
For example, if a high-profile client needs to receive a sensitive treatment, such as for a sexually transmitted infection or a cosmetic procedure, they may not want to pay with a credit card or file an insurance claim as it would create a record that could be accessed in a data breach.
As any invasion of privacy could result in the client garnering unwanted public attention or reputational damage, cryptocurrency offers a more anonymous alternative as the transaction is devoid of any personal identifiers.
In addition to promoting patient autonomy by offering various payment options that suit individual needs, accepting cryptocurrency can enhance physician autonomy as it opens the door to a new revenue stream and a potentially new clientele.
On the other hand, accepting cryptocurrency comes with risks.
“The practicality of accepting cryptocurrency requires careful consideration, particularly regarding tax implications and regulatory compliance,” the authors explained. “The IRS classifies cryptocurrency as property, so payments must be reported as income at their fair market value on the date of receipt.”
These regulations can complicate tax filings which will add to the already insurmountable administrative burden regularly reported by physicians.
Additionally, the value of cryptocurrency can change at any time with data showing that Bitcoin’s value fluctuates by 20% daily and 80% yearly. This means that by the time a cryptocurrency payment is converted to fiat currency, a patient could have either severely underpaid or overpaid for a procedure. Not only can this type of volatility result in capital losses for dermatology clinics, but it can also destroy the trust between physicians and their patients.
“Given these complexities, health care providers should assess whether the benefits of adopting cryptocurrency and blockchain technologies outweigh the risks,” the authors concluded. “If adopting these technologies, practices should implement clear policies and safeguards, including robust cybersecurity for digital wallets, prompt conversion of cryptocurrency to fiat to mitigate volatility, compliance with financial regulations and specialized insurance to protect against potential losses.”
Reference:
- Cryptocurrency explained with pros and cons for investment. https://www.investopedia.com/terms/c/cryptocurrency.asp. Updated June 15, 2024. Accessed Nov. 26, 2024.