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The Growing Popularity Of Bitcoin Now Begs the Question, Should Online Retailers Accept It as Payment?

Since the creation of Bitcoin in 2008, cryptocurrencies have gained widespread recognition and are worth more than one trillion.

More and more investors now hold Bitcoin and countless other digital assets, using them to purchase goods and services, with the number of retailers accepting cryptocurrency increasing in recent years. As opposed to fiat money, created and controlled by a nation’s government, Bitcoin is backed by its users. The price fall isn’t deterring investors who still want to buy Bitcoin. Irrespective of how much or how little Bitcoin one has, spending it wisely is a good idea. 

While Bitcoin is often touted as the future currency, it’s a viable currency for the present. If you’re exploring cryptocurrency for eCommerce, you’re not alone. Thousands of online stores accept Bitcoin, which signals a significant shift in consumer behavior and business operations. Examples of major brands accepting Bitcoin on their eCommerce websites include but aren’t limited to NewEgg, Shopify, and Etsy. Taking Bitcoin as a payment method can position your enterprise as a leader in the industry, getting your business in front of new customers. If you don’t know how to get started, please continue reading. 

Key Takeaways:

  • Bitcoin offers lower transaction fees compared to traditional payment methods, potentially reducing costs for retailers.
  • Enhanced security features of Bitcoin can protect against fraud and unauthorized transactions.
  • Retailers can easily convert Bitcoin to fiat currencies, facilitating straightforward financial management.
  • Accepting Bitcoin requires awareness of its taxation implications and volatility, necessitating careful financial planning.
  • Implementing Bitcoin payments involves choosing a suitable payment gateway and integrating it with existing systems for smooth transactions.

The Pros and Cons of Accepting Bitcoin Payments for eCommerce 

Accepting Bitcoin as a business benefits the company's health, but it’s not without complications. There’s no single best form of payment, meaning each has its advantages and disadvantages, so improve your understanding of the situation to speed up decision-making. If you’re an eCommerce retailer or brand, you might consider incorporating cryptocurrency as a payment method, so know the pluses and minuses from the very get-go. 

Bitcoin Is Known for Having Relatively Low Fees

Payments between consumers and businesses are streamlined via card networks, issuers, payment processors, and retail payment systems. Merchants pay fees upon every transaction with a debit or credit card, which raises inflation and pinches consumers as businesses pass the higher costs onto them. Since Bitcoin doesn’t depend on a third party to facilitate and regulate transactions, the price per transaction is considerably lower. Transactions are processed by miners who compete against one another to solve a complex math problem; solving it results in a hash, which is used to secure information. 

Bitcoin Offers Better Payment Security 

Data must be adequately encrypted during transmission, to say nothing of the fact that stored payment information must be protected. Bitcoin’s cryptography is so good that breaking into the system is almost impossible, even if weaknesses create opportunities for thieves. All transactions within the blocks are validated and agreed upon via a consensus mechanism, meaning the nodes must work out the current state before updating the blockchain. Cryptocurrency transactions are irreversible, so the digital token can’t be spent more than once. Bitcoin’s irreversibility helps you better manage your cash flow. 

Bitcoin Can Be Easily Converted to Dollars 

By exchanging Bitcoin for fiat currency, you can avoid the complexities of dealing with digital wallets or blockchain technology. You can trade cryptocurrency for fiat currency like U.S. dollars on various platforms and mobile apps; the exchange rate isn’t subject to the economic actions of your country. Before you’re able to convert Bitcoin to dollars, you must create an account and pass KYC (Know Your Customer) verification to comply with regulatory requirements. Once you’re done, transfer your coins to the service’s wallet and choose the fiat currency that aligns with your needs – you can trade Bitcoin for Euro, Korean Won, Japanese Yen, and so on. 

Bitcoin Is an Asset and Is Taxed as Such 

In accounting, Bitcoin is often treated as an intangible asset, subject to income tax provisions. Not only do you pay tax upon receipt, but you also pay tax if you dispose of the Bitcoin by selling, exchanging, or spending it. Failure to report Bitcoin can be costly; the “taxman” oversees the cryptocurrency industry. If you accept Bitcoin as payment, report it as gross income at the fair market value when it is received. Don’t fret because you can write off your Bitcoin losses just like deducting your losses from stock or bond sales. 

Bitcoin Is Generally Highly Volatile  

Bitcoin is volatile, with the potential for major upward and downward price movements over short periods. Several factors drive volatility in the Bitcoin market, such as Google trends, the number of coins in circulation, and consumer confidence. If the returns become more stable, they become predictable, making Bitcoin less valuable. At times, volatility can be healthy, with unwavering increases and decreases in price within a general range. Cases of extreme price volatility are rare, so what you see in the Bitcoin market is moderate (healthy) volatility. 

A Walk Through the Practical Steps Involved in Processing Bitcoin Payments 

It’s time to go from theory to practice and explain how eCommerce retailers can enable Bitcoin payments. You need a wallet that accepts Bitcoin and no other cryptocurrency, protected by a password and a private key. With a non-custodial wallet, you have complete control of the funds, but if you lose the private key, there’s no way to recover or regain access to your Bitcoin. To receive cryptocurrency payments, provide your Bitcoin address to the sender; you can transform it into a scannable QR code. Before you let shoppers know they can pay with Bitcoin, check for regulations in your jurisdiction to avoid legal issues and hefty fines. 

Here are some basic steps to follow: 

  • Choose a payment gateway: The payment gateway acts as a bridge, allowing your business to accept Bitcoin payments for goods (or services). Critical evaluation criteria include fees and rates, processing/settlement times, operational redundancy, and compliance. 
  • Add Bitcoin payments to your checkout page: Integrate your chosen payment gateway provider and test it before going live to ensure everything works fine.  
  • Integrate Bitcoin payments with your accounting software: Ensure the Bitcoin payments are recorded on the same platform where you account for the rest of your business transactions. You can easily pool all the necessary information and file the required returns.

Contact an expert if you’re unsure you’re recording Bitcoin transactions properly.  

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