Bitcoin as a currency is rapidly increasing in popularity, as businesses seek to find a fast, secure payment method that can give them a competitive edge. Plumber Richard Costello from MultiPlumb explains why he decided to accept Bitcoin payments in his business.
What is Bitcoin?
Bitcoin is a decentralised digital currency that uses peer-to-peer payment networks and is not controlled by any banks, central banks, governments or authorities.
Bitcoin has been described as the ‘cash of the Internet'. While it's not completely anonymous, it cuts through all of the red tape that can make paying by traditional currencies frustrating, to say the least.
There are many reasons why Bitcoin is becoming a popular payment method for small businesses.
Get Paid Quickly
Cashflow management can make or break any business, whether they have an annual turnover of £50,000 or £50 million. Card payments will normally take a couple of working days to hit your business bank account but, with Bitcoin, it’s normally transferred within an hour. Imagine the difference that kind of speed could make to your business!
Lower Transaction Fees
Lower transaction fees means more profit, so I shouldn’t really need to explain this point in much detail. If you accept debit or credit card transactions you're probably paying between 1-4% in transaction fees.
To send £2,000 in Bitcoin costs roughly £0.25 and normally completed in under 10 minutes so we’re talking less then 0.02% in transaction fees.
Easily Accept International Payments
This is a big one, especially for companies who trade internationally.
Business-to-business payments are heavily regulated, expensive and can take a long time to go through. Bitcoin, in contrast, cuts through all of these barriers.
As a decentralised currency, there's no one telling you what you can and can't do with your money, so you can pay whoever you like, however much you want, without having to prove to anyone why you're owed the money, which can sometimes be the case with traditional international payment methods.
As stated earlier, transactions fees are low regardless of how much money you're transferring - the fee is normally under 0.05%.
One of the biggest benefits of accepting Bitcoin as a payment method is fraud prevention. When a client pays by credit card, they have to divulge all of their personal data.
Bitcoin is essentially digital cash, so they can pay you without giving you any sensitive information. This prevents issues where we've seen companies being hacked for their data related to credit card transactions, which exposes the customer to increased risk.
How many business out there have been unable to recover money in a chargeback case, where they were genuinely not at fault and the customer was just being devious or playing the system?
The great thing about Bitcoin is, because it is decentralised and not controlled by anyone, there are no chargebacks. No chargebacks means no surprises, so you can plan your cashflow a lot better without worrying about your bank unfairly withdrawing money out of your account.
Isn't The Price of Bitcoin Unstable?
The price of Bitcoin has been on a steep upward trend since it's initial inception in 2009. Yes, there have been pullbacks, and the price has been unpredictable but, in general, it keeps on going up. In contrast, the value of pounds and dollars has been declining since they were introduced. Do you remember how much £100 was worth 20 years ago compared to today?
The business decision that you need to make here is whether or not you keep payments that you receive in Bitcoin, or you convert it into your local currency. If you leave it in Bitcoin your money could triple or even quadruple in value in one year. Or it could reduce in value by 50%. No one knows, but if normal supply and demand logic is applied, the likelihood is that it will keep on going up in value.
A conservative strategy here could be to convert 50% into currency and leave the other 50% in Bitcoin and hope for the best? I am not a financial advisor, so do you own research before making a decision.
There are many other benefits to accepting Bitcoin as a payment method but these are the main ones. Even if you don’t start accepting payments in Bitcoin straight away, I’d encourage everyone to do their own research on the topic so that you can make an informed business decision.
I'm not a financial advisor and the above comments are only my personal opinion, but I believe that Bitcoin is the future. Only time will tell!
Richard Costello, from Dartford in Kent, is the owner of MultiPlumb and has been involved in the plumbing industry, installing bathrooms and boiler systems for over 15 years. If you have any questions or suggestions for future blog posts from Richard, feel free to get in touch at firstname.lastname@example.org