2017 was the year that Cryptocurrencies boomed and 2018 is set to be another explosive year for Bitcoin and alternative coins. As a business owner, small or commercial, you should prepare yourself for when customers ask the following: “Do you accept Bitcoin?”
Due to increasing popularity amongst the public, the number of Bitcoin and other Cryptocurrency users have tripled and this is sure to continue growing. Will you show a customer who is asking about Bitcoin away or will you nod with a smile and get even more business? In order to thrive in business, one needs to stay ahead and this means looking at new and alternative ways of payment.
We take a look at how business owners can implement Bitcoin and Cryptocurrencies in their everyday operations:
What is Cryptocurrency?
Cryptocurrencies consist of Bitcoin and alternative coins or Altcoins. Bitcoin was created in 2008 by a man named Nakamoto Satoshi. To this day no one knows his real identity and the artist remains unknown. Bitcoin was created to serve as a peer-to-peer electronic cash system that is both decentralised and anonymous, meaning that no government or bank can see how much you have and tax you. Some struggle with the concept of digital cash. It is really quite simple. Banks operate on ledgers. This is how much you have and how much you deposit or withdraw. Bitcoin is exactly the same with the exception that you reflect as a number and your transactions are therefore, anonymous. One cannot physically hold a Bitcoin in your hand like with Fiat currencies but it does not mean that it is worthless – on the contrary, Bitcoin operates on a Blockchain, which gives the crypto its unique abilities. The coding is open source so that anyone may learn from it. Bitcoin can be mined by means of machines that use algorithms to create digital cash. Funny enough the first Bitcoin that was mined was used to buy a pizza. What started out at a few cents recently reached an all-time high of more than $20 000. It is said that in a couple of years’ time, the price of a single Bitcoin could be $1 million.
Not far behind the golden standard of cryptos is Vitalik Buterin’s Ethereum, which was introduced in late 2013. What differentiates Ethereum from Bitcoin is it’s “smart contracts”. This allows businesses or individuals to store contracts or valuable information on a Blockchain that can even execute some of the arrangements, as stipulated in the contract. That way no one can tamper with it and it can’t get lost.
There are literally hundreds of Altcoins, some are good and others are not. Each one is unique in the sense that it tries to solve a real-world problem or improve on current systems that are falling behind. For a complete list, click here.
What Can You Use Cryptos For?
You can use cryptos to buy anything from groceries, vehicles, houses, holidays, fashion to speciality services such as electricity. As long as the merchant accepts Bitcoin or any other Altcoins. However, this is where it gets tricky. The list of merchants or online retailers who accept cryptos as payment are increasing day by day but more is needed and there is plenty of opportunities for businesses to come onboard. With a total market cap of more than $743 billion, it is easy for any business to attract a big community of wealthy clientele. All you have to do is put up some signage or a banner on your website or in your shop window that reads: “We accept Bitcoin.” Voila!
What Are The Benefits For The Retailer?
By now you as a business owner will have asked – but does it make financial sense to accept cryptos as a form of payment for my business? What are the costs associated with it? There are various benefits for retailers to accept Cryptocurrencies as a form of payment.
• Bitcoin Is Safe And Secure
Bitcoin payments are secured by Blockchain technology that uses multi-level encryption. As previously stated, all transactions are available on the Bitcoin ledger whilst remaining anonymous.
• Bitcoin Eliminates Identity Fraud
What can we say about identity fraud that you don’t already know? The effects are devastating. One feels violated and like someone has intruded in your life. Then you still get a hefty bill for items you have never seen or bought in your life. Thanks to Bitcoin’s Blockchain, you do not have to worry about identity fraud since one cannot tamper with info on the Blockchain without leaving a paper trail.
• What You See Is What You Get
Thanks to Bitcoin’s decentralised system, you don’t have to worry about the tax man knocking at your door any time soon since, as it is not governed by any entity, there are no hidden charges.
• Bitcoin Transactions Are Affordable
The cost of a single Bitcoin transaction can vary from 30c – $1. This is extremely affordable when one compares it to the $3 or a 5% of the total amount charge that is deducted by other companies.
• There Is No Going Back
A popular scam is for consumers to pay using a credit card and to reverse the transaction in a certain time frame. This is normally when the business has already shipped the order and is basically left with no product or payment. With Bitcoin this is a thing of the past, as one cannot reverse these transactions. A Bitcoin transaction is final.
• Screw Exchange Rates
Paying and accepting Bitcoin can save you a lot of money since you do not have to worry about the constantly changing exchange rate that is associated with a Fiat currency. When using cryptos, you are not subjected to processing fees or exchange rates. This does not mean that the price of Bitcoin or Altcoins stay the same, as it too can fluctuate.
• Faster Transaction Time
It can literally take up to a week if not longer, to send or receive money internationally. Then you still have to give a reason why you are sending or receiving the funds (as if it’s anybody’s business). With Bitcoin, you don’t have to give a reason for performing transactions and transaction speed is super-fast. It can take anything from seconds to minutes for a transaction to be finalised on the Blockchain.
• Keep Some For Yourself
The Cryptocurrency market is volatile and can make astronomical gains in 24 hours. It may be a good idea for a business owner to hold onto some of the Bitcoin they received as payment, as an investment. You never know when it goes up to six figures!
• Attract New Customers
There are literally millions of investors, especially millennials opting out of Fiat and investing in cryptos. If you accept Bitcoin or other Altcoins, you will instantly have access to a brand new and broad market and increase sales. A recent study by Blockchain Capital shows that 30% of investors are millennials and range between the ages of 18 – 34. According to the study, this market would rather spend $1 000 on cryptos instead of investing it in more traditional forms of investment. About 15% of the crypto market currently comprises of people over the age of 65.
