Cryptocurrency is all the rage and Bitcoin is its blue-eyed boy. 2021 has seen Bitcoin reach milestone after milestone. While not yet mainstream, it is most definitely gaining momentum to eventually step into it.
What is giving the Bitcoin craze some level of legitimacy is that there are now well-known companies that accept Bitcoin as a valid form of payment. That’s right, Bitcoin payments are being accepted by trusted businesses is a sign that the cryptocurrency now has more favorable views than before.
Some of the companies that accept Bitcoin include Starbucks, Microsoft, Etsy, Rakuten, PayPal, Whole Foods, Home Depot, BMW, AT&T, among others.
But the question that needs to be asked is – should your business start accepting Bitcoin as a form of payment too?
What is Bitcoin?
Bitcoin is a type of cryptocurrency. This is a currency that is ‘decentralized’, meaning its transactions are carried out directly from buyer to seller. The transactions are not controlled or monitored by third-party regulatory authorities, such as a government or a central bank.
Bitcoin essentially takes away the need for a middle man to process payments that one makes. The currency is stored in an online wallet that only the user has access to. It uses something known as a blockchain, essentially a public ledger, to record all transactions in a time-based sequence. This reduces the risk of fraud as the transaction details cannot be changed once they’ve been recorded, as per experts.
The benefits of accepting Bitcoin as a payment
There are some genuine advantages of Bitcoin and accepting such payments. Here are the things small businesses should consider:
Reduced transaction fees
If you accept any form of online payment, then you are already well aware of the pesky transaction fees or user charges you need to fork over to the payments processing platform. Credit card transaction charges are no less pain either for many businesses, with bank fees being a thorn in their side.
And since people are all about digital wallets and payments these days, cash transactions are on a steady decline. So your business could end up paying 2-4% in transaction fees alone, based on the type of payment and the platform you use to process these payments.
Bitcoin payments take that out of the equation. Most Bitcoin and cryptocurrency payments have very low to no transaction charges at all. Over a period and volume of transactions, you would indeed see considerable savings since you don’t have to pay an intermediary for online and card payments.
Protection from chargebacks
Since Bitcoin works on the concept of decentralization, a transaction once processed cannot be returned. It is like a cash transaction in this sense, and all payments made are final and irrevocable.
Many businesses and merchants have this recurring problem with chargebacks. With Bitcoin payment, the decision to reverse a charge is of the business alone and not a third-party player.
International payments become much easier
If your business has international customers, then you already know the hoops you have to jump through to be able to accept payments from a different country. It is not a pretty picture.
Not only is accepting international payments complex, but it is also usually very slow too. Bitcoin payments completely change that. The payments are processed within minutes, and your business can accept payment in Bitcoin from any corner of the world without a fuss.
Bitcoin payments are super secure
Because of the decentralized and public ledger nature of Bitcoin, it is difficult to mess with their transaction info. The transactions once made are final, and cannot be modified or deleted in any manner whatsoever.
Bitcoin can be an investment
Bitcoin has limited capacity, meaning there are only as many of them that can be mined. Once that threshold (of 21 million) is reached, no more can be created. When supply is short then the demand automatically shoots up.
Holding onto the Bitcoin that your business receives as payment can create a windfall when the time is right.
The not-so-great aspects of accepting Bitcoin as a payment
It is not all hunky-dory though, there are some pitfalls that you should know about if you’re considering accepting your payments in Bitcoin.
The market volatility of Bitcoin and cryptocurrency
There is no official regulation of Bitcoin, due to its very nature. But the lack of regulation leaves it open for the market forces to decide what the price of Bitcoin will be. This is not something that businesses would ideally want.
If it so happens that the value of Bitcoin has gone down from the time you’ve received it to the time you’ve exchanged it to a dollar value, then your business loses out.
Government action and regulatory sanctions
Cryptocurrency and Bitcoin are legal in the US. But there aren’t any laws governing it, though some are now being crafted. This introduces a level of uncertainty and questions on how to account for policy changes and government action on the use of Bitcoin and cryptocurrency for business.
Taxes on Bitcoin and cryptocurrency
The IRS now mandates businesses and individuals declare their Bitcoin activity. It has introduced tax regulations by classifying profits made via Bitcoin under capital gains and taxes them as such.
If you are a business, then this creates an additional layer of work of figuring out all your Bitcoin transactions and reporting them on your tax forms come tax season.
What should a business do then?
Bitcoin is still very nascent. Many people are not aware of it how it works, and it still hasn’t been proven as dependable.
However, it is gaining acceptance fast and could soon even see more businesses actively consider and accept it as a form of payment. It comes down to the specific business and if you have the appetite to experiment with or cash in on this trend that businesses seem to be attracted to.
It truly depends on whether it is something your customers want it. Why go through all the trouble when no one has asked you for it. But if they do, it would merit figuring out how you should go about doing it for your business.
One thing is certain though – digital currency is our new future. There is no denying that fact. And Bitcoin being at the forefront of it has an advantage. If your business accepts payment in Bitcoin, then it stands to potentially realize profits from it.
Subscribe to Wishup Blog | Remote Teams | Remote Employees
Get the latest posts delivered right to your inbox