If you haven’t heard of Bitcoin yet in your small business, the odds are good that you will hear of it soon. This new trend in currency is taking the world by storm. What once was used primarily for online transactions is now making its way into brick and mortar stores.
What is Bitcoin?
Bitcoin is a peer-to-peer digital currency. People familiar with open source software such as Firefox and Linux understand the concept of “open source” to provide outstanding source code that is free to others to enhance or modify. The simpler answer, as most people use Bitcoin, though, is that it serves as digital currency.
Why Would Small Businesses Consider Bitcoin?
In 2012, there were only a handful of businesses — 1,000 worldwide according toCNN Money — that accepted Bitcoin. Today, that number has grown to well over 26,000. The surprising number for many people, though, is that 20 percent of those businesses are storefront businesses like bakeries, wine shops, board game stores, and florists.
Brick and mortar businesses in tech-savvy areas will have more traction for their Bitcoin offerings than businesses in more rural areas. Shops located in towns with colleges and universities may also receive more interest in their Bitcoin offerings.
It does help give businesses an edge with consumers who have Bitcoins lingering in virtual wallets as well as a novelty for those who have viewed this as little more than online “fun” money in the past. The ability to use Bitcoins as real world currency is catching on and will continue to do so as long as brick and mortar small businesses, such as yours, continue to embrace the possibilities.
Benefits for small businesses include the fact that it’s easy to use and train employees to use, it works well with tablets and smartphones, and it’s simple to incorporate into accounting software like QuickBooks. Perhaps the biggest benefit to using Bitcoin, though, is the fact that it charges lower processing fees than credit card companies. That is something small businesses can truly appreciate.
Risks of Using Bitcoins for Small Businesses
There are some noteworthy risks involved in using Bitcoins that are worth mentioning. First, there are no governmental regulations involved in using Bitcoin. For some people this is a major bonus. However, without the governmental regulations, there are also no governmental protections should theft or fraud occur.
Second, the “value” of Bitcoins is somewhat volatile. Unless you redeem them instantly, you could find they are worth considerably more or less when the time comes to exchange your Bitcoins for dollars.
The other potential risk for businesses is that there are risks of Bitcoin exchanges getting shutdown, digital wallets being hacked, and the outright theft of Bitcoins themselves.
Ultimately it comes down to the potential risks verses the potential rewards for your small business. Whether you decide to take the plunge and invest in Bitcoins or not, it’s always wise to protect your small business interest with adequate small business insurance, including crime insurance and cyber liability insurance.