BITCOIN AS A CURRENCY TOOL
For bitcoin to be widely thought of as a currency, it needs to be used more and more. As you might imagine, it’s hard enough to convince merchants to accept bitcoin as a brand new currency, but it is even harder to convince consumers to get involved with digital currency.
The advantages for the merchants are crystal clear: Bitcoin cuts down on fees and other costs. But if no one visiting your store is using bitcoin as a payment method, there is no benefit in accepting it either. So it’s up to the consumer to set the wheels in motion.
To make bitcoin a more convenient currency tool, you can turn to familiar‐looking plastic:
✓ Prepaid bitcoin cards
✓ Bitcoin debit cards
These plastic cards can be topped up with bitcoin — or linked to an existing bitcoin wallet (we shall teach more on wallets tomorrow) — allowing you to spend digital currency wherever major credit cards are accepted. The merchant still pays the same fees as with regular card transactions and still receives funds in local currency.
Bitcoin is still some way from being a mainstream payment method; retailers need to be convinced to accept bitcoin. We think the time has come to start convincing the everyday consumer to leave the cash and cards at home and pay with bitcoin using their mobile device.
That will not happen overnight, so until then, bitcoin users must be patient (while reveling in the thought that they are ahead of the game).
Bitcoin and retailers
As a forward‐thinking retailer, you should be ready and prepared to accept bitcoin payments for your online or brick‐and‐mortar shop. Accepting bitcoin payments doesn’t require you to deploy additional hardware, as it peacefully coexists next to your existing payment infrastructure. You do need an Internet connection however, but most retailers already have that.
Here are some of the main advantages of accepting bitcoin:
✓ Accepting bitcoin payments is subject to very low transaction fees — a welcome change from the 3 to 5 percent per transaction you lose when accepting any type of card or mobile transaction.
✓ Bitcoin payments can be converted to a local currency of your choice, and funds are deposited to your bank account the very next business day. If you are using a good payment processor, they will charge you only a small margin to convert the bitcoin to your local currency. Compare that to card transactions, where you have to wait up to a week or so before you receive the money — minus the 3 to 5 percent transaction fee plus an additional fee for any currency conversions.
✓ Bitcoin is a global currency. It works the same in every country around the world. Everywhere you go, the bitcoin symbol is the same.
✓ Bitcoin value is calculated to the eighth digit after the decimal point (the hundred millionth), unlike cash, which is only broken down to hundredths, or cents. For example, trading in U.S. dollars allows you to charge $11.99. Bitcoin would allow a charge of 11.98765432 BTC. Although this may not seem to be of significance now, should the value of BTC exponentially increase in the coming years, those additional decimal places will be very useful for accurate pricing in the future.
✓ Accepting bitcoin payments lets you expand your potential customer base on a global scale, as there is no need to offer a plethora of local currencies when offering bitcoin will suffice.
✓ Bitcoin‐to‐bitcoin means it keeps its value during the transaction and it is later on converted to a currency of your choice.
Bitcoin and consumers
As a consumer, the advantages of using bitcoin are pretty straight- forward. First of all, you no longer need to use cash to pay for goods or services at a bricks‐and‐mortar location. Cash is clunky to use, and it fills up your wallet with banknotes and your pockets with coins so quickly that you just want to spend it faster to get rid of it (or is that just me?). Plus, the ever‐present — if slight — chance exists that you may be carrying counterfeit money without even knowing it.
Bitcoin is also a viable alternative to paying for goods and services with your bank account or bank/credit/debit card, for the following reasons:
✓ Rather than relying on the services provided by a centralized service such as a bank, bitcoin lets you make any payment to anyone at any time, regardless of business hours, weekends, and holidays.
✓ When you make an online payment, it is processed immediately.
✓ Bitcoin is a borderless digital currency, operating in the same manner in Europe as it does in North America, Africa, Asia, Latin America, and Australia. Anyone in the world can use bitcoin to pay for anything else in the world, albeit you might have to jump through some hoops in order to get there.
✓ Many efforts are underway to push bitcoin’s acceptance by merchants, combined with new and improving alternative ways to spend bitcoin conveniently (such as the previously mentioned debit cards).
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