How, exactly, do you make or receive payments with a bitcoin?
As an entrepreneur, that’s what you’re most interested in, right? You’re not reading a 1000+ word article on cryptocurrency, spending half your night on a white screen, just because you enjoy reading about new inventions. You want to know what value it has for your business, whether it can make your transactions easier, safer, and more secure.
You probably expect to make money with Bitcoin, but the virtual currency remains confusing, to say the least.
What if your understanding of Bitcoin is all wrong?
Do the words “cryptocurrency,” “blockchain,” and “mining” make any sense to you?
What if your understanding of the way Bitcoin works is wrong?
Do you have any idea how to make or accept payments using virtual currency?
It would be a virtual tragedy to miss this opportunity, yet I believe that’s precisely what’s happening. Not just to you, but to millions of entrepreneurs and other digital businesses around the world.
But why is that? Is it because Bitcoin is just a joke, a popular trend, or a fad? The answer is no. I believe if you know what a bitcoin is and how it really works, you can leverage it to improve your business.
I am sure there is a host of reasons why you’re not yet using Bitcoin for your business transactions, but I would venture to say that the biggest reason is your fear that bitcoins are not legal currency.
Read on to learn what a bitcoin actually is.
A bitcoin is legal virtual currency.
I know, it may surprise you to hear that. But stick with me for a moment.
The main purpose for creating Bitcoin, according to its founder, Satoshi Nakamoto, as he stated in his first and only whitepaper on the topic, was to provide a better alternative for “commerce on the Internet,” which has been discredited by cybercrimes. “What is needed,” Nakamoto continues, “is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.”
That’s what Bitcoin is.
Since its creation in 2009, Bitcoin has revolutionized the $1.8 trillion global payments industry, according to a study by McKinsey, and has gained popularity as its stock price jumped from around $216.91 U.S. dollars in January 2015 to approximately $697.37 U.S. dollars in October 2016.
You’re not stealing anybody’s coin when you use a virtual currency like Bitcoin to buy goods online or accept the virtual currency as a merchant. So, yes, Bitcoin is legal in most countries around the world. Some countries, however, such as Ecuador, have banned its use, not because it’s a crime, but because the country’s regulations don’t favor it.
Of course, regulations toward transactions and other business and finance activities differ from one country to the other. That’s why it’s important to research policies in your region and learn how to store and spend the digital currency before you start using it in your business.
Let’s talk about that next.
How do bitcoins work?
First, you have to get a bitcoin wallet.
A bitcoin wallet is a personal database, typical of your Internet banking account interface, that shows your transactions, as you can see from the screenshot below:
(Image source: apptoko)
Getting a bitcoin wallet is easy. Just decide which type of wallet you want—as there are different types of bitcoin wallets that are either Web-based, Desktop, Android, and iOS.
Here are the popular types of bitcoin wallets you can download right away:
Once you’ve downloaded the wallet on your smartphone, computer, or somewhere on the web, you can use it to transfer cash from your personal account (your wallet) to another account (the recipient’s wallet).
For example, when you want to send $500 from your bitcoin wallet to your freelance designer (we’ll call him Joe), for instance, here’s how you’ll do it:
- Enter your private key (a cryptographic signature that proves your right to spend bitcoins from your wallet) to sign a message with the following information:
- The source transaction of the coins (this is a record of which bitcoin address was used to send the bitcoins to you in the first place);
- The amount you want to send to Joe ($500 for the design services he’s done for you); and
- Joe’s address.
You will then release the funds from your bitcoin wallet out to the wider bitcoin network. From there, bitcoin miners (a network of people) will confirm the transaction and include it in the blockchain.
That’s simple, right?
Now let’s look at why you should use the digital currency to pay your contractors and receive payments from your customers.
Why should you use Bitcoin?
More than 100,000 businesses are already using it. Both small and large businesses like Microsoft, Dell, Home Depot, and Expedia are using it.
The digital currency is moving fast. It has already moved to its second phase after championing its first phase, which was “merchant adoption,” Sonny Singh, chief commercial officer at BitPay, told IBTimes UK. “The second phase is exploring bitcoin’s use cases,” Singh continues. “For example, one area where companies could see huge benefits from bitcoin is in international payments. This could save them a lot of money.”
Here are three reasons why you should consider using bitcoins:
Bitcoin has immense value. Five years ago, individuals and businesses cared less for Bitcoin. In fact, the value of a single bitcoin in 2012 was only about $5. Today, the digital currency has taken a giant leap in its popularity, usage, and value. Now, one bitcoin is valued at $2,000.
More than 300,000 people perform daily business transactions with bitcoin, according to blockchain, because they realize just how valuable it is for their business.
Entrepreneurs just like you use bitcoin to buy products and services, subscribe to their digital products, and settle their expenditures. And the good news is that, despite the massive value the bitcoin currencies are for businesses, they are also cost-effective.
Transactions with Bitcoin have minimal or zero transaction fees. Bitcoin has no government or any financial institution to act as an intermediary to process your transactions. This is unlike the traditional bank or credit card transaction, and it’s one of the reasons why you need to subscribe to the bitcoin payment.
First, your account is stable. Nothing can shut it down or get you suspended because it’s 100 percent secure. Your bitcoin can’t be stolen, because the currency is not like your cash in the bank. This currency is cryptocurrency, well-guarded by codes and other digital protection. You can send and receive bitcoins without fear of being attacked, because your personal information is anonymous.
The bottom line?
Imagine… after reading some whitepapers, articles, and in-depth blogs on Bitcoin, you have finally decided to download a bitcoin wallet and start using it for your business. After that…you never turn back.
You now accept bitcoin for your e-commerce shop. It is no longer “fake money” to you. You have a ton of bitcoin in your wallet now, and you use it to pay your freelancers and web designers, because the simplicity and ease of use is just something you had never imagined.
This is all because you educated yourself about how the digital currency works, removed your fears, and started using the cryptocurrency to your advantage.
Keep using it to simplify your transaction processes and growth hack your business. You’ve got your roadmap—now all you need to do is stay updated on current bitcoin trends. Your new life of simplicity and success awaits.