Bitcoin was originally designed as an alternative digital currency to traditional currencies by relying on an existing peer-to-peer electronic cash system.
Today, however, we see many investors, both individuals and institutions, calling Bitcoin digital gold.
Although Bitcoin reached the level of $ 18,000 recently, some users ’view has not changed about Bitcoin being a digital currency for daily use and payments, not for investment.
Recently, Paypal announced its support for cryptocurrency and bitcoin services, on top of it, by allowing users to buy bitcoin and pay merchants with it.
This means expanding commercial use of Bitcoin and increasing and growing the number of transactions over the Internet.
Below we will discuss the benefits that can be reaped by accepting Bitcoin in businesses.
Direct Bitcoin Payments:
When one hears the phrase “cryptocurrency payments,” perhaps the most logical picture that comes to mind is that the user and the customer provide the merchant directly with bitcoin and receive the good or services in return.
But although Bitcoin is very popular among some cryptocurrency-focused companies, such as MtSocks, which relies on Bitcoin in its work, it is in fact the least common way to implement cryptocurrency transfers among traders today.
Jason Dean, an analyst at Quantum Economics, explained:
The traditional finance industry is not yet ready to abandon fiat currencies and embrace cryptocurrency entirely on its own.
While there is definitely a positive PR for companies that advertise their support for Bitcoin.
However, bitcoin at present is only suitable for the most forward-looking companies.
The truth is that it is still difficult to accept Bitcoin in its original form at the point of sale, and systems still have a long way to go to make this smooth.
Bitcoin also causes a number of accounting problems, both at the point of sale and in terms of emptying of books.
He added that most people get around this by assigning legal value at the time of the transaction, but it is not ideal and can create additional tax liabilities if Bitcoin is stored and converted back into fiat currencies at a later stage.
These problems stand side by side with the wildly fluctuating price for which Bitcoin is known, which further complicates matters further.
Jason Dean went on to say:
At the moment, Bitcoin is suitable for more advanced companies.
On a large scale, domestic adoption is inevitable.
It is possible that these early adopters, while having to struggle with volatility and unstable payment systems, will ultimately be seen as market leaders.
Hybrid payments between bitcoin and fiat currencies:
Another form of cryptocurrency payments has emerged over the past two years.
This form is represented by merchants accepting cryptocurrencies in exchange for providing goods and services, but the acceptance of encrypted digital currencies is not done directly, but rather supervised by a third party who converts digital currencies and pays them in the form of paper currencies to the merchants.
Meaning, by using this method, the customer actually pays the cryptocurrency, but these currencies do not go directly to the merchant.
Instead, a payment processor receives it, turns it into fiat currencies, and sends it to its customers.
Therefore, companies and traders can accept Bitcoin and other cryptocurrencies without worrying about processing and dealing with it, as they entrust this task to third parties.
Notably, PayPal offers such a scheme for its merchants.
This angered some cryptocurrency fanatics.
At the same time, making crypto payments today is very easy, as an API can be embedded on a website.
According to Max Krupyshev, CEO of the cryptocurrency processing service Coinspaid:
This hybrid model is preferred by the vast majority of casual traders who want to incorporate cryptocurrency payments on their platforms.
While this is not a magic bullet that can boost a company's profits overnight, accepting bitcoins can be really beneficial for companies, some more than others.
Benefits of accepting bitcoin:
The traditional payment methods led by both "Visa" and "MasterCard" are distributed widely around the world, but these systems are subject to strict control and regulation.
This means that merchants can face unexpected hurdles and restrictions down the road when setting up their payment channels.
But this is not the case with Bitcoin, which offers much more freedom and hassle-free operations compared to traditional financing.
Regardless, transaction fees are often lower with cryptocurrencies.
Traditional payment processors typically take in 2% of each sale on average (this number varies from one destination to another).
Krupyshev notes that if cryptocurrency payments are accepted, these fees are reduced by at least half, by an average of 1%.
Krupishev explained that the encrypted digital currencies are suitable for companies and new traders and for those who face difficulties in payments by relying on traditional means.
Krupishev added that in particular, “high-risk” institutions or those located in a gray area of legal regulation will be the primary beneficiaries of Bitcoin payments, and he gave examples of these services with those that provide adult videos, live broadcasts, or even gambling and dating sites.
Thinking without geographical boundaries:
Another great advantage of accepting bitcoin by businesses is that cryptocurrencies are not subject to a central authority or government and instead provide global payment solutions without regard to barriers and geographical boundaries.
This exempts merchants from setting up their own payment infrastructure in each region.
In this regard, “Krupyshev” stated:
As a business, Bitcoin and cryptocurrencies allow you to think without geographic boundaries.
For example: If you own an online business and sell some services online, it doesn't matter if your customers are from India, Latin America, or Russia.
By accepting cryptocurrencies, you can direct your store to any geographic area you want.
Bitcoin is an important choice for traders:
Bitcoin and cryptocurrencies are an additional option for merchants to receive digital payments from their customers, with the possibility to take full advantage of reduced fees and the ability to deal with different users across different geographies.
It is expected that the focus of Bitcoin and digital currencies will increase with the increase in their acceptance by international companies and stores.
Bitcoin BTC is completely unsuitable for payments. The transaction fees are incalculable and often exceed $10, which is much more than credit card fees.
Bitcoin Cash BCH is an excellent payment method. The transaction fees are almost zero.