By Carrie Gallagher
Industry experts, regulators and journalists alike hail the evolution of Bitcoin as one of the most transformative developments within financial services over the past decade. But what exactly is it? And why does it matter to your small business?
Bitcoin is an entirely new digital currency that exists online to help streamline international transactions by removing the barriers created with currency exchange rates and processing fees. Using Bitcoin, your business and your customers can purchase products and services anonymously and internationally, without the high fees associated with credit cards, because it’s not tied to the movement of any regional currency and the associated government regulations. But Bitcoin isn’t strictly for global trade; it can also be used in day-to-day local transactions.
Whether you’re trying to reach markets around the world, buy supplies internationally, or provide additional options for your local customers – or simply to stay ahead of one of the biggest trends in the global marketplace – below are a few of the Bitcoin basics that will help to explain what it is and why it matters.
1. It can save your business money.
Bitcoin fees are much lower than monthly credit card fees – often less than one percent – because there is no middleman involved. If you sell high-priced items, this can result in more significant savings for your business.
Unlike some credit card companies, Bitcoin also protects against chargeback fraud, since no transaction is reversible. Further, because Bitcoin is digital currency, you don’t have to purchase credit card machines and upgrade equipment to keep up with industry demands.
2. It’s user-friendly.
A Bitcoin account is incredibly easy to set up and can be accessed from any smart-phone, tablet, computer or other internet-connected device. No further processing equipment is required.
Once you have an account and participate in transactions, you are able to immediately cash in your Bitcoins at the current exchange rate or keep them as is for use in future transactions. Because Bitcoin is becoming increasingly accepted within mainstream business, there are various software and merchant services tools available to assist you with management of your Bitcoin account.
3. It’s accepted worldwide.
Bitcoin has the ability to grow your customer base internationally; since this digital currency isn’t tied to a physical location, purchasing and selling internationally is easier and more effective. And since credit card rules vary from one country to the next and international fees can break the bank, a decentralized currency like Bitcoin can be a seamless way to grow your business worldwide.
4. You’ll need to modify your accounting procedures.
Since Bitcoin is an entirely new type of currency, it will require modifying your accounting methods; however, many accountants already have the knowledge and resources to help you should you choose to accept it. Your day-to-day book-keeping method doesn’t need to change, but pay special attention to fees associated with converting Bitcoins to flat currency as they may differ from one transaction to the next. However, since merchant processing assistance is offered through Bitcoin, as opposed to a third party like PayPal, the fees are much lower.
5. Because of its infancy, anticipate future regulations.
Because Bitcoin is a recognized currency, it is already subject to rules and regulations by the IRS. Make sure you’re compliant in order to avoid complications. It is also important to note that, like any other currency, Bitcoin is susceptible to further regulation down the line – only time can tell how regulation will affect Bitcoin practices.
Further, like anything you do online, there’s the chance of a security breach. Investigations and regulations have already been made in reaction to Bitcoin foul play. Despite the potential risks, if you want to reach more customers or you’re just tired of high credit card fees, now is the time to take action. Bitcoin can save your business a substantial amount of money, keep your customers happy and help you grow globally.
And if it doesn’t work out? Don’t fret – Bitcoin is as easy to remove from your everyday business practices as it was to implement.