Should You Add Bitcoin to Your Small Business Website

Just a few years ago, Bitcoin was barely heard of; however, today it is one of the most widely used forms of online payments utilized by customers worldwide, which means as a small business, if you are not accepting Bitcoin, you could be missing out on potential customers.

What is Bitcoin?

The Bitcoin idea was said to be developed in 2009 by founder Satoshi Nakamoto, with the initial transaction being used to purchase takeout.

Bitcoin is a type of digital currency, additionally known as a cryptocurrency, which serves as a method of payment for making purchases from retailers. It is also used to process customer payments, and some businesses even use it to simplify their payroll. Bitcoin is also traded on various global markets, which is ultimately how its worth is established.

Bitcoin exists only in the digital world, which means there is no actual physical form of currency. Instead, the cryptocurrency is reserved in a digital wallet that utilizes a blockchain ledger that enables Bitcoin users to keep track of their Bitcoin amounts as well as both send and receive payments from other Bitcoin users, also known as peer-to-peer transactions. The point being, to enable people to avoid financial institutions and instead become kind of their own bank.

With Bitcoin, you have full authority over your funds through the use of the digital wallet, which sort of serves as your bank account or safety deposit box. However, these funds can only be accessed via a hash address, which is generated from the public key.

Your digital wallet can be stored in various locations, such as on a third party online platform, hardware, a computer, or a mobile device, and more.

Is there Anything About Bitcoin that is Illegal?

The use of Bitcoin as a form of digital currency is legal in the United States, and payments require the same reporting and taxes as physical currency. Furthermore, just like traditional currencies as well as other payments by financial institutions, anti-money laundering regulations also apply.

How Does it Work?

Bitcoins act as sort of virtual gold coins that are designed to have value in and of themselves. In other words, just as having actual gold coins in your possession, Bitcoins have worth and can be traded.

Once you own Bitcoins, they can be transferred from one Bitcoin user to another via the digital wallet. This is essentially a small database that contains useful information, such as the private security key that allows transactions, which can be stored in the cloud, known as hot storage, or on a computer drive, known as cold storage. You can store your Bitcoins away in aspiration that their worth will increase over time, or use them to purchase services and goods from retailers.

All Bitcoin transactions are logged and made available in a public ledger, which helps keep the use of Bitcoins honest. In other words, it helps prevent illegal Bitcoin activities, such as fraud, copied Bitcoins, and duplicated transactions. However, personal details, such as the name of the person who owns the wallet, are not recorded in the public ledger. This way, each transaction is confirmed, but the person's personal information is kept anonymous.

How Much Does It Cost?

Because there are no financial institutions involved with Bitcoin transactions, it gets rid of continuous bank charges as well as costly wire and bank transfers. However, there are usually small charges to use specific Bitcoin services, including online services that change your Bitcoins into paper money, services that aid the group of miners, and any pools of miners you become a member of.

Miners are a group of ledger keepers who use their own personal computers to monitor Bitcoin transactions, and they are compensated for their accounting work by earning new Bitcoins for their service to the network. Should a miner choose to join a mining pool, the pool will usually request a small donation, or they may charge a one percent support fee.

Additionally, some nodes will charge a small one-time transaction fee each time you transfer money using their servers, and online exchanges typically charge a fee when you exchange your Bitcoins for euros or dollars.

Can a Small Business get Scammed or Hacked from Bitcoin Transactions? Is it Safe?

Although the use of Bitcoins is considered fairly safe, they are not regulated by the government. This means there is no centralized issuing authority or individual who created the Bitcoin to trace back to, which carries its share of risks.

Furthermore, there is no personal information required to open a Bitcoin account or to make a payment from an account the way there is with a bank account, so other than the group of miners; there is no oversight designated to ensure the information on the ledger is true and correct.

Also, when storing any information online, it always carries the risk of being stolen by hackers. However, storing your Bitcoins using the offline method, also known as cold storage, is more hacker-resistant. You should also be sure to back up your wallet with a copy whenever possible in the event that your computer is lost or stolen. In fact, each time you make a Bitcoin transaction, the .dat file is updated, so be sure to save this file as a backup each time it is updated.

Lastly, unregulated online exchanges also run the risk of human dishonesty or inadequacy, which can lead to financial losses. However, unlike conventional banking whose losses are partially insured, there is no insurance coverage for Bitcoin losses.

How does a Small Business Get Started Taking Bitcoin?

Getting started taking Bitcoin is simple and can be done in the following three steps:

Create a Bitcoin Address

First, create a Bitcoin wallet using your chosen service. The wallet functions similarly to an email account and will be the address where customers will transfer their funds. To complete a transaction, customers key in your wallet address, or scan your code using their smartphone, enter the amount to be transferred, and then select send.

Or, you can opt for a bitcoin payment processor, such as BitPay, which will enable you to handle many transactions during a business day. Payment processors also include various applications, which provides added functions, such as add a shopping cart plug into your online shop or set up a POS. They also allow you to convert your money into fiat quickly. There is a percentage or monthly fee to use the service; however, it is typically less than what other companies charge.

Inform Customers that You Accept Bitcoin

To let your customers know that you accept Bitcoin, simply include a Bitcoin acceptance button on your online site near the Visa, MasterCard, and PayPal buttons you already have.

If you have a brick-and-mortar establishment,  apply Bitcoin acceptance stickers on the door as well as the cash register to inform customers.

Consult Your Accountant

Because Bitcoin is subject to the same tax obligations as traditional currencies, you may want to alert your accountant that you intend to accept Bitcoin payments, so they are prepared to handle Bitcoin tax-related issues. They can also determine how to keep your data.

About the Author

Craig Corbel is the Vice President of Marketing at Solution Web Designs, a leading SEO, online marketing agency, and Long Island Website Designers serving small and mid-sized companies nationwide.