Bitcoin is a crypto-currency. I know that sounds a little crazy, especially if you have never really investigated it.
Crypto-Currencies are interesting in and of themselves, and big investment advisers like Forbes suggest we should be careful investing in them because "they have no intrinsic value".
The value of crypto-currencies, as they are so new, and can be kind of a fad, tend to rise and fall on a regular basis so keeping a lot of money in a crypto wallet can make you vulnerable to these kinds of swings you may not be ok with.
So with those big drawbacks, why would you want to use Bitcoin as a currency, either to pay for things, or to accept payment.
Here are the big reasons we like bitcoin, and we think you should at least consider it, or something like it for your business.
People who buy silver and gold will tell you that they like to own something that has an intrinsic value. After all the dollar is not backed by gold anymore, and if the dollar were to take a big drop as a currency it would be financial Armageddon. Now keep in mind that sounds a little crazy, but if you do your own research you would find that a dollar collapse really would be a big problem.
If the dollar fell apart due to hyper-inflation, or deflation, it could indeed be a bad day for everyone. Because retirement accounts are backed by treasury bonds, which are backed by what are basically IOU's because of QE actions by the fed. This outcome is quite possible.
Also with the dollar being dropped as the worlds reserve currency for trading energy world-wide it is a real possibility. We try not to dwell on it. But the possible dollar problems in future decades are not the reason we like bitcoin.
People who have been investing in "non dollars" because of this fear traditionally purchased old-school physical currency like gold and silver bullion. I am sure you have seen the ads for your gold backed IRA on the television.
But lets consider this "intrinsic value". Yes Gold and Silver are in fact used for real world applications, but the actual value of them is only in what people are willing to pay for them in return. So in essence, how is that different than the dollar?
Intrinsic value is over-rated, and its quite possible no such things exists to a rational person. Everything has a value, and it has never ever been a mystery.
An item, object, idea, service, and everything else have always been worth what someone else will pay for them. You see value is established in the transaction. You tell me a dollar is worth a loaf of bread, or an oz of gold, or a new truck. I can prove you wrong by simply selling it for more dollars.
So now that we see bitcoins have no intrinsic value, and neither does anything else. What about these wild swings in the market?
The wild swings are real in bitcoin and they are a possible downside. If people decide bitcoins have no value, they will be worth nothing. End of story!
Bitcoin is a crypto-currency. In VERY simple terms this means that there are a limited number of them in existence. Here is how they are created:
1. John who has 1 bitcoin sends that bitcoin to Jennifer. This transaction is public record and is stored on whats called the "block chain". All the transactions in the world are on that blockchain.
2. To make sure Jennifer didn't steal the bitcoin from John and to make sure John's bitcoin was real, and to ensure no funny business of any sorts has happened a whole bunch of other computers are used to verify the transaction.
3. The computers who verify this transaction have to use a lot of computing power to do it. So why do they do this for free? They don't do it for free, they do it for a fee. You see for every transaction they verify they get a chance to unlock their own new bitcoin. So thousands of computers are out there verifying all the transactions all the time and they earn a small fee in return. This is called "mining". Because from their perspective these computers are mining new bitcoins by providing a secure environment for trading to everyone else.
4. Once about 6 of these miners have verified the trade is real it is transferred into the new account. This is not reversible and it cant be counterfeited.
Have you ever had an angry unreasonable customer steal from you by bouncing a check for your services, or even worse by charging one back!
We have had that terrible experience. If your customer decides to be dishonest they can dispute a payment they made to you for months! Then even if you are 100% in the right you could have to wait weeks or even months to get the money back.
Here you are doing a great job providing a great service, or physical goods. Next thing you know someone tells the bank a lie and all that hard work or items you sold are now free, and you have to wait months in a hope that a very one-sided process might go your way.
This will never happen with bitcoins.
Once someone pays someone else the transaction is over and can not be charged back.
The other great thing about bitcoins is that we get paid faster and for less. If someone pays us in bitcoins there is no credit card company charging us a percentage for the pleasure. There is no bank to hold the funds for a week while they make money on holding our funds to make loans. We are in charge of our own money.
Bitcoin puts the power in the hand of the business owner and the individual
, and out of the hands of banks and credit card companies who rake us over the coals with fees!
Besides the fact that we like the idea of a currency beyond regulation of a central bank, and with the benefits of scarcity, so no bank can just print a bunch more and devalue ours.
Besides the fact it can not be forged or faked or stolen. We like that its unique.
It gives customers a unique reason to do business with us. We are hoping to work with some tech savvy startup bitcoin moguls. Will they find us? Who knows? Will it pay off? Who knows? But its interesting and fun, and it encourages people to learn about digital currency, and to engage in global unregulated commerce. It makes us stand out to tech savvy investors. It cost us nothing!
What kind of interesting payment method could you use to draw customers?
Paypal and Applepay are a couple ideas. Did you know you can offer financing through paypal with no interest for 6 months? Some savvy companies have been suggesting people buy now and pay later to drive sales of goods and services alike.
The big companies all do this already. Financing is a good idea for many business owners who are suggesting people make large purchases.
Guess what, you even get to make money from suggesting the financing. You can make an affiliate commission on loans you push to a financing company!
Most people don't know this when they buy a car and end up with a worse loan than they qualified for so the car salesman could make extra points "on the back end".
But if your helping people afford an important purchase with financing, that could be a great help!
A couple other finance companies to check out are Syncrony and Affirm. Affirm has an especially cool project because they make small loans to people looking to buy consumer goods. People who are approved to get an affirm loan check the affirm website for sites they can spend their affirm money on, and you might be able to get on that list.
Even if you can't get on the affirm list, affirm will now put the balance on a credit card number generated on the fly. So if your an affirm merchant you can still collect via credit card like you already do.
Many customers want to buy, but they have a real financial concern. When they weight making a mortgage payment vs buying that cool new toy/gadget/item they are afraid to make the decision. To much buying pain.
Studies have actually shown us that people feel pain when they spend money. The more dangerous the purchase the more painful it is.
When you give someone the option to finance a purchase you reduce the pain by spreading it over time. It might help make an unthinkable purchase more palatable to your buyer.