Recently, you’ve probably heard the term “Bitcoin” more and more – and have probably been some degree of confused as to what it is and how it works.
Bitcoins are an online currency that was created in 2009 by an unknown person (who goes by the name Satoshi Nakamoto). When you buy Bitcoins, you don’t have to go through a bank – you simply have an online digital wallet of Bitcoins. They can be bought with a variety of different currencies, but aren’t recognized formally as a form of currency by governments and authorities.
Some businesses have decided to dabble in the idea of online currency and have begun accepting Bitcoins as a form of payment for their goods or services (like these 15 Philadelphia businesses) – but is it a good idea? Here are some pros and cons from our Philadelphia-based digital marketing agency:
- Bitcoins can be easily accepted and given using a Bitcoin merchant solution (if your business is online) or a touchscreen app (if your business has a brick and mortar shop).
- The value of Bitcoins can greatly fluctuate – they can go from 8 cents per coin to $15 per coin in a day, which means a possibility to increase your profit when you convert Bitcoins back into tangible currency.
- Businesses don’t have to pay commission charges on many types of international money transfers.
- Being one of the first businesses in the handful that accepts Bitcoins could generate exposure and intrigue.
- The value of Bitcoins can greatly fluctuate – they can go from $15 per coin to 8 cents per coin in a day, which means there’s a risk of sales losses when you convert Bitcoins back into tangible currency.
- Because the currency is online, it’s subject to hackers and fraud.
- Bitcoin accounts aren’t insured by the FDIC (like bank accounts are), so you are unprotected if something goes wrong.
- Bitcoin users are anonymous – only the wallet ID number is used when making a transaction, so nothing is truly tied to a person’s name.
It’s important to thoroughly weigh your options before your business starts accepting Bitcoins. Talk to your lawyer, accountant, and other authoritative figures before you make a decision.