Most people have probably heard of bitcoin, even if they arenâ€™t entirely sure what it is or how it works. This is understandable as there are more than 740 available cryptocurrencies today, bitcoin being the most popular.
While bitcoin has established a comfortable place in our global economy, its history is somewhat marred by its ties to the dark net, a digital black market purveying drugs, hacker tools and hitmen for hire (although the last one is probably untrue).
But bitcoin is more than an anonymous cash system for illicit goods and services. Itâ€™s a decentralized currency that, in some ways, enables more secure money transfers than traditional payment methods.
In fact, since 2015 more than 100,000 merchants have started accepting bitcoin including PayPal, Overstock and Expedia. Various ecommerce providers are doing the same. A quick comparison between Magento Enterprise and Shopify Plus, two of the biggest players in the hosting game, reveals that Shopifyâ€™s 75,000+ vendors can readily accept bitcoin if they choose, while Magento users will need to acquire a special plugin to accept crypto payments.
But what are the specific benefits of using or accepting these nontraditional payments? Below we will tackle what bitcoin means for ecommerce and what you can do to get the most from bitcoin shoppers.
Innovations in Currency
Letâ€™s start with the basics. Bitcoin is a decentralized digital currency, meaning it is completely online, isnâ€™t backed by gold or silver and isnâ€™t governed by any centralized banking authority. Instead, bitcoin is backed by trusted value (like the U.S. dollar) and is tracked by user-maintained ledgers.
Hereâ€™s an example: Mary buys a high-end television for .5 bitcoin from Ahmedâ€™s ecommerce site. They both record in their ledgers that Maryâ€™s funds went down .5 bitcoin and Ahmedâ€™s went up .5 bitcoin. At the same time, every ledger on earth records the transaction.
From time to time, these ledgers disagree in which case the majority of ledgers vote and become the new standard. The system is set up in such a way that the democratic majority always wins, while stymieing fraudsters who would never have the time, money or resources to rig such a vote.
While every user can see your funds and transfers, the system is protected by mathematics and encryption to keep identities anonymous and secure. Each user is responsible for their own privacy, meaning your shoppers wonâ€™t suffer from major credit card data dumps, like the one that plagued Target in 2013.
Another benefit of cryptocurrency is its speed. Instead of waiting hours or days for a transaction to go through, bitcoin processes in under 10 minutes â€” from anywhere in the world! This is good news for vendors because it means money in your pocket almost instantly and good for shoppers because their goodies ship quicker.
Want to sell your products overseas? Bitcoin is so much easier than traditional currencies because it avoids the sometime costly fees associated with converting currencies and immediately allows for international sales. Not to mention that credit card processors typically impose a 3 percent processing fee, which is sometimes as little as zero percent for bitcoin; potentially saving you hundreds or even thousands of dollars.
In the end, accepting bitcoin gives consumers a greater say in how they decide to spend their money. Itâ€™s not so different from allowing buyers to purchase your products with a credit or debit card number or allowing them to use PayPal for their own peace of mind.
In a lot of ways, the continued adoption of cryptocurrencies by ecommerce vendors and platform providers brings bitcoin out of the shady subculture and into the mainstream marketplace. Will your digital store be part of this innovative trend?
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