Bitcoin is a virtual currency designed specifically as a medium of exchange. The underlying technology allows for the posting of transactions on a public ledger, which adds security and a host of other benefits for cryptocurrency users. As a result, bitcoin has only continued to increase in usage for both consumers who want to buy and sell bitcoin and those who want to start making purchases with their cryptocurrencies. For those businesses who have not yet begun accepting cryptocurrencies, workarounds and alternatives from third-parties are actively being considered.
To avoid losing out on precious sales leads, businesses of all sizes may do well to make cryptocurrency payment options available to a new and growing market segment.
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Benefits for small businesses to start accepting bitcoin
Still not convinced? Here are a couple of other benefits for businesses that accept bitcoin.
More customers and more sales opportunities
The more payment options your business offers, the more customers you can offer your services to. In many cases, this includes customers worldwide who want to avoid exchange rates and the associated fees to make the conversion. A global currency opens the door for transparent dealings and fair pricing, so consumers don’t feel ripped off when purchasing. The increasing availability of bitcoin ATMs has helped accelerate the idea of a global currency, even with high transaction fees. Rather than subjecting consumers to pay these fees, which they will factor into your product’s cost, accepting the currency at the storefront can give your offering greater appeal.
Reduced fees make for a bigger bottom line
Many small business owners are already paying fees for accepting certain credit cards, at times upwards of 3.5%. With higher prices, small businesses must absorb some of these costs in their profit margin, and they are okay to do so since many consumers prefer to use their card. Bitcoin becomes an attractive option by comparison since, without a middle-man, fees for accepting the cryptocurrency are also reduced.
Greater security against fraudulent purchases
Bitcoin offers greater security since all transactions are final and written into the blockchain. This means chargebacks can’t be made from the original purchase, and no disputes will need to be made. Disputes can be lengthy and greatly harm your business’s profit, especially if chargebacks are fraudulent. Using a peer-to-peer system, third parties can’t return payment; only the merchant can make allowances to do so.
Drawbacks of accepting bitcoin in your small business
Businesses can certainly benefit from accepting bitcoin. However, bitcoin also has many unique features that may not make it the right choice for every business. Before deciding that your business wants to step into the cryptocurrency world, it is important to consider the other side of the coin (pun intended).
Cryptocurrencies are subject to hacking
With bitcoin gaining popularity, cybercriminals have found new ways to gain access to funds that haven’t been stored with proper security. Since bitcoin is not backed or insured by governments, a hack might be difficult to recover from. Cryptocurrency exchanges have since leveraged a combination of online and offline storage methods to ensure that breaches do not occur. If they do, the majority of their funds are well protected. Likewise, small business owners must have offline storage methods with proper security protocols to ensure their assets are safe.
Bitcoin is volatile
Even those who don’t trade cryptocurrency recognize bitcoin for its volatile price swings. While these swings make for great trading opportunities, volatility can also cause concern for business owners who rely on a steady income to support themselves. To protect themselves from loss, store owners do well to regularly exchange their tokens for fiat money to avoid being caught in a market downturn.
Regulations require some learning
In general, there is a learning curve around cryptocurrencies and how to manage them. Small business owners may find they are already pressed for time as it is and may find it too stressful to try and get up to speed on a new payment method. If this is the case, it may be beneficial for business owners to wait until more educational resources are available to them before dipping their toes into the crypto pool.
Small businesses must continue to do the necessary research to determine if accepting bitcoin is in their best interests. There are many benefits and drawbacks to the decision. Therefore, the answer won’t be the same for each business and will instead depend on the mission and goals outlined by their team.