In the second of this two-part blog, Grant McMaster questions what crypto currency means for online business…
Bitcoin was the first of the crypto currencies – virtual funds that exist solely on the Internet and are not governed by government, banks or in most cases any form of central authority. For many users the appeal of Bitcoin lies in exactly those facts.
There are risks associated with using Bitcoin; the safety of your entire wallet depends upon a good understanding of the system and an ability to keep your Bitcoin wallet, private passcode and system, secure.
Many people have adopted the system, and now retailers are looking to offer the facility to pay for goods and services with Bitcoins. Big names like Amazon and Subway have already started accepting the currency. In the UK, smaller independent businesses like The Devonshire Arms in Cambridge, and Saw Mill Cafe in Stratford are joining the ranks.
So how would you go about setting up a Bitcoin payment system?
Bitcoins are virtually stored in something called a wallet, and there are a selection of wallets from which to choose.
A wallet contains the entire ‘block chain’ which is a record of all the transactions made, and it’s also the only place that bitcoins can really be said to exist. If you select a desktop wallet, be aware that some will install the entire block chain as part of the installation process and it takes just under twenty gigabytes.
Next, let people know that you accept bitcoin. A handy sign from the bitcoin website can help you with that.
You can invoice a customer for a service or goods by generating a bitcoin link, a QR code that is read by a smartphone or by opting for a hardware terminal.The easiest method by far is to have a QR Code at checkout that the customer can scan for your wallet address and then forward funds, remember to confirm receipt of funds before closing the sale.
You can also, using specialized QR Code software, generate one-time use bitcoin addresses for specific amounts if you prefer and allow the customer to scan the unique QR code, it simply depends upon the amount of time and the nature of the business.
Cryptopay is a solid choice, offering a free Point of Sale smartphone terminal, QR Codes, payment buttons, hosted terminals and other features designed to make your life easy.
If Cryptopay doesn’t fit what you’re looking for then several other websites offering similar services exist.
Cryptopay will also allow you to exchange your bitcoins into whatever local currency you are using for accounting and tax purposes. Remember that although bitcoin and other crypto currencies are not under the direct control of banks and governments, any business operating within the borders of a country is subject to their trading and taxation laws.
Deciding upon the value of merchandise and services in Bitcoins is as simple as consulting the current exchange rate and adjusting accordingly. At the time of writing this article, one bitcoin is worth £234.92, so according to that exchange rate, goods or services worth £100 would generate an invoice of 0.42BTC.
Bear in mind when invoicing a customer that the client bears the costs of the transaction and cater for that in your invoicing.
Bitcoins are an exciting new development in the online retail world and they offer a retailer the chance to innovate his business model, reaching out to customers who may not otherwise be interested.
Beyond being a useful method of payment and retail tool, being amongst the first in your area to accept Bitcoins as a form of payment gives you a Unique Selling Point and, for a short while at least can put you ahead of your competitors.
Of course, there are security considerations to take into account, which you can read about in part one of this blog. Bitcoin is by no means a failsafe currency. However, it’s certainly one to watch and evaluate as times goes on.
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