Let’s get started!
By now you should be eager to get started and implement Bitcoin payments at your business. How does one go about doing this?
1. Get A Sign
It doesn’t really matter what industry you’re in, if you have a sign on your website or in your shop window that reads “We Accept Bitcoin”, people’s heads will turn. It shows that you welcome new developments, are not narrow minded and of course welcome the crypto community. These are all the qualities any millennial can relate to! Besides attracting the elite crypto clientele, you will also help to create awareness about cryptos and get even more customers.
2. Welcome Bitcoin Payments
Accepting Bitcoin is really easy. There are numerous QR Codes that can easily be integrated into your current system to make Bitcoin payments a reality. If you are running an online store, one can run a node to get started.
3. Use Your Phone And Tablet
Bitcoin makes it easy for retailers to accept the digital cash since many wallets work with QR code scanners. It is easy to download such an app using your smart phone and tablet. Bitcoin QR Code is a sound app.
4. Use A Bitcoin Payment Processor
There are two major payment processors that accept Bitcoin as payment – Coinbase and BitPay. All you have to do is register on their websites, integrate the system onto your website and let the machine do the rest for you.
Coinbase is not only an exchange but also features a merchant service that is suitable for businesses and individuals. Bitcoin payments are processed and paid into your Coinbase account. The service is free and if you wish to withdraw funds, you will be charged a fee of 1%. It doesn’t cost anything to keep your Bitcoin on the exchange. The exchange is really merchant friendly, as you can even set it up so that a certain amount of Bitcoin is paid out every day. Very nifty!
BitPay works on the same basis as Coinbase. BitPay is widely used and accepted and even retail giants such as Steam and Shopify swear by it. The system goes a step further than Coinbase and can even manage your company’s invoicing and keep records. This makes Bitcoin payments cheaper and saves you a lot of time.
The third option for ways of accepting Bitcoin payments is to do it manually. There is no law or rule that says you have to work through a third-party service provider. If you are up for it, you can master it yourself. All you have to do is obtain a Bitcoin address by registering with an exchange or an online wallet. By doing this you can give the wallet address (not the private key) to a customer who can directly deposit Bitcoin into your wallet. All you will be left with is to do the invoicing, billing and shipping, if you are in that line of business. There are ups and downs to it but atleast you are in full control. Once you have received payment (which takes seconds or minutes), you can use a platform like LocalBitcoin to gain access to your money immediately.
These are the best options for online wallets and exchanges you might want to consider:
For more options, click here.
5. Plug-Ins And Buttons For Your Website
If you are running an online store on platforms such as Magento, Shopify, WordPress or WooCommerce, having a Bitcoin plug-in or button is easy. Customers will know immediately that you are part of the crypto community. There are currently a variety of plug-ins and extensions that are suitable for e-commerce shopping platforms. This literally works with your current system and no major adjustments are required from your side.
These plug-ins are great for WordPress sites:
• First things first, is Bitcoin legal in your country?
Countries like Japan, Zimbabwe, Bangladesh, Bolivia, Ecuador, Kyrgyzstan, Nepal have banned the use of Bitcoin. Remember to first check what your country’s stance and legislation is on the acceptance of Bitcoin payments.
• What About Accounting?
Majority of the crypto community is law abiding citizens who are concerned about tax compliance when dealing in Bitcoin. Cryptos are a form of cash and should be treated as such. At the moment there is no country whom are forcing Bitcoin holders to pay taxes based on their Bitcoin account. The idea behind Bitcoin and Cryptocurrencies is that they are decentralised and are not controlled by any body or government. It is advisable to speak to an accountant about this topic.
• Besides Bitcoin, Which Other Currencies Should I Consider?
Bitcoin is the gold standard of the crypto industry but there are other coins with even better qualities that could be good options to accept as payment at your business. Have a look at Ethereum and Ripple, for example. These coins are sometimes a lot faster than Bitcoin.
• What Price Do I Set?
Did you know that you can simply Google what the Bitcoin exchange rate is and compare it to USD or GBP? Click here for an easy and convenient Bitcoin converter. It makes sense that a business owner needs to pay bills using Fiat and may have to convert the Bitcoin. The Blockchain makes this easy.
• Can I Sell Gift Cards To Bitcoin Customers?
Yes! This is really a swell idea as it may help you with the taxation issue. You can issue gift cards to Bitcoin customers and then can then use those gift cards to purchase goods or services. This is also a great way to not confuse the accountant too much when it comes time for the closing of the books.
• What Are The Risks Involved?
There aren’t really risks involved by accepting Bitcoin as payment but here are a few scenarios of how things could go wrong. As they say, knowledge is power.
An example is if a person finds out who your customers are, they could issue a counterfeit invoice and ask for payment to be made to their own Bitcoin address, instead of yours. In order to prevent this from happening, you can publish your Bitcoin address on your website so that clients may verify the address. Of course, there is also a handy app to help you combat these and other similar scenarios. It is called FraudLabs Pro and was specially designed to help online merchants to prevent possible fraud.
• How Will A Sales Contract Work?
A sales contract works exactly the same when accepting payment with Bitcoin as when accepting Fiat. Be sure to stipulate the terms of the service, who is responsible for transaction fees, refund policy and dispute procedure to name a few.
While the majority of countries recognise Bitcoin as a currency, it may still seem unreal. Despite some negative news being spread about cryptos, it has become evident that they are here to stay. The great thing about an increase in the number of crypto investors, is the increase in the number of Bitcoin spenders. Depending on the type of business you run, you can choose from a variety of options, of how to make Bitcoin payments work for you. One traditional business principle that stays relevant, even in the world of cryptos, is to know who your customer is and what they want. If you can keep your eye on the ball, you will always have a story full of clients.