Microsoft, Expedia, Overstock, NewEgg, and popular dining chains such as KFC and Subway are just some of the businesses in the growing list of companies that accept Bitcoin. Even AT&T and Virgin Galactic have also adopted Bitcoin payments. Many mainstream establishments are already embracing Bitcoin, and there are compelling reasons for this.
For one, Bitcoin makes it possible to do transactions with confidentiality. This cryptocurrency also ditches the involvement of banks and financial regulators when doing online transactions, especially when foreign exchanges are involved. It makes the process faster and hassle-free. Additionally, there are no extra fees to worry about—no vexing service credit card charges, recurrent debit card fees, and penalties for going below the maintaining balance of bank accounts.
Bitcoin is creating advantages not only for shoppers but also for businesses. It is accessible to anyone without having to do any paperwork, which means it helps expand business opportunities. It allows sellers to receive payments and lets shoppers to buy things — all without having to go through tedious procedures to get a bank account or enroll in an online payment service.
Moreover, Bitcoin payments are known for security. The underlying blockchain technology cannot be tampered with. There were several cases of theft, but these are mostly attributable to the lack of prudence on the part of Bitcoin holders or exchanges. Nobody has managed to crack the encryption that protects the distributed ledger that aggregates all Bitcoin transaction records. Hence, it is safe to say that Bitcoin is sufficiently secure.
If you are considering accepting crypto payments for your small business, consider the following pointers.
Make sure you have mastered the basics
When accepting credit cards, debit cards, or other cashless payment systems, you have to do some preparations. You need to become familiar with the procedures, the technologies necessary, and the corresponding fees and bureaucracy-related matters. The same goes for Bitcoin payments. You need to properly understand how it works before getting involved with it.
Get acquainted with the transfer cost (Bitcoin transactions are not totally free), the truth about its “anonymity”, the process of setting up and using a Bitcoin wallet, and the methods of converting it to fiat money. Also, understand the volatility of its value in relation to fiat. Be decisive in converting your crypto into dollars or some other fiat currency whenever there is a downward trend to prevent exchange losses.
As mentioned earlier, Bitcoin technology is generally secure. The vulnerability is in the way the cryptocurrency is kept by the owner. When adopting Bitcoin as a payment option in a business, it’s essential to plug all security vulnerabilities and ensure adequate data protection. You should prudently identify all potential weak spots in your company IT.
Bitcoin has a solid encryption technology behind it. The integrity of its immutable distributed ledger has so far remained intact. However, there are various ways for hackers to gain access to accounts (the wallets) and transfer funds without the owner’s knowledge or permission. Thieves use phishing, spyware, and other malicious software to attack a device used in maintaining a Bitcoin wallet. The main goal of which is to obtain a copy of the private key.
Your private key is a long string of characters which serves as the password for accessing an account. Once a third party obtains the private key, a compromised account is as good as gone. Bitcoin wallets contain the private key, and they are usually designed to make the string of characters importable instead of being “copyable” to prevent keyloggers from reading them. However, sophisticated malware may be designed to take screenshots of the key if a text version of it cannot be obtained.
It is advisable to avoid keeping Bitcoin balances in hot wallets and online Bitcoin exchange accounts. The recommended setup is to store most of your Bitcoins in cold storage (offline wallet) and having just enough funds in a hot wallet to meet daily business needs. With this scheme, if ever a hacker manages to steal your private key, the damage will be limited to the balance in the online wallet.
Don’t hesitate to shift from fiat to Bitcoin pricing and vice versa
Like most cryptocurrencies, Bitcoin is a highly volatile digital currency. Bitcoin prices can move more drastically compared to the movements in the exchange rate of standard currencies. They may go up or down by several tens or hundreds of dollars. Because of this reality, many think it is better to price products in fiat currency instead of Bitcoin.
It is generally easier for buyers to see prices in the more familiar currency, so they don’t have to calculate equivalents, especially when they try to compare the prices of items offered by different stores. Also, on the part of the sellers, it can be tiring having to adjust prices every so often (when pricing in Bitcoins) to match the fluctuations in Bitcoin price. As such, it can be arguably better to stick to fiat currency pricing.
It’s worth noting that stores can have extra gains due to the changes in Bitcoin price. You can take advantage of this Bitcoin price fluctuation when pricing in BTC to have higher extra gains. It’s a small difference not many Bitcoin-paying buyers would mind because of how BTC prices are usually denominated in satoshis or decimals. Still, this price difference can translate to additional profits.
Observe how customers behave when you use fiat currency or Bitcoin pricing, and crunch the corresponding changes in the profit numbers. The method that yields the higher sales and profits is logically the preferred method.
Lastly, consider diversifying your cryptocurrency support. Don’t be too focused on Bitcoins. Try storing value in the Bitcoin fork called Bitcoin Cash. Other good options are Ethereum, Litecoin, and Ripple. Diversifying is advisable to avoid suffering from heavy losses in instances of massive abrupt BTC price drops. It’s also a good way to accommodate other potential customers who don’t have Bitcoin but have other cryptocurrencies to use as payment.
Accepting Bitcoin payments is expedient for businesses, but there are risks involved. That’s why it’s important to have a good grasp of how it works and to emphasize security. It’s also helps to keep a keen eye on how pricing affects sales and profits and to consider keeping other cryptocurrencies as safety nets against the volatility of Bitcoin.