For the vast majority of entrepreneurs, the world of bitcoin remains a mysterious place, much like Harry Potter’s Hogwarts, Narnia, or what was on the other side of the looking glass when Alice took the plunge.
The thing is, it doesn’t have to be that way at all.
What Is Bitcoin?
Bitcoin isn’t a physical property—it exists in the virtual realm. It’s a digital currency created in January 2009 following the housing market crash. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms. It’s operated by a decentralized authority, unlike government-issued currencies.
Bitcoin balances are tabulated on a public ledger known as a blockchain. Everyone involved has transparent access to those numbers, as well as to all bitcoin transactions.
Bitcoins are not issued or backed by any banks or governments, nor are there any individual bitcoins that are valuable as a commodity. Despite it not being legal tender, bitcoin has rapidly gained popularity, and its emergence is triggering the launch of hundreds of other virtual currencies. These units are collectively known as Altcoins.
How Does Bitcoin Work?
While regular paper money is traded via currency exchanges, bitcoin is traded either via a cryptocurrency exchange, or a peer-to-peer transaction.
In days of yore, money gained its value because it was made of precious metals such as gold and silver. Today’s paper currency only holds value because the general public accepts this to be so. By maintaining faith in our governments and banks, a country’s people also maintain that faith in their nation’s monetary funds.
But because the government creates the money we use, they also control its inherent value. With bitcoin, the people control and maintain the value of the cryptocurrency. It enables peer-to-peer transactions to take place without the need for bankers or government regulators.
Bitcoin can be purchased via bitcoin ATMs, which are beginning to pop up in convenience stores, gas stations, and similar locations. However, the easiest method to acquire bitcoin is by using a credit card and completing the transaction via a traditional bank account. You simply exchange the currency you normally use for equal value in bitcoin.
Bitcoin can be expensive, so it is possible for people to purchase fractions of bitcoin. Again, think of it like the stock market; the amount of shares you can buy in Microsoft aren’t going to be the same as the number that Bill Gates could purchase.
Why Bitcoin?
The advantages of bitcoin are that it’s a new way to transact outside of the government and a method to gain 100% control over your own money, and to do so in an outside area not influenced by any organization, government, or bank.
On the flip side, like a high-risk stock, bitcoin is a very volatile investment. It could just as easily break your bank as it could make you a fortune.
Online Businesses Moving to Bitcoin
As the world shifts more toward becoming first and foremost an eCommerce-driven economy—a move that’s certainly been ramped up by the impact of restrictions in movement caused by the COVID-19 pandemic—some major online firms are beginning to turn to bitcoin.
Expedia and Overstock are two of the larger online shopping entities that have embraced the concept. The world of online sports betting is another industry moving toward bitcoin and that’s worthy to note. Several betting sites now accept bitcoin as payment. When the tech bubble burst in the early 2000s, among the new types of businesses that not only survived but thrived through the turmoil was online gambling, whether it be sports betting sites, poker rooms, or casinos.
Outsiders tend to view the world of gambling as a wild west frontier, but nothing could be further from the truth. Annually, this is a multi-trillion-dollar industry worldwide. Top betting sites such as William Hill and Ladbrokes are publicly-traded commodities on the stock exchange.
When top online betting sites such as Bovada and BetOnline are opting to accept bitcoin as a method for customers to fund their betting accounts, this is absolutely a good sign for the future of cryptocurrency.
As the old saying goes, they don’t keep opening casinos because they’re money-losing propositions. The one trait that all gambling companies have in common is an innate ability to assess and manage risk. The odds are always set to the advantage of the house. These bookmakers wouldn’t be venturing into bitcoin if they viewed it as a bad investment.
Is Bitcoin Right for Your Business?
As business transactions continue to move away from brick-and-mortar sites and into the world of eCommerce, it only makes sense that payment methods are going to continue to follow.
The last decade witnessed the explosion of eWallets like PayPal and TransferWise. Bitcoin and other forms of cryptocurrency are the next logical step along that path.
Advantages of bitcoin are that it’s convenient. There’s no fees charged like with a service like PayPal. And with millions monitoring activity on the blockchain, it’s virtually impossible to complete a fraudulent transaction.
By transacting in bitcoins, a company that accepts and stores them can add to their profit margin. Bitcoin has more than doubled in value over the past seven years.
Accepting bitcoin is also a viable marketing tool. It will set your business on the cutting edge of the curve and in today’s rapidly-changing economic landscape, that’s not a bad place to be.
