Why Should Small Businesses Take Bitcoin Into Account – Bitcoin finally made its mark in 2015, with over 100,000 businesses accepting it, including industry giants like Microsoft, Overstock.com, and Dell. What exactly is this mysterious “cryptocurrency” that has been the topic of much discussion for years? Isn’t it past time for your small business to embrace it as well?
Here’s everything you need to know about bitcoin, including its benefits and potential drawbacks.
What exactly is bitcoin?
Bitcoin was created in 2009 as a cryptocurrency or entirely digital form of money. While that may not sound exciting, Bitcoin is unique. It is purely a person-to-person transaction, with no banks, financial institutions, or government entities standing between you and your money. Bitcoin is based on the blockchain technology system, which keeps your bitcoin wallet safe and secure from fraud.
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Many small businesses may benefit from the currency’s digital format, which allows for faster, cheaper, and easier cash exchanges. Bitcoin’s assets are primarily due to its decentralization. You don’t have to rely on a bank to process your financial transactions thanks to blockchain, the technology that bitcoin was built on.
Other reasons to consider bitcoin include:
1. There are no fees
If your merchant transaction fees of 2 to 3 percent are a drain on your cash flow, bitcoin has you covered. Bitcoin transactions are typically between 1% and 0% in cost.
That is not a mistake. There are no fees associated with sending or accepting bitcoins as payment. You don’t have to give up your own money to the financial institutions that own your business loans or credit cards because bitcoin doesn’t require a bank to verify each transaction.
However, you may have the option of paying a small transaction fee, expediting the process.
2. No need to wait
Those fees may not bother you, but waiting for your money to arrive in your bank account most likely does. There’s no need to wait nearly as long to receive your payment because there’s no centralized institution checking every bitcoin transaction; the underlying technology, blockchain, do it for you. Bitcoin transactions are processed quickly, often in a fraction of the time, it takes to process a credit card transaction.
You can charge a customer, take a walk around the block, and then get paid. That’s how quick Bitcoin is.
3. There are no borders
Bitcoin is a great way to deal with foreign transaction fees, exchange rates, and currencies if you export your goods and services or buy supplies or materials from other countries.
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What is the reason for this? Border restrictions are ignored by bitcoin because it is a global currency that is not tied to a single government or company. You’re good to go as long as your customers or suppliers accept bitcoin.
4. There are no payment disputes
Despite its digital nature, bitcoin functions more like cash than credit. Bitcoin transactions are final, and a customer can’t dispute them because they didn’t like the service you provided, for example. Accepting bitcoin could help you if you’re having trouble with customers arguing credit card payments.
5. A business opportunity
Bitcoin’s value fluctuates, just like other currencies. It is, however, less stable than payments in cash, gold, or other commodities that you are accustomed to.
While this volatility can be a disadvantage to accepting bitcoin, it can also have a significant benefit, as we’ll see below. Bitcoin can be viewed as an investment: Accepting bitcoins and then waiting to cash them in means you’re betting on their value rising.
Investing in a currency becomes much less absurd and boring with Bitcoin. A single bitcoin increased in value from $2 to $1,242 between 2011 and 2013. Although it has since dropped to around $800, there is still a lot of room for growth.
Accepting bitcoin has its drawbacks
It’s also crucial to be aware of the dangers that may exist. The three most significant roadblocks to running a business with bitcoin are listed below.
1. It is unrestricted
Although its decentralization is an advantage, bitcoin’s lack of government backing may deter some users. Although the US government recognizes bitcoin as a legitimate commodity with the potential to have a positive impact on financial regulation, the use of bitcoin is restricted or prohibited in some other countries.
2. It is unsteady
Although bitcoin has become more stable over time, recently surpassing gold, it is still fundamentally a currency that a single financial institution doesn’t regulate. The Federal Reserve can raise or lower interest rates if the economy requires it, but bitcoin does not have this option.
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Some see this “unstable” quality as a positive because the bitcoin market is free of interference. Still, it could make things difficult for your small business if the bitcoin market suffers. Before you invest heavily in bitcoin, you should figure out your risk aversion.
3. It isn’t easy to prepare for
It can be challenging to plan financial statements, figure out taxes, and set prices with a decentralized, volatile, purely digital currency.
How can you make forecasts that take into account large swings in the market or changing government regulations? This is a difficult task, but one that can be accomplished. Before accepting bitcoin at your small business, you should consult with your bookkeeper and accountant.
Overall, bitcoin can help your small business in various ways, but there are many unknowns in accepting the currency. If you’re thinking about buying bitcoin, sit down and think about how it can benefit your company and how you’ll handle the challenges it may bring.