There’s been a lot of recent buzz on cryptocurrencies like Bitcoin. It’s an exciting form of digital currency; easily transferable, secure, and anonymous. That makes it ideal for anyone who wants to avoid banks leeching them dry on cross-border transactions.
That said – there’s plenty to keep in mind. If you’re wondering whether to accept Bitcoin as a form of payment, or how to start – read on!
Bitcoin first came into the light as the brainchild of Satoshi Nakamoto. He wrote a paper on a peer-to-peer digital cash system that proposed a zero-trust security model and, in 2009, the Bitcoin network was born.
The first Bitcoins were “mined” in a process that allowed users to convert machine work into digital currency. However, there’s enough of it floating around today to make it much more accessible to a wider market.
For example, Bitcoin and other cryptocurrencies are gaining favor as a means of payment for services. A freelancer in Berlin, for instance, could work for a company in Amsterdam and get paid in Bitcoin, bypassing expensive bank money transfer fees.
We’re also seeing an increasing amount of legitimacy in cryptocurrency-related companies thanks to large moves such as public listing. One such example is the recent Coinbase NASDAQ listing.
Given how widespread all of this is becoming, many users are finding themselves more interested in crypto as a means to an end.
In many cases, the legality of Bitcoin and other digital currencies is still up in the air. Many countries around the world have been dragging their feet over cryptocurrency legislation. Others, which have already taken a stance, have gone in either direction.
Let’s consider some notable locations which have passed judgment on Bitcoin;
With legal issues out of the way, let’s jump into some benefits first.
There are many reasons why Bitcoin can be a compelling form of payment.
Massive infrastructure growth has given a solid boost to digital communications and borderless trade. Many, including myself, find overseas markets much more accessible. Nearly 30% of my clients are overseas, and we need to find feasible ways of transferring money.
Banks typically charge near-usurious rates for international funds transfers and take their sweet time in processing them. Money transfer services are slightly better, but the system isn’t always ideal for accessibility. Bitcoin becomes a very viable alternative in these scenarios.
PayPal is one popular choice for international money transfers, but the service can be slightly annoying. It also allows remitters to reverse payments, which isn’t ideal for those accepting PayPal payments.
Bitcoin transactions are final, meaning once the funds transfer to you, they stay with you until you transfer them out. Not ideal for the ones sending the money, but it makes accepting payments much safer for you.
Unlike bank transfers, Bitcoin transfers take a fraction of the time to cross borders. While the time needed for them can vary slightly depending on current volume, you won’t need to wait between two to five working days like most banks will take. Even PayPal transactions can take a couple of days to clear on occasion.
International transfer fees for banks (and even online payment transfer services) can be confusing. Instead of dealing with incoming, outgoing, or even destination country-based costs, you only need to handle sender transaction fees for Bitcoin.
And that’s charged to the sender, so you just need to sit still and watch funds flow into your wallet.
Bitcoin works on blockchain technology, which is a decentralized form of data storage. Blockchain is essentially a massive accounts ledger with decentralized control. Because of the methodology, there is also little chance of data loss or unauthorized transactions.
With much of the world putting an increasing focus on mobile, Bitcoin seems to be naturally progressive. Today, most crypto wallets are mobile-based and readily available from major channels like Google Play and the Apple App Store.
Mobile networks are still being built much more quickly in locations where many are unbanked or land-line infrastructure is less developed. This situation makes Bitcoin an exciting possibility for businesses and freelancers to expand their reach.
Earlier I mentioned that Bitcoin works based on blockchain technology, adding to security. Blockchain treats the Internet as a massive database. All blockchain-connected devices store bits of data that are Bitcoin transaction records.
Crypto wallets are needed so that you can add transactions or note those involving your account. The crypto wallet is the blockchain element that does the complicated work of updating the massive blockchain Bitcoin ledger.
Although most of us might be considering Bitcoin as payments for things like freelance services, major companies today are increasingly leaning in this direction. Here are some notable companies that are doing so right now;
Even for places that don’t accept Bitcoin directly, you can purchase gift cards with Bitcoin and use them. Some examples include Netflix, Amazon, and Steam gift cards.
While this list may not directly affect your decision to accept Bitcoin as payment, it does let you know that your Bitcoin won’t go to waste. There are many places you can spend them without needing to convert them into fiat currency.
If what I’ve said so far has swayed you, then it’s time to get ready to accept your first Bitcoin payments. Compared to the paperwork that banks will have you wade through, Bitcoin transactions are a lot simpler.
To accept Bitcoin, all you need is to sign up for a digital wallet. I’ve covered these extensively in my article on best crypto wallets, but there are just two key highlights you need to know;
Most digital wallets are easy to use, and we’ll do a run-through using Exodus Wallet as an example. I’m a desktop kind of guy, so I downloaded the PC application via their website and installed it.
Once installed, click the wallet icon on the top navigation bar. From here, you can send and receive payments. Click on the “Receive” button, and you’ll see a QR code and address string (it looks like a complex, scrambled line of characters and digits).
Either one of these can be sent to your clients for them to send Bitcoin payments. When they do, your balance gets updated in the wallet.
Once you have your digital wallet, you need to decide how to handle your clients. One way is by using invoicing software that is capable of integrating Bitcoin as a payment method. Some examples of these include BitPay, CoinPayments, and Lamium.
If you’re working on a smaller scale or already invoicing manually, ignore these and simply notify your clients manually. Doing so may not be as convenient, though, as it could mean extra work for you and some confusion for your customers.
While Bitcoin might sound like a desirable payment method right now, there are some downsides to things. These include;
By now, you’ve probably realized that Bitcoin isn’t the perfect dream as a currency replacement. While there are concrete advantages to accepting Bitcoin, risk and complexity exist as well. To answer the question of possibly accepting Bitcoin payments can be tricky.
For those fed up with expensive banking fees, complex routing regulations (in some places), or country bias in payments, then Bitcoin can be a good alternative. It isn’t tricky to swap to Bitcoin payments as long as your customers are willing. It is essential, though, to understand the risks involved.
If you aren’t freelancing or running your own business but still interested in getting Bitcoin payments, there are also a fair number of jobs that pay in Bitcoin.
Timothy Shim is a former tech journalist who has turned his experience towards his business as a writer, editor and content strategist. Today, he helps businesses craft compelling messages and advises on SEO, content marketing, and social media strategy.