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What is Bitcoin and how will your small business benefit from using it?

By Nick Rojas

You have probably heard of Bitcoin, but that doesn’t mean you understand what it is or how to use it. However, Bitcoin offers numerous opportunities to entrepreneurs, even if they do not run businesses in the tech or finance sectors. Read on to learn more about what Bitcoin is and what it can do for you, as well as some of the risks that it may bring with it.

What is Bitcoin? An Intro for the Uninitiated

Bitcoin is a type of cryptocurrency – money that exists exclusively in digital form. There are no physical coins or bills with cryptocurrencies. They exist only as digital records.

The technology that allows most of these digital records to be logged is called blockchain. Think of blockchain like a ledger that records every transaction made with a given cryptocurrency. At this point, you may be wondering how blockchain is much different from an electronic banking record or database of credit card transactions. Besides the fact that blockchain records crypto transactions (whereas these other methods represent transactions conducted with physical currency), there is one major difference between them: blockchain does not store these records on a single device or server that can be compromised easily. Instead, blockchain makes copies of the record whenever a new transaction occurs, and spreads them out to anonymous devices on a broad network. By “decentralizing” the ledger in this way, it is practically impervious to hacking attempts and fraudulent attempts to alter the information it contains.

How Bitcoin May Benefit Small Businesses

Are you wondering why any of the information presented above matters? Here’s the main reason: security. Cryptocurrency transactions are extremely secure, which can be a major advantage for businesses that accept them. Security is not the only advantage that cryptocurrencies offer. Businesses that accept cryptocurrencies can also benefit from the following:

  • Most cryptocurrencies offer their users anonymity, which means all transactions conducted with them are final. No need to issue refunds!
  • Cryptocurrencies have the potential to appreciate in value very quickly, since their value is theoretical. The more demand for a given crypto, the more it is worth—good news for anyone who holds it!
  • Cryptocurrencies are becoming more mainstream, thanks to services like Uphold that allow users to convert money back and forth between cryptos and other assets quickly and easily. As such, there is a growing demand for more businesses to accept cryptocurrencies as payment for goods and services—and a large, mostly-untapped market growing along with it.

Approach with Cautious Optimism

As the most popular type of cryptocurrency currently available, Bitcoin is particularly sought-after. Because it has a larger user base than other cryptocurrencies, it also tends to be more stable. Of course, cryptocurrencies can lose value as quickly as they can gain it, so investors should always approach them with caution—even larger tokens like Bitcoin. Still, if the markets in recent years have provided any indication, there is huge potential to profit from cryptocurrency in the coming years.

Your small business may benefit from investing in cryptocurrency, or from adapting so that you can accept it as a form of payment. Just make sure that you have tools you can use to turn your Bitcoin into “regular” money easily, because the market can be a volatile place.