Bitcoin is a digital currency that is meant to make person-to-person transactions not only possible but also more efficient and independent of third party verifications. Bitcoin is still in its early stages. It hasn’t been around long enough or adopted by enough people for there to be any patterns or data-driven conclusions. This post isn’t meant to convince small businesses to start adopting Bitcoin into their business plan. Nor is it meant to ignore the disadvantages and risks that come with it. It is simply to look at some of the ways Bitcoin can affect small businesses and their audiences.
When payments are made through credit card, a bank or other financial institution is required to verify the payment, which results in processing fees as well as delays in the transaction. Bitcoin’s blockchain system takes care of the verification, eliminating processing fees and speeding up transactions.
With the credit card system, customers are able to revoke a payment or request a refund after a product has been sent. This can make things difficult for businesses trying to have a flexible return policy, and easier for people to scam businesses for free products. Bitcoin transactions, on the other hand, are final and irreversible. In this context, Bitcoin can help businesses that deal with a lot of transaction disputes (Source: Bitcoin.Org)
Bitcoin makes person-to-person transactions possible anywhere. This means that businesses can now open up to regions that were once ineligible to pay for a product or service due to government regulations or other credit card restrictions.
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The above advantage is less applicable to small businesses who are less internationally focused, however Bitcoin does open up a niche opportunity. Even if your business doesn’t conduct international transactions, your audience may, due to their occupation, background, hobbies, and more. Accepting Bitcoin payments could make your business more appealing to your audience than other businesses if your audience is embracing Bitcoin for their own personal reasons.
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Allowing for multiple payment options is one way to make your business more appealing to your target audience. Another way to increase your appeal and even bolster your reputation is to take on innovative approaches (of course, in an informed way). If you have done your research about Bitcoin and have decided to adopt it into your business, it is likely that you’ll be giving yourself a leg up over your competitors. Even if most of your audience doesn’t use Bitcoin, the knowledge, awareness, and effort required to incorporate it into your strategy says a lot about your business as a whole.
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The above information covers some of the advantages of Bitcoin that small businesses may experience—that is, if their conditions are right and if they educate themselves and take all the proper steps to adopt it. Even still, with all the right steps, Bitcoin has its risks and disadvantages.
Also, while Bitcoin protects against certain types of fraud, that does not mean it is secure. Bitcoin is not regulated by the government or one central authority. It’s also digital, which makes cybersecurity a threat. What Bitcoin offers in freedom it does not offer in protection.
In addition, consumers may not be craving freedom so much so that they’re willing to take risks with Bitcoin. Even just the concept of cryptocurrency is hard to grasp, and understanding how it works, what’s protected and what’s not can make your head spin. Aside from those who are diving into Bitcoin Mining and staying up to date on every detail, most consumers have yet to get a firm grasp on this system. This uncertainty serves as a barrier to adopting the currency and even appreciating when businesses they engage with do.
To the amateur, Bitcoin is confusing—it’s not insured by a federal or regulatory institution, but its blockchain method secures it as a system. Bitcoins don’t require personal or private information that can be “stolen” and used by others to spend your money. However, all transactions are recorded on a public digital ledger that anyone can access. There is still a lot for the general public to understand and internalize about this cutting-edge currency before they can feel comfortable with it and make decisions about it.
As mentioned above, this post was not meant to get you to feel or position yourself one way or another about Bitcoin with respect to your business. It’s meant to serve up some of the information that has been gathered so far to help you stay informed along the way.