One of the first obvious uses of Bitcoin was the development of a method whereby there could be currency transfer without having to rely on intermediaries. Rather than requiring a central bank, each user can transfer their own money. It is especially useful for users in countries such as Argentina, which have suffered from crippling inflation at times in the past.
In many cases, however, businesses were one step ahead of consumers when accessing Bitcoin and its related technology. That’s no longer the case, as Bitcoin has become a useful tool for businesses of all sizes to transfer funds and avoid fees.
Bitcoin changed the way people like to do business. It has brought about a new realm of possibilities to the digital marketplace. When bitcoin was first released, its value was extremely low, and it could be easily mined using computing power from any desktop computer. However, over the years, its value has increased rapidly. And because of this, only dedicated machines with specialized hardware can mine bitcoin today. It means that mining bitcoins are becoming increasingly harder over time. With the increase of bitcoins value, it has also brought about a rise in its popularity.
Many online businesses have adopted bitcoin for their payment methods as they do not have to pay any fees or chargebacks to process a transaction. However, bitcoin is also changing how people invest and operate their business in general. Through this article, we will discuss the advantages and disadvantages of running a business using bitcoin.
Companies including BitGo (a cryptocurrency storage provider) and BitPlastic (a Bitcoin-based plastic card company) have used blockchain technology to create secure business solutions.
Advantages of running a business with bitcoin:
Safety is a significant benefit of using bitcoin
Businesses that use bitcoin will not be able to lose any money if the government decides to impose taxes or other restrictions on their customers. All they have to do is make sure that their customers are using bitcoins for their payments, and they can avoid paying extra fees or face any legal issues.
There are no restrictions on business transactions when using bitcoin
For instance, if a business wants to ship their product to another country, they will not have to worry about the restrictions imposed by that particular government as long as the facilitation of the purchase is in bitcoins. They can easily ship their product, and another customer will be able to pay for it using bitcoin, and no matter where the product ends up, the merchant will still receive his or her funds safely. The same goes for meeting people online or through video conferences. Businesses do not have to worry about their customer being from a different country when using bitcoin as their main payment method.
Chargebacks and fraudulent purchases
Businesses that use bitcoin for their transactions can avoid chargebacks and fraudulent purchases. Since blockchain technology automatically blocks any transactions that are it considers fraudulent, merchants do not have to worry about losing any money when they accept bitcoins as a form of payment.
Unlimited services
We can use bitcoin for a variety of purposes. There is no limit to how individuals can use bitcoin as it is a form of digital money. It means that people can use it for online purchases, payment of electronic bills, paying taxes, and other purposes. It also has many potential uses in the future, like a global digital reserve currency or even an investment tool.
Privacy or Anonymity
It can be anonymous since bitcoin transactions are completely transparent. This means that people who use bitcoins do not have to give any personal information in their transactions. Such a move is making them much safer than traditional payment methods.
It is independent of any government or country rules and regulations
Since any central government does not regulate bitcoin transactions, the user can complete transactions with no time or location restrictions. This means that people can do business in countries like the US without worrying about government fees or taxes, making them a more attractive payment method for many people.
Easily acceptable
It is easy to accept and use as any central body has not regulated it. This means that even people who are not familiar with bitcoins can easily use them for their transactions. It is also why merchants around the world have started accepting bitcoin payments, resulting in a rise of merchants accepting bitcoin payments as a form of payment.
Low transaction fees
Bitcoin has low fees compared to other payment methods like credit cards or PayPal. This means that merchants can easily accept payments using bitcoins and not worry about high processing fees.
Instant transactions
Bitcoin transactions happen instantly, while it takes longer for traditional payment methods to send the money in their banks or to the merchant. Merchants can directly get paid for their products, which will help them to keep their cash flow healthy all through the year.
Good investment tool
We can also use Bitcoins as an investment tool, but that is still very risky. Investors should consider some warning signs before investing in bitcoins.
Disadvantages of running a business with bitcoin:
High volatility issues
The high price volatility of bitcoins makes them unsuitable for some professionals. For instance, if you have a business that uses bitcoins in their operations, they may not get the best value for their bitcoins as its price fluctuates rapidly. They may end up selling their products at lower prices or paying more than what the value of their goods is.
Bitcoins are not regulated
This means that you can deal with fraud or stolen bitcoins without having to worry as your transactions will not be traceable. However, there are some preventive measures that you can take to ensure you do not lose any money or get hacked. For instance, if you use a small bitcoin wallet for online transactions and do not give out your bitcoins to third parties, then the risk of losing money is minimal.
Not applicable for physical goods and services
You cannot send physical goods using bitcoins, which also applies to services like legal or accounting advice. It is impossible to pay a lawyer in bitcoins as this will require the lawyer to have bitcoins in his or her wallet.
Merchants not accepting bitcoin
Since you cannot transfer real physical goods for bitcoins, the merchants will only accept them as a form of payment and not sell other goods for it. This means that trading with bitcoins is very limited, and there are only some businesses accepting payment in bitcoin.
Since it is still early in the use of bitcoins for business transactions worldwide, not many merchants have started accepting them. This means that if you wish to start accepting bitcoin payments for your business, you will need to find an alternative way to accept payments, as most merchants do not accept bitcoin today.
Insufficient information
Since the use of bitcoin is still new, there are a lot of people who do not know about it or have an interest in using it. This means that you will have to spend a lot of time convincing customers to use bitcoin for their payment method. As more and more businesses commence accepting bitcoins for their payments, this may change in the future.
Malware attacks
Bitcoins can be stolen or lost easily if you do not keep your wallet carefully or have malware on your computer. Since there are no regulations on bitcoin transactions, you will have to store all your bitcoins in a security device such as a wallet or a vault, making the theft of bitcoins almost impossible.
Not regulated
Bitcoin is not regulated, which means that you may get scammed by someone else when accepting bitcoins as a form of payment. This means that your business can easily be swayed by another person who has scammed you with bitcoins in his or her wallet. The loss of money will be unavoidable. Despite this, you can take precautions to make sure that your money does not get stolen as theft is still possible even with bitcoin.
Summary
The impact of cryptocurrency on business operations is a hot topic that has garnered significant attention in recent months. As bitcoin becomes more popular, companies across a wide spectrum of industries are adapting to accept this new form of payment.
