Whether you are running an online or offline business, accepting Bitcoin as payment is safe and secure. Learn how you can implement Bitcoin to your payment system. This guide will explain to you the need to consider accepting Bitcoin, and it's pros and cons.
here are numerous ways that incorporating a Bitcoin payment strategy into your business can pay off. Online retailers like Overstock and TigerDirect are already reaping the benefits.
For one thing, simply letting customers know that your business accepts Bitcoin is enough to generate media attention and free publicity. You are also more likely to get more business and loyalty from Bitcoin users to want to support businesses that accept the popular cryptocurrency.
More importantly, Bitcoin is easy to use and facilitates speedier transactions and lower costs than credit cards.
Bitcoin payments are also much less susceptible to fraud than credit cards due to the nature of blockchain technology and the level of identity-theft protection. Transactions and payments received in Bitcoin are verified and never disputed.
It is also easier to facilitate international transactions with Bitcoin. Typical foreign exchange fees will usually be too expensive for small businesses to be worth it, but Bitcoin makes cross-border transfers much cheaper. In turn this allows those same businesses to reach an international market.
Lastly, credit cards and other conventional banking transactions are subject to returns and charge-backs. Bitcoin payments are irreversible, so businesses making transactions with the cryptocurrency do not have to deal with this.
There are many methods and services at your disposal to start accepting bitcoin for your business. The following lists are just some of the available ways that will show you how to accept Bitcoin, whether you are a physical retailer or an online store or service provider.
The understanding of Bitcoin bookkeeping and taxes can differ based on the jurisdiction and country you live in. For example, the Internal Revenue Service in the US taxes Bitcoin and other cryptocurrency as property rather than currency.
The complications that this ruling introduces arises when exchanging Bitcoin. When the merchant acquires a property, the fair market value of the property must be recorded. If the fair market value has increased at a later date when it is sold, IRS Bitcoin guidelines dictate that gain in value is taxed.
Due to the fluctuating nature of Bitcoin, every single one of your transactions may theoretically have different taxable gains when you exchange them for fiat currency. To mitigate these complications, many Bitcoin payment processors and service providers offer an instant exchange service.
Essentially, this means that Bitcoin payments you receive are instantly exchanged into a currency of your choice. Of course, it is advisable to get a tax specialist to help navigate the specific the taxation laws and other details that may be unique to your jurisdiction.
Some accountancy firms that even specialize in Bitcoin such as Bitcountantand are emerging as well.
While accepting Bitcoin payments does not carry the typical risks of credit cards or other payment processors, there are some things that you should watch out for in order to avoid fraud. The possibility of people attempting to scam your customers by sending them counterfeit invoices does exist.
It involves them finding out your customers’ identities and delivering invoices to accept a payment to a Bitcoin address that they control, rather than yours. Your business can reduce the risk of this happening by forcing people to get the full Bitcoin address from your website via secure SSL.
It is also a good idea to print most of the address on the payment stub (perhaps with four or five characters starred out), so that there is a paper trail to settle any potential disputes.
Automated solutions such as FraudLabs Pro can screen Bitcoin transactions to determine risk level, and businesses can also understand the proximity of their users by using IP address geolocation.
There are significant benefits to incorporating a Bitcoin payment processor into your business. While the infrastructure to accept credit and debit card payments means that businesses have to pay a two to five percent fee on each transaction, Bitcoin’s lack of any central intermediary drastically reduces the fees that merchants have to pay.
Another big problem of any money transfer system, including standard bank cards, is ‘double-spending.’ Oftentimes, a fraudster is able to spend an amount of money again by calling to reverse a transaction.
Thanks to blockchain technology, Bitcoin offers protection from such fraudulent schemes. Once the transaction is confirmed, it is recorded in the public ledger and after that it becomes irreversible and unchangeable. In this respect, accepting Bitcoin is pretty much like accepting cash.
The volatility of Bitcoin is probably the biggest disadvantage of using Bitcoin in business transactions. If you are not constantly adjusting your prices to reflect the fluctuating value of the cryptocurrency, you may suffer losses.
However, the many Bitcoin exchanges offer instant exchange services, meaning Bitcoin payments are immediately exchanged into the fiat currency of your choice. Along with that, the regulatory grey area of Bitcoin worldwide presents unique challenges.
As cryptocurrency becomes more mainstream and policies are updated to adapt to it, businesses may struggle to keep up with ever-changing legislation.
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