Why You Should (or Shouldn’t) Use Bitcoin for Your Business
The entire world is increasingly using bitcoin, which means your potential customers are likely to use it. However, considering the volatility of bitcoin, you should know the pros and cons of accepting this form of currency before making a decision.
Pros of Accepting Bitcoin As Payment
There are multiple reasons for accepting bitcoin as payment for your business. Here are just a few of them.
Bitcoin is a decentralized, open-source payment network. This means that no institution controls the flow of money, and all transactions directly involve network members. Any machine connected to the internet can be used to send and receive payments, so you don’t need a point-of-sale terminal to accept payments in bitcoin.
2. Minimal Transaction Costs
Accepting payments with bitcoin is free for you because you don’t have to pay a third party for this service. You also don’t have to spend time processing and transferring money because that’s all taken care of by the network. This reduces your overall transaction costs, which could be passed on to your customers and increase sales.
3. Fast Payment Processing
Bitcoin payments are fully confirmed in about 10 minutes, which is convenient for you and your customers. For example, this means that a payment received at 11:15 will be approved by 11:25.
For many merchants, this provides an opportunity to process additional payments before the end of the day efficiently. Also, because it is easy to determine whether or not payment has been received, you can precisely calculate your profit from each sale with no risk of fraud.
One of the appealing attributes of using bitcoin as payment is that you can keep your identity private. Only the person who pays has to verify their identity, and transactions are completely anonymous. This attribute makes bitcoin even more appealing for many industries, such as online gambling or adult entertainment.
5. International Payments with No Exchange Risk
Since the blockchain is entirely decentralized, there is no exchange rate risk when sending international payments. This means that if you accept payments in U.S. dollars, you don’t need to worry about how your revenue will be affected by the exchange rates between the dollar and other currencies.
Cons of Using Bitcoin For your business
While there are multiple great benefits to accepting bitcoin payments, there are also some serious downsides. If you’re not careful, accepting bitcoin could cost you more money than it saves—and even worse, it could hurt your business’ reputation.
Bitcoin is a highly volatile currency, so its value can change significantly over short periods. For example, if you receive a bitcoin payment for $10, the value can drop to $9 within ten minutes. This means that every time you have to make a transaction, including paying your employees or suppliers, you risk that the value of bitcoin will change before you process your payment.
2. Limited Range of Accepted Currencies
There are no official or common rules on how much a given currency can be changed or exchanged for other currencies because of the decentralized network. So, if you accept payments in Bitcoin but the transaction value of the number of bitcoins exceeds a specific limit. You’ll be unable to pay your suppliers because they won’t be able to exchange their currency for Bitcoin.
3. Legal and Regulatory Risk
There isn’t a single currency used all over the world that cannot be altered or devalued, which means that you have to consider what legal and regulatory risks your customers have based on their country of residence. For example, suppose you’re in the United States and accept bitcoin payments.
In that case, you should assume that any foreign customer won’t be protected against inflation in their own country. This means they could lose their entire transaction amount if the value of bitcoin drops significantly.
Because the bitcoin network is decentralized, many small payments are associated with each transaction. These payments must then be processed by parties worldwide and could be susceptible to cybersecurity vulnerabilities like hackers.
Hackers can be mitigated by using a multi-sig wallet. Still, it would help if you considered that any compromise of your payment processing software could result in losses for your business. Furthermore, because this risk is also present for credit card transactions, it might not be much of an advantage for bitcoin payments over these conventional ones.
Bitcoin has been used for years as a payment for goods and services, so it is a viable way to receive payments for your business. However, while there are several advantages associated with using bitcoin as a payment method, it is not without its drawbacks.
But it provides a unique opportunity for your business to stand out from the competition and expand into new markets with or without a pragmatic startup security program. Check out our blog now for more content on Bitcoin and other cryptocurrencies.
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