Should your business accept bitcoin as a payment method?
Bitcoin is an innovative payment network and a new kind of money. Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.
Many people have heard of bitcoin as a digital currency that is only used on the internet. It is true that most bitcoin transactions happen online, but it's also possible to use bitcoin in physical stores and off-line too. So far there are over 100,000 businesses worldwide that accept bitcoin for payments. Entire countries like Sweden have even started issuing tax breaks to those who use bitcoins.
Some of the largest brands have started accepting bitcoin:
- Overstock.com
was the first major retailer to start accepting bitcoin as payment for their products. They have been accepting bitcoin since January 2014 and have processed over $10 million in sales using bitcoin.
- TigerDirect
TigerDirect is an online retailer specializing in computers, computer parts, computer monitors, networking equipment and electronics. They started accepting bitcoin in January 2014 and have processed over $1 million in sales using bitcoin.
- Expedia
Expedia is an online travel agency that allows users to book airline tickets, hotel rooms, car rentals and cruises online or via mobile app. Expedia started accepting bitcoin as payment for hotel bookings on July 1st 2014 and has processed over $10 million in hotel bookings using bitcoin since then. Expedia also accepts litecoin as payment for hotel bookings but has not released any figures on how much they have processed using litecoin since they started accepting it on April 1st 2015.
- Dell
Dell is an American multinational computer technology company based in Round Rock, Texas that develops, sells, repairs and supports computers and related products and services. Dell started accepting bitcoin as payment for their products on July 18th 2014 but has not released any figures on how much they have processed using bitcoin since then. Dell also accepts litecoin as payment for their products but has not released any figures on how much they have processed using litecoin since they started accepting it on April 1st 2015.
- Microsoft
Microsoft is an American multinational technology company headquartered in Redmond, Washington that develops, manufactures, licenses and supports a wide range of products and services related to computing. Microsoft started accepting bitcoin as payment for their products on December 11th 2014 but has not released any figures on how much they have processed using bitcoin since then.
- Newegg
Newegg is an online retailer specializing in electronics, computers and computer software based in City of Industry, California that operates the website newegg.com. Newegg started accepting bitcoin as payment for their products on July 18th 2014 but has not released any figures on how much they have processed using bitcoin since then.
- TigerDirect
TigerDirect is an online retailer specializing in computers, computer parts, computer monitors, networking equipment and electronics. They started accepting bitcoin in January 2014 and have processed over $1 million in sales using bitcoin.
- Namecheap
Namecheap is a domain name registrar and web hosting company based in Los Angeles California that operates the website namecheap.com. Namecheap started accepting bitcoin as payment for their services on July 18th 2014 but has not released any figures on how much they have processed using bitcoin since then.
- Zynga
Zynga is an online game developer and provider of social game services founded in July 2007 and headquartered in San Francisco, California. Zynga started accepting bitcoin as payment for their games on July 18th 2014 but has not released any figures on how much they have processed using bitcoin since then.
- Virgin Galactic
Virgin Galactic is a spaceflight company within the Virgin Group that is based at Spaceport America in New Mexico and manufactures commercial human spaceflight vehicles, with flights into space planned to begin in 2014. They started accepting bitcoin as payment for their services on November 22nd 2014 but has not released any figures on how much they have processed using bitcoin since then.
- Shopify
Shopify is a Canadian e-commerce company headquartered in Ottawa, Ontario that develops computer software for online stores and retail point-of-sale systems. Shopify started accepting bitcoin as payment for their products on November 22nd 2014 but has not released any figures on how much they have processed using bitcoin since then..
- Gyft
Gyft is an American corporation based in San Francisco, California that operates the website gyft.com which allows users to buy, send and redeem gift cards from retailers using bitcoin.. Gyft started accepting bitcoin as payment for their products on November 22nd 2014 but has not released any figures on how much they have processed using bitcoin since then.
The benefits of accepting bitcoin as a payment method are:
- It's fast!
Bitcoin transactions are processed in about 10 minutes and there are no fees involved in making payments.
- It's secure!
The bitcoin network has never been hacked. All bitcoin transactions are verified by the network before they can be accepted into the block chain. This means that merchants never have to worry about their funds being stolen or double spent.
- It's global!
Bitcoin can be sent anywhere in the world without worrying about cross border remittance fees, currency exchange rates, or conversion charges.
- It's easy!
Bitcoin is the easiest payment method for merchants to accept. All a merchant needs to do is sign up for a bitcoin merchant account and they can start accepting bitcoins.
- It's affordable!
Bitcoin transactions are much cheaper than credit card transactions.
- It's private!
Bitcoin transactions are not linked to a person's name, address, or other personal information.
- It's convenient!
Bitcoin can be used at any time, from any place, and for any amount.
What are the disadvantages of accepting Bitcoin?
The disadvantages of accepting bitcoin as a payment method are:
- Bitcoin is volatile. The value of bitcoin can change drastically in a short period of time, which can make it difficult to know the value of your holdings.
- Bitcoin transactions are irreversible, which means that if you get scammed or hacked, there is no way to recover your funds. This makes it risky for merchants to accept bitcoin payments because they have no recourse if something goes wrong with the transaction.
- Bitcoin is not widely accepted, which means that if you are a merchant, you may have to convert your bitcoin into fiat currency in order to pay your suppliers.
- Bitcoin’s setup is not currently geared for use as a payment method, meaning it doesn’t have the same features than currencies such as PayPal. For example, bitcoin transactions can be inconvenient because they require buying currency from intermediaries or waiting for 2-3 days to confirm a block in order to get funds deposited in your bank account.
- Bitcoin is legally complex and can be hard to use. Many countries, including the United States and Uruguay, have yet to determine how to classify bitcoin.
- Bitcoin’s current growth rate is slowing down, leading many investors to question the long-term future of bitcoin as an asset.
How do I accept Bitcoin?
The first step is to create a Bitcoin wallet. This is an app that you can download on your phone, tablet or computer. The wallet will generate a Bitcoin address that you will use to receive payments from customers.
Next, you need to set up a Bitcoin merchant account. This is an account that will allow you to accept bitcoin as payment for goods and services. There are many different companies that offer this service, download Paperless, which is an easy and secure app to get started with .
You will need to set up your merchant account with the Bitcoin address that was generated by your Bitcoin wallet. Once this is done, the customer can pay for their purchase by sending the appropriate amount of bitcoin from their wallet to your address.