Bitcoin is making the headlines again. It’s seen a tremendous growth in value following news of a partial resolution to the ongoing scaling debate over block size has been agreed on amongst the community of miners who comprise the network. For many, this may be their first encounter with the revolutionary new payment platform, and for others it will be an indicator that their earlier dismissal of the technology as just a way for criminals to avoid detection on the deep-web may have been incorrect.
Whatever your exposure to the platform before now, the surging BTC to USD exchane rate should show you that more people are starting to buy into Bitcoin. In Japan, the home of many technological innovations, they are openly embracing Bitcoin and blockchain tech following a huge legal ruling earlier in the year that declared the currency as legal tender. A whole host of Japanese retail stores are currently preparing to begin accepting digital currency at some point this June.
There’s clearly a lot of hype around Bitcoin of late, but is it justified? More importantly, is it worth considering opening your businesses own payment methods to include digital currencies?
Pros of bitcoin:
Bitcoin has been hailed by many to be the planet’s saviour from the rampant excesses of corrupt central banking practices. Crypto-anarchists and economic libertarians shout their distrust over the link between cash production, and governments all over certain subreddits. They argue that through a process known as fractional reserve banking, traditional currencies are capable of vast manipulation, and the entire banking system which we know of today has been built to crash. Whatever your opinion of the claims made by these extremists matters little in answering the main question of this article, however. Irrespective of your ideological relationship with the tech, there are undoubtedly some features of Bitcoin that can help a small, or even large business owner.
Decentralised: Stronger, and Fewer Middlemen
Firstly, Bitcoin exists on a decentralised ledger, known as a blockchain. Owing to its decentralised nature, there is no single weak point for attack. There’s no server to target, meaning there’s no place to hack. This makes the system resilient to security breaches. All the transactions are visible on the blockchain, and focusing on a single point of the network just eliminates that node, leaving the rest of the system unaffected. The only way to stop the blockchain would be to simultaneously shut down all the central servers of the entire internet. Even then, the outcome would be to simply pause the activity on the network until it re-establishes a connection.
In addition, the Bitcoin system has been built to remove the element of trust required for most business transactions. For example, it’s currently more convenient to store most our wealth in a bank account. We must therefore trust that this bank can pay us our funds if we need them. This is a basic example, granted but think of any deal. There needs to be trust that exists between the parties involved. It doesn’t matter if its trust between actor A and actor B, or actors A and B mutually trusting a third party, like a bank. Bitcoin removes this need for trust. If someone says they sent you funds, you can check on the blockchain, and categorically prove one way or the other.
Users of Bitcoin are generally amazed at how cheap and free of restrictions transactions are. Massive cross-border payments are possible in minutes, with no central authority to answer to, and no enormous banking fees. Many companies find that accepting Bitcoin allows them to pass their savings on Visa fees onto their customers, and can offer a lower price than a competitor may be able to. What’s more, the process of setting up payments using Bitcoin is straightforward. All you need is a free wallet, and some customers who also have Bitcoin.
Cons of bitcoin:
Granted, the benefits to using Bitcoin as a payment method for your company do look mighty tempting but there are some important elements to consider that might alter your eventual decision.
Do your customers even know what BTC is?
Of course, this one is going to be very specific to your customer base. If you’re in a tech-savvy industry like computing, communications, or webhosting, it’s likely that your users will be aware of Bitcoin, and probably some will be already active in the cryptocurrency community. However, more traditional industries may find that they don’t see the benefits through a lack of awareness. It’s worth remembering that the space is constantly expanding and more people are getting interested in the currency daily. Being ahead of the game and accepting future tech trends might help you to gain new customers when greater mainstream adoption does occur. Given the low setup costs to accepting Bitcoin, it seems like a cheap way to potentially stand out from your competition down the line, at least.
This is a tough one for most business owners. It’s very difficult to convince someone to accept payment for their products in a currency which can gain or lose so much value in just a few hours. They fear having large sums of money tied into an asset they know little about, or don’t believe in, and dread seeing it lose a considerable percentage of value before they have chance to exchange back to their trusted dollars. These fears are somewhat unfounded as transfers back to fiat currencies can be made almost instantly after funds reach your exchange account. Vendors can choose how often they wish to transfer the whole contents of their wallet to the exchange, if they’re unsure about price fluctuations. Alternatively, they can keep as much of their revenue in Bitcoin as they like. Some companies who accept Bitcoin choose to ride the market in its truest sense by never transferring to fiat, and paying employees in BTC too. With market adoption, this is a potentially profitable, albeit risky strategy.
All told, there are few reasons to not offer a Bitcoin payment option for your services. The pros far outweigh the cons, and if the price keeps rising, and more investors continue to get on board it is likely we’ll see more companies begin to charge for their products in the most well-known of the blockchain technologies existing today.