If you have an online store or even a physical one, now might be a good time to start thinking about accepting Bitcoin and other types of cryptocurrency. Many business are starting to become Bitcoin friendly. It isn’t as hard as you might think to accept crypto tokens in your business. All you need is a little planning, a little research, and the willingness to get it done.
Things to Consider to Accept Bitcoin at Your E-Commerce Business
We have published an article at Cryptoswede that you might want to check out if you are thinking about accepting Bitcoin at your business. It will give you a basic idea of the ways you can take Bitcoin, how to store it, and how much you can probably expect the convenience to cost. Yes, there are costs associated with accepting Bitcoin just like there are costs associated with accepting credit cards.
The first thing that you need to do before you decide to accept Bitcoin at your business is to do a lot of research on the cryptocurrency itself. You need to understand what Bitcoin is, what the blockchain is, and how it all works. Otherwise, you are just spinning your wheels. There is no point in accepting a type of currency that you have no interest in learning about.
Another thing to consider is how much you will be using Bitcoin in your business. As a business owner you have inventory to consider. It takes money to purchase inventory that you can sell in your store. The vendors that you choose to buy from may not accept Bitcoin for your inventory purchases. You have to decide if you will benefit financially from accepting Bitcoin in your business. Will you simply spend it or use it to pay yourself? Will you use it to pay the people that help you run your business from day to day.
Realize That Accepting Bitcoin Can Be Costly at First
When you first begin to accept Bitcoin in your business you are going to have some expenses. You will need to obtain some type of POS system that will allow you to accept the currency. Setting up this type of system for your business may require the expertise of a programmer, and those specialists do not come cheap.
Once you have installed the necessary framework to accept Bitcoin you will have a period of time that is needed to recoup your investment. The Bitcoin that you earn from purchases made at your store during this period has to be regarded as paying back the initial investment. So, it may take some time to realize a substantial profit from your Bitcoin purchases.
There will also be some fees to contend with after you set up your Bitcoin POS. The fees for Bitcoin transactions have always been pretty low when compared to other forms of payments. They will almost certainly be cheaper than credit card fees. Still, you need to be prepared for these fees and budget for them accordingly.
Accept That Bitcoin Security Demands Your Diligence
Bitcoin is a very secure method of exchange. When you manage your Bitcoin properly there is almost no chance that you will lose it to theft. Nevertheless, the way in which you protect the Bitcoin you take in as a merchant demands that you exercise diligence. The first line of defense is your Bitcoin wallet. A Bitcoin wallet is where you will keep your own stash of the tokens.
You have several wallet options. You can choose a paper wallet, a desktop wallet, or an online wallet. You can also choose a hardware wallet. At Cryptoswede we would perhaps propose a combination of these methods. You could split up your Bitcoins into different wallets so as not to have them all in one place. Maybe make a paper wallet to keep in a safe at home, and also buy a hardware wallet that you can carry on your person.
We will stress that you cannot be too careful when it comes to the management of your Bitcoins. If you lose access to your wallet, you lose the tokens. End of story. We would also recommend that you at least transfer some of the tokens to cash. It is probably best as a merchant if you do not keep an excess of the tokens on hand.
If you decide to store your Bitcoins on an exchange, be aware that there are extra security risks when you are using third-party sources to manage your Bitcoins. Many exchanges have been the victim of hacks. Some investors have lost thousands of dollars worth of Bitcoin. If you want to trade cryptocurrency, then be a trader. If you want to accept Bitcoin as a merchant, then be a merchant.
Know That Bitcoin is Volatile
Remember how we said that you should transfer some of your Bitcoin earnings to cash. Well, there is a very good reason for that. The reason is that Bitcoin is a very volatile currency. Its value can change from day to day, and even from hour to hour. The value of Bitcoin has stabilized some it seems since the bull market of late 2017, but there is still the possibility that the price could drop after you have accepted Bitcoin for goods or services that have already been delivered. When that happens you will lose money.
*** Here at CryptoSwede you will find information on Crypto Mining the different cryptocurrencies as well as the best cryptocurrency exchanges. You can trade or you can set up trading bots instead and then store the crypto on crypto wallets. Later, spend them using crypto debit cards!***
The problem is that when you order inventory to sell in your e-commerce store you have to pay for it right away. That means that you are locked in where your profit margin is concerned. You have to realize a profit to stay in business. If you accept Bitcoin for that product and the value of the Bitcoin drops before you can convert it to cash, you are apt to lose your profit and maybe more.
Know That Record-keeping is a Must
Some merchants get into accepting Bitcoin because they believe it is going to help them dodge some taxes. This is the wrong approach. While it is possible to preserve some anonymity with Bitcoin, there are still ways that the government can track how much you are taking in. Don’t risk it. Keep good records from day one and you will have an easier time staying out of trouble with the taxman.
The good news for e-commerce merchants in the US is that Bitcoin is right now is classified as property. It isn’t taxed in the same way that cash is. Until you sell the property or make a profit off of it, you may be able to avoid including it on your tax returns. But when you sell it or trade the Bitcoin for a gain, tax may be due. You need to be aware of the tax laws in your own jurisdiction before you begin accepting Bitcoin from your customers.