Source: David McBee, Pexels
Bitcoin, the most popular cryptocurrency, is being increasingly touted as the currency of the future. In 2017, Bitcoin hit the headlines every day. With its value skyrocketing, its acceptance in institutional finance increasing and with retail investors endorsing the currency more than ever, the broader economy seems to be adopting Bitcoin rapidly. It is not surprising that this overwhelming phenomenon is making even the most conservative businessman sit up and ask what he should do if he does not want to be left behind in this revolution.
How to decide on a Bitcoin exchange?
Source: Bitcoin touch screen
You can buy Bitcoin as easily as signing up for a mobile app. However, before you buy a Bitcoin, you need a Bitcoin wallet, hardware or software, cloud-based or desktop or even mobile-based. Once you have a Bitcoin wallet, you can buy Bitcoins on a Bitcoin exchange.
A Bitcoin exchange is a digital marketplace where users buy and sell Bitcoins using different currencies. You may have certain criteria while choosing a bank or an online broker. Similarly, you need to keep in mind several factors while choosing a Bitcoin exchange. Some consider CryptoGo one of the best options, and a review of this exchange on Best Bitcoin Exchange explains why. The reviewer suggests that one should also take into account language barriers, time zone differences, international long distance costs, and the transaction fees charged. More importantly, you also need to look at the security features: does the exchange have robust security measures in place such as two-factor authentication, SMS or email alerts, encrypted emails and wallet monitoring features? Finally, you should look for an exchange that is capable of accommodating high trading volumes, meaning that it should have a high number of trading pairs and reasonably high liquidity.
Bitcoin as a payment option
For small businesses, one of the best ways of participating in the Bitcoin revolution and benefiting from it would be by accepting bitcoin payments from customers through a merchant solution. Bitcoin payments are similar to a wire transfer or cash transaction where the payment goes directly from one party to another without the involvement of a financial institution as an intermediary. The execution of payment processing takes place through a private network of computers. Each transaction is recorded in the blockchain, which is public but anonymous.
Small businesses that do not want to miss out on the Bitcoin revolution could do well to understand some of the main benefits of choosing Bitcoin as a payment option. Accepting Bitcoin allows you to put your business on the international market space immediately. In exporting goods or purchasing supplies abroad, you can bypass foreign transaction fees and exchange rates since Bitcoin is an international currency and is not tied to any single government. Further, trading with companies that also accept Bitcoin ensures that border restrictions are not an issue. You do not pay the 2-3% merchant transaction fees. The cost of sending and receiving Bitcoin payments is very low or none at all. Bitcoin transactions are faster, perhaps not more than 10 minutes as opposed to a couple of days when going through centralized institutions. Further, Bitcoin transactions cannot be reversed. Only the receiving party can refund it, which means that there are no charge-backs for merchants as in case of credit cards. The rapidly increasing number of businesses accepting Bitcoins is perhaps a testimony to the ease of doing business using Bitcoins as the mode of payment.
However, these benefits come with a number of caveats. A major disadvantage of Bitcoin is its volatility. There is no accepted index for measuring volatility in Bitcoins since cryptocurrency as an asset class is still in the nascent stages. Prices of Bitcoin have soared and plummeted, influenced by a number of factors such as national policies, fluctuating public opinion, and pronouncements of countries on regulating cryptocurrencies. Secondly, Bitcoin is completely digital, which makes cybersecurity a threat. Further, although Bitcoin ensures that identity theft and counterfeiting are virtually eliminated, it is susceptible to human errors and technical glitches.
In the UK, for instance, such perception is further perpetuated by lack of support from the British banks. According to a Financial Times report of 23 October,2017, although investor interest in cryptocurrencies has surged since their prices jumped in 2017, traditional banks are shunning companies that handle cryptocurrencies. Thus, many companies operating in the UK are forced to open accounts in Poland, Gibraltar, or Bulgaria. This puts a question mark on the UK’s ambition to emerge as a global hub for the fintech sector. Nevertheless, for Polish businesses operating in the UK, this is a boon. Although Poland is not part of the Eurozone, it is part of the Single Euro Payment Area (SEPA) system, which makes euro-based bank wire transfers cheaper. Thus, small businesses operating in the UK would find Bitcoin a highly attractive and cost-efficient way of doing business. Further, the Polish finance ministry’s statement of 2013 that it does not have issues with the legality of Bitcoin and it would not do anything to stampede its development is perhaps one of the earliest endorsements from a government. As Bitcoin grows and evolves, more countries are likely to back it. This seems to be the way forward for Bitcoin, which like the Internet, is all set to take our lives by storm.
