3 Small Business Benefits to Using Bitcoin
What if you woke up and found out all the virtual cash you accrued harvesting crops in Farmville was actually worth something?
As ridiculous as it sounds, that’s what happened with Bitcoin.
When the housing market crashed in 2007, plunging us into an economic recession, there was an overall distrust of the banking system in the U.S. Many people became dependent on electronic transactions, but were fed up with the regulatory agencies controlling it. Thus, bitcoin was born.
Using a publically distributed digital ledger, called the blockchain, bitcoin was the means by which digital transactions could be made. The beauty of bitcoin was that the transactions were quick, transparent, and free from the arm of the banking system. To put it simply, paying in Bitcoin would be the digital equivalent of paying in cash.
Like all currencies, it possesses intrinsic value which can fluctuate based on how much people think it is worth. There is only a finite amount of Bitcoin, so as demand increases, the value does too.
Since 2016, the value of each bitcoin has increased over $12,000, leaving many scratching their heads and wishing they had invested sooner. The bright side? It is definitely not too late to begin. For small business owners in particular, investing in bitcoin payments could substantially increase your profit margins.
Little to No Transaction Fees
Many small businesses have credit card processors or use PayPal for online transactions. Though it provides a convenient way for your customers to pay, using these services can rack up some pretty outrageous fees. And let’s face it, no one likes fees. With cryptocurrency transactions, such as bitcoin, it would be as if your customers paid you in cash.
If you sell to or have international clients especially, offering a bitcoin payment method will also completely avoid international exchange rates or fees. Though your clients may be on the other side of the world, bitcoin treats them as if they physically walked into your store.
Quicker Transaction Time
The wonderful thing about using the blockchain as a ledger, is that it does not require an institution to process each payment individually. The blockchain does it for you in a fraction of the normal time. If the majority of your transactions are from credit cards, it probably takes a while before you see that money in your bank account. With Bitcoin, that money goes directly to you in less than ten minutes.
This is how it works. Let’s say your customer, Bob, pays for a shirt using bitcoin. His payment is recorded using a random bitcoin address that contains the value of the transaction. That address is then stored in your own bitcoin wallet and the transaction is complete. It’s as simple as paying in cash.
Due to the amount of coverage bitcoin has gotten over the last year, it has become much easier to liquidate. You could cash in as soon as a transaction is complete or you could sit on it. The value of bitcoin has risen exponentially this year, going from $1,000 per bitcoin to over $12,000, and it continues to rise. If you invest right, a transaction of $20 in bitcoin, could end up being worth much more.
However, like all investments, there is a certain degree of risk involved. Unlike most currencies, bitcoin isn’t backed by anything, like gold. Bitcoin is only worth as much as people say its worth. Right now, it’s worth a lot, but who knows if it’s going to continue to rise.
While there are risks, you might find that bitcoin will make your small business a lot of money and make payments easier than ever before.