In this guide I will be outlining how secure and easy Cryptocurrencies are to use and why you as a business should consider accepting them alongside money. I will be focusing on the Bitcoin cryptocurrency, however its benefits can be applied to others.
What are Cryptocurrencies?
Cryptocurrencies (“cryptos” for short) are an alternative to money (pounds, dollars etc). They are digital like 92% of our money and are a form of taking payment directly between buyers and sellers without the need for a third party like a bank.
What types of Cryptocurrencies are there?
Much like there are different monies (euros, pounds and dollars), there are many different cryptocurrencies (i.e. Bitcoin, Dash and Monero) offering unique selling points including speed, levels of security and privacy.
What’s the Technology behind Cryptocurrencies?
Cryptocurrencies are built on a public and decentralised “trustless” technology called a “Blockchain”, a software which holds the ledger of all transactions distributed across a network of internet connected computers called “nodes”. Anyone can run a node by installing and running the blockchain software on a computer to help maintain the ledger, validate transactions and relay changes with other nodes automatically. The ledger of transactions is transparent and open for all to inspect on the blockchain.
If you want to learn more about Cryptocurrencies read my guide “Demystifying Cryptocurrencies“
How are Cryptocurrencies created?
Bitcoin is a software program that the nodes on the network automatically follow. They have to solve complex maths problems in order to create or “mine” Bitcoins. It’s like a competition and the more powerful of the computers get to mine Bitcoin quicker. Over time the difficulty to mine increases which means the supply of Bitcoin reduces over time and helps to maintain its value. This approach means that Cryptocurrencies like Bitcoin are anti inflationary.
If you want to understand more about Bitcoin Mining read my blog Demystifying Bitcoin mining.
How Private are Cryptocurrency Transactions?
Unlike banks, using cryptocurrencies does not require you to reveal personal details like your name, address, credit score etc. Each Cryptocurrency ledger only performs the function of validating transactions and moving the funds from the buyer to the seller automatically.
How secure are Cryptocurrencies?
A concern for any financial system is whether it can be compromised and account holders funds stolen. That’s why banks need to spend vast amounts of money protecting their individual systems and passing on these costs to its customers.
A cryptocurrency ledger isn’t controlled by any one person or company. There are over 8000 computers running Bitcoin’s ledger. A would be hacker would have to take control of 51% of all the computers. This is currently impossible and even it it were would be very costly and time consuming.
Are Cryptocurrencies cheaper than money?
Using Bitcoin to pay for goods incurs a transaction cost of a fraction of a percent which is a lot less than the 3-5% that retailers have to pay for the privilege of accepting VISA or Mastercard. With cryptocurrencies the infrastructure already exists in the form of computers and smartphones to enable instant buying and selling directly between parties.
How do Cryptocurrency transactions take place?
To accept cryptocurrencies you need to download and install a free software wallet onto a smart phone or computer. Each wallet has a “public key” similar to a bank account. This public key is represented by a QR code (similar to a bar code). Onced scanned the buyer can send the funds to the seller’s wallet immediately
Setup in under an hour!
If you wanted to start accepting cryptocurrencies now, you can install a secure cryptocurrency wallet on your computer or smartphone and put a note in your shop window or website that says “ we accept cryptocurrencies”…that’s it!
Can Cryptocurrencies be exchanged for money?
Much like you can convert pounds into euros, you can also convert cryptocurrencies you receive from sales into money using an online exchange.
Probably the easiest and quickest exchange to convert the Cryptocurrency you receive and send directly to your bank account is Coinbase.
How valuable are Cryptocurrencies?
As I mentioned earlier, cryptocurrencies are anti inflationary due to their supply reducing over time. This makes them valuable in their own right. However because you can exchange them for money, if you sell at the right time you could make money when you exchange them. Currently cryptocurrencies are very volatile and have been known to go up 100% in a year only to slump back down again.
Pay your Suppliers in Cryptocurrencies too
If you as a business can benefit from receiving payment in cryptocurrencies why not encourage your suppliers to accept them as well? Then there is no need to convert your cryptocurrency into money to pay them. Buying and selling with companies abroad using cryptocurrencies means there are no foreign exchange fees to pay like those associated with money (i.e. a company from the USA will need to convert Dollars into Euros to buy from a French company).
Accept Money and Cryptos side by side
I’m not suggesting you stop using money but you can add cryptos to the mix. Especially as it is vastly cheaper to accept cryptocurrencies why not test the water and offer it as a payment option to your clients or on specific product lines?
How I can help you?
My background is in technology and training and for over 10 years I have provided IT Support to home and small business users through my IT company ithound.co.uk. In recent years I have added Cryptocurrencies to my product offering with cryptohound.me.
Whether you are a business wanting to accept cryptocurrencies or an individual interested in investing in them, I will help you get started and provide training and support to give you confidence using them.
Carl Hughes, The Crypto Hound
Signal Messenger: +447919 562 418
Telegram: @ flowingman