The case for bitcoin
Wednesday 29 April 2015
Why pay with bitcoin? Because it’s fast, low-cost and secure - and that’s just for starters.
As BitScan starts to roll out its Love + Bitcoin programme, enabling merchants to get set up with crypto-ready websites quickly and easily, it’s worth recapping: what are the pros and cons of using bitcoin?
Read also: Love + Bitcoin: evangelists wanted!
Low transaction costs. Without credit card processors or other middlemen, there are no commission fees. Sending bitcoin costs a flat rate of just 0.0001 BTC or less - currently around $0.02 - compared to credit card fees of anything up to 5%. That’s money that can be shared with your customers, with lower prices and higher margins putting money back in both your pockets.
The downside? Not much.
International payments become straightforward. Bitcoin is truly global money - the currency of the internet. That means no foreign exchange fees and smooth international transactions.
The downside? You might find yourself needing to learn another language.
Micropayments are viable. Whilst credit card companies and other processors charge fees that make small transactions prohibitively expensive, particularly across borders, bitcoin was designed for this kind of micropayment - whether that’s a small purchase or a charitable donation of a dollar or two.
The downside? You might get a lot of people making small payments to you. On the other hand, that’s a lot of people making small payments to you.
No chargebacks. Because there’s no centralised control, no one can reverse a transaction. That means if someone sends you money, it’s yours unless you send it back. Merchants love this. Given the number of disputes that are settled out of hand in favour of the customer, without any real interest or engagement by the processor, that is a big advantage.
The downside? Some customers are wary about shopping without that protection. This can be addressed with reputation systems and dispute resolution processes. And, on the other side of the coin...
No credit card fraud. This is fantastic for customers. No one can skim a credit card and use it without their permission. So long as you keep your private keys safe, there’s no way a fraudster can take money from your bitcoin address. For most people, regular wallet apps on smartphones or computers do a great job. Because you can move money around so easily with bitcoin, you can have a ‘current’ account with a small amount of funds in it for day-to-day purchases, and a cold storage account that’s totally off the grid and very, very safe.
The downside? Proper security practices are important. They’re not difficult to follow, but there’s little comeback if money is stolen.
Anonymity. Bitcoin payments aren’t strictly anonymous, but they do offer some degree of obscurity. That is an advantage in certain business sectors, or for charities, since many people prefer to donate anonymously.
The downside? Depending on the nature of your business and your jurisdiction, there may be stricter KYC (Know Your Customer) requirements.
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