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Should Your Ecommerce Website Accept Cryptocurrencies? (Dominic Banguis)

The excitement surrounding Bitcoin does not appear to be fading anytime soon. What are the implications of accepting cryptocurrencies as payment for ecommerce sellers?

You’ve probably heard about cryptocurrencies by now. Satoshi Nakamoto, an unnamed individual, founded

Bitcoin
, the world’s first major cryptocurrency, a little more than 12 years ago. Since then, Bitcoin has grown to become a huge economic power, with a market worth of more than $647 billion. Earlier this year, electric vehicle company Tesla made a $1.5 billion investment in Bitcoin, resulting in its new all-time high value. According to the Independent, “Bitcoin has surpassed Facebook and Tesla to become the world’s ninth most valuable asset.”

Bitcoin, being a truly decentralized, peer-to-peer money, has a slew of advantages, including more global economic inclusion for billions of impoverished people, greater financial liberty, and greater anonymity than standard electronic payment methods. Millions of consumers and businesses now embrace digital money as part of their daily lives; however, should you accept it as payment for your ecommerce business?

Before making any judgments, it’s critical to understand the fundamental distinguishing characteristics of Bitcoin and cryptocurrencies in general. Explaining how Bitcoin works would require its own article, so instead we’ll focus on the key characteristics that distinguish crypto.

The Defining Characteristics of Cryptocurrency 

Cryptography is the practice that gave rise to the phrase cryptocurrency. Simply explained, cryptography is the use of computer science to protect valuable information via algorithms that turn data into secret, cryptographic keys.

Cryptocurrency, like paper money, has no intrinsic value. The value of a cryptocurrency is simply determined by the users’ collective belief that it is worth something. The value of a cryptocurrency increases as more people invest in it and as more merchants accept it as payment. According to CryptoCurrency Facts, a major distinction between fiat and cryptocurrency is that “cryptocurrency is not ‘legal tender’ and it is not backed by a central government or bank (it is decentralized and global).” This fact is one of the primary qualities that attracts both proponents and detractors of Bitcoin.

Another key difference between Bitcoin and traditional currencies is that it operates on a deflationary paradigm rather than an inflationary one. The entire number of Bitcoin available globally is fixed, as established by Satoshi Nakamoto’s algorithm. If the US dollar were based on this paradigm, you could hypothetically buy a house today for $30,000 that would have cost $300,000 forty years ago. Over time, the purchasing power of one dollar would rise rather than fall.

Finally, because Bitcoin is a truly decentralized currency, it relies on peer-to-peer technology to make transactions, eliminating the need for a “middle man” (bank or government entity) and thereby crossing national borders.

Now that we have a better knowledge of cryptocurrencies, let’s look at why you might want to add Bitcoin to the payment methods allowed by your ecommerce shop.

Lower Fees and Simplified International ecommerce

Accepting Bitcoin as payment is a huge benefit if you are an ecommerce merchant doing business in the global marketplace or making cross-border sales. Bitcoin, for starters, eliminates the necessity for currency conversions. You won’t have to bother about converting a buyer’s payment, whether it’s in dollars, euros, yen, or another currency. The value of a Bitcoin remains constant regardless of where you are in the globe.

Using Bitcoin eliminates both the transaction cost and the “exchange-rate fee” for cross-border transactions. While there will still be fees connected with cryptocurrency transactions, ecommerce retailers and purchasers will discover that they are significantly lower than those linked with credit cards and PayPal.

Accepting Bitcoin Payment Allows Access to a Larger Market

Accepting Bitcoin could help you expand your consumer base among both global and local buyers. According to the World Bank,

there are 1.7 billion adults worldwide who do not have a bank account
. Financial inclusion for those living in poverty or in developing countries remains a serious concern. Bitcoin solves this problem by letting anybody, everywhere to use the digital currency. As a result, Bitcoin enables billions of people to participate in the global economy who would not have been able to do so otherwise.

Bitcoin has also accumulated a sizable user base ready to support businesses that are affiliated with the crypto movement. Accepting Bitcoin payments increases your attractiveness among tech-savvy customers and can introduce you to a completely new purchasing group.

Transactions are completed quickly and securely.

Bitcoin, which is based on blockchain technology, allows for complete transaction traceability and ultimate transparency. Not only that, but Bitcoin provides perfect anonymity via cryptography, and the Bitcoin block is nearly impossible to recreate. When compared to traditional digital payment systems, this practically means that the chances of fraudulent transactions and counterfeit currencies are quite low. In addition, unlike PayPal or credit cards, Bitcoin’s peer-to-peer technology fully bypasses the banking system, allowing for far faster transactions.Bitcoin may be held in a digital wallet on your phone, computer, or tablet, giving customers instant access to their assets.

Finally, consider the following:

We have discussed several of the advantages of accepting Bitcoin in your ecommerce site, but you should be aware that bitcoin is still widely regarded as a risky investment. Because the crypto market is prone to fundamentally dramatic price changes, while Bitcoin might be a valuable asset for your company, it’s always wise to err on the side of caution and avoid putting all of your eggs in one basket. Though it is celebrated as a decentralized currency that does not rely on any government or financial intermediary, this fact makes it inherently difficult for any government to try to integrate it into existing tax-based systems, limiting its use in certain economic transactions such as purchasing a home or leasing a car.

However, for our purposes in the ecommerce industry, Bitcoin provides a great possibility for many people all over the world. 

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