Bitcoin Blog Part One: The Benefits of Accepting Bitcoin for Companies and Their Customers
Virtual currency Bitcoin is set to have real-world impact on the world of e-commerce, with a growing list of companies such as online retailer Overstock, e-commerce specialist Shopify, publishing platform provider WordPress and even space tourism pioneer Virgin Galactic all choosing to accept it as a method of payment. These represent some of the ‘big guns’; however, many of Bitcoin’s supporters believe that adoption by the mid-market will be the key tipping point that brings the virtual currency firmly into the mainstream. With smartphone apps bringing Bitcoins more easily into the hands of potential customers, the question is: does Bitcoin make sense for mid-market firms?
Let’s go back a step, and look at what Bitcoin actually is. Bitcoin is one of the earliest examples of a ‘cryptocurrency’ – that is, a type of digital currency that uses cryptography (secure communication techniques) to protect transactions against counterfeiting. Bitcoins are used as an alternative to traditional currencies such as pounds, dollars and euros to buy products or services electronically.
So what are some of the benefits for companies and their customers?
Fees are Minimal
Arguably the most enticing benefit – although one that could potentially be a double-edged sword, which we will discuss in part two of this blog – is the fact that as Bitcoin is not regulated by any bank or country, processing fees are minimal and commission charges levied on international money transfers are eliminated.
Participating is Easy
Another important benefit is that Bitcoin is very easy to use and participate in. Bitcoins are passed from peer to peer, eliminating the need for an intermediary such as a bank. There is no approval process, no application, no money to pay out and no need for a bank account. This is a rather large breath of fresh air in an area that can typically be strangled by red tape, risk profiles and regulatory gnashing of teeth.
Speed is of the Essence
Alongside ease of use, there is, of course, the benefit of speed to think about. Bitcoin transactions are generally far faster than any interbank transfer as there are no intermediate banks involved to slow the process down. Bitcoins simply pass straight from one virtual ‘wallet’ to another.
Sense of Security
Credit cards were conceived way before the dawn of e-commerce and have had to continually run to keep up with the revolution of online payments. Private data – card number, card code verification (CCV) number, expiry date, and so on – must be typed into websites by customers to complete every purchase – something that many still feel wary about. Merchants can help allay this fear through the use of card store and tokenisation, which eliminate the need for customers to repeatedly enter their card details. Bitcoin, on the other hand, has been developed from the ground up specifically for online trading. It is said to be extremely secure, with features such as Bitcoin wallet digi-key encryption and back-up, storage of bitcoins offline, and the multi-signature protocol, which requires multiple approvals to grant withdrawal of funds.
The Right Image
Companies in sectors such as high technology or gaming could gain a certain amount of prestige among audiences of young professionals by accepting Bitcoin. In addition, the virtual currency is still new enough that it still makes headlines when new companies come on board – a simple way to obtain some free publicity.
Clearly there are quite compelling advantages offered by Bitcoin. But every business is unique, so it is vital that you weigh up both sides of the proverbial Bitcoin before deciding whether to adopt it as a payment method.
Want to learn about the other side of the proverbial Bitcoin? Part two of this blog is a click away.