Tapping Into the Digital Currency Revolution: Why Business Needs to be Bitcoin Friendly
Transacting in blockchain backed currencies like Bitcoin or Ethereum is becoming increasingly common. Over 300,000 daily transactions are occurring using Bitcoin. Add to these numbers other alternative blockchain currencies and that leads to over 500,000 unique transactions per day and rising. Another way to look at this is 6 transactions a second.
Malls now have Bitcoin ATM machines where people can purchase and exchange Bitcoins for other paper currencies or other paper currencies into Bitcoins.
The digital generation (under the age of 30) account for 65% of bitcoin users (and growing) while the GenX (up to 40) account for another 25% of users. These are target rich customers for new business models including food carts, craft breweries, digital stores, mobile consultants, and small office/home office nomadic service providers.
Like the use of debit cards and PayPal whose growth curve cryptocurrencies are mirroring, the early adoptive generations lead the use and acceptance of new payment methods and businesses that avoid accepting new payment streams risk losing customers and lost customers are difficult to replace.
Will accepting Bitcoins help a failing business succeed? Doubtful. Accepting Bitcoins and other cryptocurrencies will help attract customers you may be discouraging. Accepting Bitcoins is the modern day equivalent of accepting credit cards back in the 1960s. Now is the time to join the digital commerce revolution.
Common questions small business ask include:
Q: Is it legal to accept Bitcoins?
A: Yes, of course, it is.
Q: Is it really money?
A: Yes and No. It isn’t “currency” as defined by the IRS and the US Treasury, although other countries treat it as currency. It can act as a security or a commodity but really isn’t exactly either or those. What happens in an “accounting” world is that a business records their sales price based upon the fair market value of the Bitcoin on the day they receive and report its expenditure on the day the Bitcoin is converted to a traditional currency or another form of value (gift cards, use in purchasing, distribution as a dividend or profit share, etc.). Any resulting price increase or decrease between the day of acquisition and day of disposal is treated as a sale of business property.
Q: Wow that sounds complicated.
A: Sounds more so than it really is. Most businesses utilize a direct conversion model of Bitcoin to functional currency using one of the several facilitators. Just like the more common credit card processing system where the merchant bank facilitates the use of the associated debit/credit transaction and deposits funds within a few days in the company’s bank account. These cryptocurrency transaction companies perform the same function. In this way, the accounting for sales is really not that much different than credit cards.
Q: Do you have any recommendations?
I still don’t understand this digital currency concept but I want to expand my sales?
A: Sure. The company I have found credible is GoCoin (www.GoCoin.com) (full disclosure, we represent GoCoin and were active in its formation. We are not compensated for endorsements or other referrals). GoCoin is simple to use, quick to set up to accept Bitcoin payments on your website and is the global leader in payment facilitations.
Q: What do I need to do to accept Bitcoins?
A: You will want to establish one or more cryptocurrency wallets that allow you to place coins under your ownership. Companies like Coinbase (www.coinbase.com) for example work well for this. There are many qualified wallet companies (and note, although I reference Bitcoin throughout this article, there are a number of well-established currencies (referenced as ‘Alt Coins’) so don’t limit your use to just Bitcoin. You will need an exchange process (like the GoCoin model referenced before) and you will have to comply with basic information sharing due diligence as part of the homeland security and banking security processes. All of this is quite simple and we are here to assist and help you accomplish your objectives.
One of the advantages of accepting Bitcoins over traditional credit cards is the discount rate that you, as a merchant, pay is lower. Generally closer to 1% compared to say 2.5% – 3.5% depending upon your merchant service agreement, volumes, and associated risk profiles. This savings drops to your bottom line profitability.
Additionally, by accepting these Alt Coins and promoting them at your business, you are signaling to the up and coming consumers and business leaders that you are a modern and contemporary business. Even if the use of these coins is slow to initiate, the associated marketing value still improves your bottom line.
Will accepting Bitcoins help a failing business succeed? Doubtful. Accepting Bitcoins and other cryptocurrencies will help attract customers you may be discouraging. Accepting Bitcoins is the modern day equivalent of accepting credit cards back in the 1960s. Now is the time to join the digital commerce revolution.
Daniel Morris
Daniel frequently provides Media Content via Workshops, Podcasts and Printed Articles concerning new “AltCurrency” aka Bitcoin and others. If you wish for Daniel to speak to your Professional Group, please contact us.
Morris+D’Angelo is the industry-leader for many High-Wealth Customers and Organizations.
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