What Can Accepting Bitcoin Do For You?
Find out how businesses can start accepting bitcoin and what benefits come with it.
The Pros of Accepting Bitcoin as Payment
- New potential customers—Bitcoin opens up your business to a set of early-adopting, tech-savvy customers keen on using bitcoin to buy everyday goods and services. To fulfill Bitcoin's promise as the money of the future, Bitcoiners gravitate toward businesses that accept Bitcoin as payment.
- Bitcoin enables easy international payments—Bitcoin isn't bound by any country's financial regulations, nor is it subject to traditional finance's outdated infrastructure. By accepting Bitcoin as payment, business owners and merchants enable customers worldwide to pay for your services without going through the hassle and expense of currency conversion.
- No chargebacks—Unlike credit cards, Bitcoin transactions cannot be reversed. This protects you from fraud and makes Bitcoin a desirable payment option for businesses that deal with digital goods, such as online courses, e-books, and software. That said, most companies offer a refund or return policy, so customers can rest assured that you're not sacrificing customer service by accepting Bitcoin. The customer can always be right, and you can always do what's best for your business.
- Lower transaction fees—Fees are the bane of business, the silent tax that keeps you from being profitable. They're the roadblocks to expansion and scale and a pain in the neck for customers, too. Credit card companies offer payment networks to make commerce happen, but they suck up your profit and your customers' money in the process—all for a system that isn't even that efficient. Bitcoin's transaction fees are much lower than credit card fees, upwards of 3% per transaction. On the Lightning Network, Bitcoin transaction fees are essentially free—just fractions of one penny.
- Your money gets to you instantly—With traditional finance, final fund settlement on the Bitcoin base layer takes only 10 minutes, compared to the two to three days it takes to settle a fiat transaction. And if you use the Lightning Network, settlement is nearly instant. So anyone at any corner of the planet can make a Bitcoin payment to you instantly, and you'll see the funds in your wallet right away.
- If you self-custody your bitcoin, no one can freeze or withhold your funds—Regulation in the financial industry is confusing. Depending on where you're located, different laws may apply to your business. And then there's the whole guessing game of wondering if banks will freeze or withhold your account because they don't like the nature of your business... or for no reason at all. It's a headache. A nightmare, some might say.
Bitcoin solves this problem by giving you complete control of your money. No one can tell you what to do with it. You're in control of your money.
The Cons of Accepting Bitcoin as Payment
- Bitcoin is volatile—The Bitcoin price is notoriously volatile. While this can be good for traders and investors, it's not so great for businesses. However, payment handlers like BitPay offer protection from Bitcoin's volatility by immediately converting Bitcoin payments into fiat currency. This way, businesses and merchants can avoid the worry of fluctuating Bitcoin prices and focus on what they're good at: running their business.
- Tax rules are confusing—Even in the past year, IRS guidance on digital currencies has tightened, but there are still many gray areas regarding Bitcoin and taxes. Regulation, capital gains taxes, and other factors make it difficult to determine how Bitcoin and taxes mix. Always remember: you should talk to a tax professional to get the guidance you need for your business.
- Managing refunds and returns are tricky—If you do business online, you know that managing refunds and returns can be a pain. Bitcoin makes it even more complicated because you can't simply reverse a Bitcoin transaction like you can with credit card payments. Instead, you have to work with the customer directly to refund their purchase, which can be time-consuming, require additional employees, and ultimately cost you more.
- Custody is a challenge—Unlike fiat currency, Bitcoin is a digital asset that needs to be stored securely. This means you can't simply put it in a safe or lock it in a drawer. Because if you have poor security, someone could steal your Bitcoin—and there are no Bitcoin customer service companies you can call to get your funds back. It would help if you found a reliable digital wallet solution that will protect your Bitcoin from hackers, malware, and other security threats. Businesses may opt for custodial solutions and third parties, but this comes with additional fees, counterparty risk, and a degraded sense of self-sovereignty.
How Can I Accept Bitcoin?
If you're down to take a plunge down the rabbit hole, there are a few ways you can go about accepting Bitcoin. The most popular method is to use a Bitcoin payment processor like BitPay, Coinbase Commerce, Coingate, or CoinPayments.
In our opinion, a better option is to use a Bitcoin Lightning Network wallet that allows companies to receive bitcoin in their account instantly. You won't have to deal with counterparty risk and intermediaries fees, and you'll get to decide what you want to do with your bitcoin. If you're a brazen Bitcoiner, you might choose to HODL your bitcoin as a longer-term investment. But if you want to cash out immediately, you can do that too. The choice is yours, and that's the beauty of Bitcoin.
For a list of places to spend your bitcoin, check out an earlier blog we wrote here.