Bitcoin is all over the news, people are going nuts, selling off other investments and assets to buy this most popular type of cryptocurrency. With all the commotion, perhaps you’ve considered accepting bitcoins on your e-commerce site? What is involved in doing this and what is bitcoin, exactly?
An acquaintance of this blog sold all his worldly possessions to buy bitcoin when their worth went from $1,000 to $18,000 per unit last year. Bitcoin’s value has skyrocketed and is traded on the Cboe and CME futures markets. However, at the time this blog is being written the Securities and Exchange Commission suspended trading of The Crypto Company until January 3, 2018 citing “concerns regarding the accuracy and adequacy of information” surrounding the cryptocurrency, stating it is prone to speculation and manipulation.
What is Bitcoin?
Bitcoin is a digital currency that was created in 2009 by an unknown entity calling themselves Satoshi Nakamoto. Transactions are made without banks. Bitcoin can be used to purchase goods, but much of the excitement is about getting rich by trading it. The price of bitcoin skyrocketed into the thousands in 2017. A primary difference between cryptocurrency and standard currency is that cryptocurrency is not controlled by any government.
Bitcoins are created when people virtually mine for them by competing to solve complex math problems using special software on their computers. The term “mining” is used because the process is slow and labor-intensive. Similar to mining for gold or other precious metals. Mining is the way Bitcoins are added into the system: Every time a miner unlocks a bitcoin block, all the transactions on that block are processed. The miner, in return for his hard work, is rewarded with some bitcoins for unlocking the block.
Bitcoins are stored in a digital wallet, kept either in the cloud or on the user’s computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money. Bitcoin wallets are not insured by the FDIC and can and have been hacked or stolen.
Many marketplaces called bitcoin exchanges allow people to buy or sell bitcoins using different currencies. People can send bitcoins to each other using mobile apps or their computers. The exchanges are anonymous, which unfortunately makes cryptocurrency attractive to criminals.
What can you buy with bitcoin?
If it’s not purely an investment, people who acquired bitcoin are going to want to spend it at some point. So, what can you buy with bitcoin?
Many online e-commerce sites allow you to buy physical goods with Bitcoin. Microsoft, Dell, Overstock, Newegg, Tiger Direct all accept bitcoin. Amazon has long been rumored to have bitcoin acceptance in the works, which could cause its value to skyrocket.
Have you considered accepting bitcoin in your e-commerce site?
To accept bitcoin for online businesses is quite easy, simply give out an address and indicate how much Bitcoin users need to pay. If you don’t want to receive payments directly, payment processors can convert your Bitcoins into regular currency. Compared to credit card payments, which can take weeks until you can use that money, with Bitcoin you can use your funds within minutes. The fees to use bitcoin are quite small and, unless you use a processor, they don’t take a percentage per payment.
Coinbase and BitPay are popular merchant services that allow you to accept bitcoins either as a business or as an individual. With Coinbase you will be able to start accepting bitcoin payments on your site, which will go directly in to your Coinbase account. You can then use the service to convert those coins and withdraw them to your bank account for a 1% fee.
More and more e-commerce sites are offering cryptocurrency as a payment method, will you?