Should Your Company Accept Bitcoin as Payment? Here's What You Need to Know
April 5, 2021 (Investorideas.com Newswire) - You already know that bitcoin is no longer a marketing gimmick. The cryptocurrency - which was invented in 2008- has grown to become the world's leading and most popular virtual currency. What's more, it's gaining popularity and becoming widely accepted all over.
According to a 2020 survey by HSB, at least one-third (about 36 percent) of small and medium-sized businesses in the United States accept Bitcoin as payment for goods and services. That's tens of thousands of small and medium-sized businesses. In fact, major U.S companies such as Microsoft, AT&T, Burger King, Expedia, Wikipedia, KFC, Overstock, Subway, and Namecheap are already accepting bitcoin as payment. Today, anyone can buy Bitcoin instantly using simple Bitcoin wallets like BitWallet.
But what exactly is Bitcoin and is it time your company accepted it as payment, too? Here's what you need to know about this digital currency, its advantages, and potential disadvantages.
What is Bitcoin?
Bitcoin is a decentralized virtual or digital currency that uses peer-to-peer technology to keep track of transactions and facilitate instant payments between businesses or individuals.
What differentiates bitcoin from other cryptocurrencies is the fact that it's decentralized in nature. There are no financial institutions, central banks, or national governments standing in the way between users and their money. It's purely peer-to-peer or rather person-to-person.
Bitcoin, like other cryptocurrencies, cuts out third parties and middlemen in a transaction. You don't have to store your funds with some financial institution or a platform where you're dependent on someone else to safeguard it. Instead, you have control over your money through encryption that only you can access and have a key to. Companies choose to accept bitcoin for many different reasons, such as going with the technology trends, eliminating identity theft and data breaches, or attracting customers who use cryptocurrencies. But should your company accept it as payment? Is it right for your business?
Pros to Accepting Bitcoin as Payment
Little to No Transaction Fees
If your company accepts credit or debit card payments, you know there's usually a flat fee for each card swipe in addition to a 2 to 3 percent of the transaction amount. These merchant transaction fees can quickly drain your cash flow. Well, things are different when it comes to bitcoin transactions. The lack of a middleman or centralized institution to verify each bitcoin transaction dramatically lowers transaction fees. Bitcoin allows you to transact with fees under 1 percent per transaction.
One of the challenges businesses and people face with modern payment platforms is having to wait for the financial institution to check and verify each transaction before it's completed. It can be frustrating to wait around for your funds to arrive or reflect in your bank account.
Since there's no central intermediary to inspect or verify anything, you can make bitcoin transactions instantly. As a business owner, you can charge a client from anywhere around the world, go take a walk around your block, and the transaction will quickly be processed and completed.
Accepting bitcoin as payment will allow you to immediately expand and open your doors to international customers for whom your goods or services were once inaccessible. Formally announcing that your business is accepting bitcoin can also help boost your brand awareness and visibility, thereby increasing leads and sales.
Bitcoin is a global digital currency that's not tied or limited to a single government or organization. In other words, there are no border restrictions when it comes to bitcoin transactions.
So, if your company ships products and supplies to and from other countries, then bitcoin can make your payment processing and transactions much cheaper. All you need is to find businesses and clients ready to make bitcoin transactions, and you're good to go.
Lower Fraud Risk for Buyers
As a business, you want to provide your customers with the safest and most secure way to make their payments. And you can achieve that with bitcoin. Bitcoin allows customers to transact with you without sharing any sensitive financial or personal information as it's the case with debit and credit cards.
Another benefit of accepting bitcoin as payment is that you're protected from fraudulent chargebacks. The fact that there's no third-party involvement means that your transactions are final.
Cons to Accepting Bitcoin as Payment
Bitcoin is Unregulated
One of the drawbacks that come with accepting bitcoin is that there's much uncertainty around how central banks and governments will regulate cryptocurrencies. Many governments, including the U.S, recognize bitcoin and other cryptocurrencies as a valid currency and are crafting financial regulations to govern them. Any business owner who chooses to accept bitcoin as payment should be ready to pivot and adapt their operations to periodic changes in the regulatory framework in the near future.
It's Unstable and Volatile
The price of bitcoin is dependent on market forces and its value is highly unpredictable. For instance, this digital currency was first valued at around $0.0008 per coin in 2010 but rose to $19,172 in December 2017. In May 2019, one bitcoin was worth $8,905. Today, it's valued at about $7,000 per coin. It's, therefore, crucial that you figure out your risk tolerance before accepting bitcoin as payment.
It Can be Difficult to Plan for
The decentralized and volatile nature of bitcoin makes it almost impossible to determine your prices, figure out taxes, and plan your financial statements. Of course, this is something you can still do, but you need to discuss it with your accountant before investing in bitcoin as a business.
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