SHOULD YOUR SMALL BUSINESS ACCEPT BITCOIN?
Bitcoin is the most popular form of cryptocurrency used as a medium of exchange. It utilizes a peer to peer technology involving two users directly, and as such, it is completely decentralized. The use of Bitcoin cuts out the middleman in any transaction involving its use. Rather than depend on an organization to safeguard your money, you could just hold on to it via encryption you alone can access. It is a very safe way to do business, especially as we hear stories of hackers becoming more sophisticated and frequency of data breaches.
Bitcoin’s viability and security are attributed to the blockchain technology. This technology has given Bitcoin the necessary backing, safety, high degree of integrity, and its transactions are subject to regulation even though it has no government agency or other similar bodies backing it up.
Bitcoin has drawn lots of attention from publicity, i.e. stickers, media outlets, and journalists etc. which has led to its practicability, giving reasons why the use of Bitcoin is essential in our day to day transactions. For this reason, entrepreneurs are considering adopting this method. But it is important to question yourself if the adoption of this method would generate profits.
Bitcoin was primarily used in online stores but has gained, and is still increasing acceptance in other areas of business such as car dealings, service-based establishments, food establishments etc. It hit the mainstream in 2017. Regardless of size, any business will one day consider accepting Bitcoin as a method of payment, and this could be closely linked to some factors which include being at the forefront of technology, competition, market, attracting customers who use Bitcoin, not wanting to be left out and eliminating fraud.
However, in making Bitcoin a mode of business transaction, you’ll need to understand its use, its effectiveness, as well as, issues that may arise.
First, you’ll need to learn how to accept Bitcoin payments and before you can achieve this, you need to understand what Bitcoin wallet is and how to use it effectively. Each portfolio has a unique address usually 34 characters in length; Businesses will prefer generating a QR code with their wallet address and the various prices of goods, and then potential customers can scan with their mobile devices to send payment. Companies like Bitpay have platforms that function to assist merchants both accept Bitcoin and deposit payments.
Bitcoin as a medium of exchange has its benefits as well as its drawbacks. Some of these benefits include increment in sales, the creation of investment opportunities, lower transaction fees & quick processing, more security for business transactions and enhanced public profile;
while some of the significant drawbacks are its unregulated nature, and it’s difficult to plan for, due to its volatile nature.
BENEFITS OF ACCEPTING BITCOIN
- Increment in sales
It helps expand small businesses, making the accessibility of their products possible for international buyers
- There are no border restrictions
The unique nature of Bitcoin, not tied or backed by any company or government agency, makes it entirely free from border restrictions.
- Lower transaction fees
Bitcoin is decentralized in nature which significantly reduces transaction fees. You can send or accept Bitcoin with little or no transaction fees attached (cost ranges between 1% and 0). Most times, small fees attached to transactions functions to speed up the process.
- There are no disputes in payments
Bitcoin as a digital method for transaction possesses more cash than credit features. Its operations are barely contested (users giving negative feedback) because its services are usually very satisfactory.
- Merchant protection
The decentralized nature of Bitcoin protects merchants from illegal chargebacks. There are no third parties to revert changes and transactions are final
- Fast Transactions
Bitcoin’s underlying technology, blockchain checks each transaction and processes them quickly; so, there is no delay in getting credits. Its transactions are speedy.
- Gives consumers an added advantage
It provides an additional payment method, coupled with providing the needed protection of their information
RISKS OF ACCEPTING BITCOIN
- Bitcoin security
Although Bitcoin transactions are very secure and get rid of threats to the system, it is yet to eliminate cyber threats from causing havoc, and this could be linked to the fact that Bitcoin is not insured. Customers are advised to regularly back up their data to ensure its safe keep.
- It Is Unregulated
Bitcoin’s lack of support from government bodies could refrain some potential users; this is one of the reasons why it is accepted in some countries and banned in others. Small businesses planning to make use of Bitcoin for transactions must be prepared to adapt to sudden and periodic changes; these changes could even continue into the future.
- It is difficult to plan for
The volatile and digital nature of Bitcoin makes things difficult while preparing financial statements. Large fluctuations could also occur due to government changing regulations. If businesses hold on Bitcoin receipts for any length of time, some degree of risk is introduced which could be reduced by working with a third-party payment processor like Coinbase to quickly convert your Bitcoin receipts into U.S dollars.
- Its value is highly unpredictable
Bitcoin first surfaced in 2009 and was valued in pennies and by 2013, rose to 1200 dollars, and today, one Bitcoin is worth more than 11,000 dollars.
Small businesses considering the use of Bitcoin, need to sit and re-evaluate both sides; How it benefits the business and be ready to ‘swim against the current’ if challenges surface. As long as you understand the risks involved with the use of Bitcoin, and can implement its acceptance, then there may be value in providing another payment option for your guests.