Let’s start with the basics. Bitcoin and other cryptocurrencies are digital assets that use cryptography to timestamp, secure, and transfer coins between owners. The consensus on keeping track of all this information is determined by computers solving difficult mathematical puzzles based on random selection of data distributed across multiple systems around the world rather than relying upon centralized infrastructures like banks or governments (or even tech giants).
Let's start with the basics. Bitcoin and other cryptocurrencies are digital assets that use cryptography to timestamp, secure, and transfer coins between owners.
The consensus on keeping track of all this information is determined by computers solving difficult mathematical puzzles based on random selection of data distributed across multiple systems worldwide rather than relying upon centralized infrastructures like banks or governments or even tech giants.
Cryptocurrencies have advantages over fiat currencies which make them popular among business owners. They are significantly cheaper to use than a standard credit or debit card and allow full anonymity when buying online, so there is no real point in requiring bank accounts for SMBs that want to accept such payments since crypto users can remain entirely anonymous even if their identity becomes part of public records through legal proceedings proving ownership of e-wallets or other vehicles belonging to companies themselves not businesses.
Because processing fees from these transactions typically come lower than equivalent credit card fees, they are often much less expensive for online merchants to accept.
Some companies have gone one step further and built entire business-to-business (B2B) blockchains that businesses themselves can use as an alternative way of keeping track of inventory or verifying payments sent between affiliates across the country. For example, Nike uses blockchain technology in its supply chain management system dedicated to sneakers called Maestro.
Everybody involved with producing a particular shoe must upload information about it before becoming part of transfer to prevent counterfeit sneakers from entering their distribution chains.
Another benefit of offering users the ability to pay with cryptocurrency at your company is that many people are now looking for cryptocurrencies as an asset hedge, sitting on coins like Bitcoin in expectation of higher prices and holding them instead similarly to gold.
Approach this problem using cryptocurrency conversion pricing tools available online or with a local exchange like Coinkite or Kraken. Although most major exchanges offer API interfaces allowing merchants to deposit and withdraw cryptocurrency, only a few offer easy conversion tools that allow merchants to calculate differentials between the various major currencies.
In this scenario, you can store your customers’ cryptocurrencies in escrow, so they’re never actually available for immediate payment until deposited into their crypto-enabled accounts at the respective exchange of choice.
A combination of technologies allows businesses to meet their jurisdiction’s compliance needs and provide customers with a fully regulated, secure experience.
Transactions on BitPay are not reversible without the help of your business or an associated payment processor – either can be involved in the transaction through integration so that they can ensure third party fraud is not present, halting or reversing transactions.
Some jurisdictions allow for direct credit cards. The result is the same as other services requiring traditional bank wires: Your business will get better funding rates especially for international customers using Direct Debit. Banks worldwide will always attempt to undercut Bitcoin rates to win new business.
For example, BitPay has been used by companies. Still, hundreds of companies offer similar solutions, and they have options like E-Check, Banking Flat Rate Accounts, or even credit cards.
There are two ways to create a crypto wallet for your company: using an external provider or building it yourself.
The most popular way to create a crypto wallet for your company is to use an external provider. These providers provide a platform to easily create a digital wallet and add your company’s cryptocurrency holdings. The major providers include Coinbase, Binance, and Bitfinex. To choose the right provider for your needs, be sure to review their features and pricing options.
Build your own
If you choose to create your own crypto wallet, read up on guides on how to create a digital wallet and choose the right platform.
According to a survey by Constellation Research, 23% of U.S.-based small businesses currently accept cryptocurrency payments, which may be subject to change in the near future as they feel confident that there will soon be more major banks and credit card companies offering cryptocurrencies on their debit cards or at checkout pages – this has already started happening with select retailers such as Expedia.
A cryptocurrency card/wallet will be more appealing to customers because it is safer than a cash deposit and the transaction fee charged by businesses.
As Businesses gain more experience with digital assets, they may opt for creating dedicated tablet or smartphone apps encompassing a crypto wallet that allows people to send money between each other quickly and easily in near real-time.
This type of solution still has yet to reach critical mass, so there’s not much point in getting businesses involved now. The industry will be more cohesive if they do things simultaneously so that other companies can leverage existing practices and infrastructure when it’s ready.
You won’t have fraud protection like credit cards or cheques by any means of payment. Make sure your customers know these risks before asking for their personal login information; otherwise, these kinds of problems may happen to them.
How to Accept Crypto Payments as a Small Business
You can do a few things to make accepting cryptocurrency payments easier for your small business. Research which cryptocurrencies are accepted by your chosen merchants the most popular is Bitcoin.
Then, you can use a third-party cryptocurrency payment gateway to offer all your customers the ability to pay in cryptocurrencies. Circle.com is a next gen payment solution provided for businesses. These options include accepting cryptocurrencies through payment gateway providers such Coinbase instead of third-party vendors using blockchain technology – this allows you and your customers full control over all the transactions. Artificial intelligence (AI) technology has already been used by companies like BitGo, which allows cryptocurrency wallets owned or managed by customers to be securely stored offline.
With services like Stripe already doing cryptocurrency payments at a colossal scale, many large companies have created dedicated teams to look into digital assets. Amazon is a major tech firm that accept cryptocurrency. There are quite an array of options available for Amazon merchants when accepting Bitcoin as payment, including BitPay for Bitcoin transactions, Ledger Nano X (a hardware wallet) through Trezor and Flexa Card. Major online retailers like Overstock already accept it as well – and they have processes in place that don’t require merchants to do much of the heavy lifting when it comes to investing time and resources.
Cryptocurrency is an interesting and complex technology that has the potential to improve the functionality of traditional financial systems greatly. If your business operates in an industry where cryptocurrency could be beneficial, it's important to understand its basics and how it works to capitalize on this potential.
SMBs need to consider how new technologies like digital currencies fit into the overall strategy of their businesses and whether or not they align with other tools that already work well within those ecosystems. As long as your customers understand the advantages and disadvantages of cryptocurrency, your business could benefit from this rapidly growing industry.
For example, if your small business were looking for ways blockchain tech could be useful in improving data security and preventing fraud, it would make sense to explore how this technology could be integrated into existing systems like invoicing or accounting software. Suppose your business is just trying to grasp the basics of cryptocurrency before jumping in headfirst. It might be more beneficial to focus on resources that provide a smoother introduction to the technology.
Businesses should understand cryptocurrency basics before embracing it wholeheartedly. This is especially true for SMBs that aren’t specifically interested in incorporating blockchain tech and crypto branding into their financial infrastructure. They would be better served by resources aimed at helping subscribers get up to speed on this new technology quickly and efficiently.
Ensure your staff understands how online currencies like cryptocurrency work and how these services can help improve business operations with lower fees or improved efficiency if they’re not using cryptocurrency altogether.
However, understanding that cryptocurrency is the future, companies should immediately invest in and have an informed understanding of digital currencies and blockchain tech as it is emerging in the global market as it is an investment worth making.