However, while accepting credit cards and other traditional payment methods may seem obvious, accepting Bitcoin payments is more complicated. In addition to subjecting your business to Bitcoin’s erratic price, it also comes with tax complications. Still, there are large companies, such as Amazon and AT&T, who now accept Bitcoin. Clearly, Bitcoin has resonated among enough consumers that it’s worth considering. Due to this, we'll review the topic further in this post.
What Is Bitcoin?Bitcoin is a type of digital currency, also referred to as a kind of cryptocurrency or virtual currency. It's the first decentralized digital currency ever created, and is stored on a network of computers called a blockchain. Every transaction is verified through cryptography on this blockchain. As a digital currency, Bitcoin only exists as a snippet of code on your computer. In other words, there are no physical coins or tokens. Each time Bitcoin is spent or received, the network verifies the transaction and stores it. The stored transaction can't be altered without network verification. This provides security for Bitcoin users because the transactions record is available to the public. However, even though the data is public, the person or entity that spent or received that Bitcoin is kept anonymous. Due to this combination of security and the ability to remain anonymous, Bitcoin has become very popular. Many Bitcoin users like the currency because it’s an alternative to using traditional financial institutions to transfer money. Coindesk highlights several distinctions between Bitcoin and traditional currency, which include:
- Decentralization: Traditional currencies rely on centralized banks to facilitate and verify transactions. Bitcoin transactions are verified by a network of computers spread throughout the world.
- Limited Supply: Unlike traditional currency, there's a finite supply of Bitcoins. This eliminates the ability of anyone to manipulate its value.
- Immutability: Once an hour has passed after a Bitcoin transaction is recorded, it can’t be reversed.
- Divisibility: Bitcoin can be divided into one hundred millionths, making it possible to process microtransactions.
Is Bitcoin Really The Future of Digital Currency?Bitcoin must overcome obstacles before we can declare it as the future of digital currency. One of Bitcoin’s core values lies in its security, yet Bitcoin hackers regularly find ways to steal. Also, because it's an anonymous transaction, more than one billion dollars in Bitcoin is spent in illegal online marketplaces. However, the number of companies that accept cryptocurrency like Bitcoin is increasing. Plus, as the technology behind Bitcoin advances and becomes more mainstream, adoption will likely increase. Ultimately, it’s impossible to say if Bitcoin is the future of digital currency. Whether it’s Bitcoin, a similar format, or a combination of several, cryptocurrency is here to stay.
The Pros and Cons of Accepting BitcoinAs you might expect, accepting Bitcoin comes with both pros and cons. Depending on your business's industry, the benefits and drawbacks of accepting Bitcoin may be more or less pronounced. In concept, the advantages of accepting Bitcoin are similar to those of accepting any other additional payment method. For example, by offering Bitcoin payments, you’ll increase the chances that your customers will have their preferred payment method. However, the disadvantages of accepting Bitcoin are unique and not exactly straightforward. To help you decide whether to offer this payment method, here are the pros and cons of accepting Bitcoin.
The Benefits of Bitcoin:
- Access New Customers
- Lower Fees for Cross Border Payments
- Bitcoin Can Build Your Brand
- More Choices for Your Customers
The Downsides of Bitcoin:
- High Exchange Rate Risk
- Unique Tax Treatment
- Complicated to Set Up
- Lack of Regulation