Chances are you’ve heard of the digital currency bitcoin already. Invented by someone under the name Satoshi Nakamoto, Bitcoin is creating a ripple in the way business transactions have always been made.
The first thing you need to know about bitcoin is that no one controls it. With bitcoin, buyers and sellers are free to transfer the cryptocurrnecy among themselves, directly from one person to another, without the involvement of a bank. Since there are no administration needs, it’s considered decentralized by the U.S. Treasury.
Bitcoin can be used just like conventional money to buy goods and services, but you must be a participant to play. Bitcoin is traded between members of the Bitcoin network. These are people who have downloaded the software and are able to accept and give bitcoin. There exist people who complete each bitcoin transaction. These are the miners, who complete complex mathematical equations to verify each transaction. Each verification takes an average of about 10 minutes. The transaction process prevents a person from spending the same bitcoin in more than one place. Only 21 million bitcoins can ever be mined, and that’s cut in half every four years. It’s estimated that the amount of bitcoins floating around will reach zero in 2140.
So should a business accept Bitcoin? It is a good way to avoid fees from credit card processors. You’ll only be paying the less than one percent payment to the miners in the network. And the quick transactions make it easier to avoid problems with fraud. Also an advantage, all bitcoin transactions are final. So your company won’t face any chargeback fees when a package is misdelivered or other transaction hiccups occur. Businesses that accept bitcoin appear on websites that tell users where they’re accepted, so you’ll be able to reach another market that you may not normally reach. Bitcoin transactions also offer another level of accounting transparency for your company, allowing you to provide detailed counts of your transactions.
However, with bitcoin, any minor mistake has the potential to have big consequences. A single technical difficulty or simple human error can cost you bitcoins. Location is also a factor of whether accepting bitcoin will be beneficial to your business. Customers in larger towns are generally more open to using bitcoin than those in smaller towns.
If your business does decide to accept bitcoin, a best practice is to convert your digital currency into US dollars each day to avoid a picked electronic wallet, loss in the crash of a hard drive, or other unforeseen circumstances. Luckily, there are more and more services being created for the sole purpose of storing bitcoins save and recovering them when they’re lost.
