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Is ecommerce ready to embrace crypto-currency?

  1. Bitcoin
    Kat Haylock

    Kat Haylock Community Editor Staff Member

    Posts: 301 Likes: 130
    4 |

    It's kind of chicken and egg with bitcoin (BTC) at the moment, writes DEFCON1. People need places to spend bitcoin but businesses fear the demand isn't big enough. But perhaps that’s where ecommerce fits in.

    In early 2016, bitcoin developer Mike Hearn dramatically announced that bitcoin had failed. The blame fell on rampant censorship in China and vicious community in-fighting.  A few months later, TransferWise CEO Taavet Hinrikus declared in an interview that bitcoin was dead. It’s not hard to imagine the repercussions had similar remarks been made about sterling, dollars or other solid, tangible currencies we’re used to. But bitcoin is a currency that dies a hundred times a day.

    In response to news of its impending doom, bitcoin’s value rose 125%, making it 2016’s top performing currency. In early 2017, the price of one bitcoin soared past the $1,000 mark. Despite a glimpse of the cryptocurrency’s notorious volatility on January 5th – when its value dropped $200 in a single hour – bitcoin has since enjoyed relative stability at around $900.

    With the likes of Microsoft, Wholefoods and Save the Children choosing to accept bitcoin, is the digital currency finally moving away from its morally agnostic reputation? Moreover, should it be seriously considered as a viable payment option for ecommerce websites in 2017?

    UK Business Forums user DEFCON1 thinks so. “It's getting harder to just ignore this trend as it becomes more popular and more mainstream,” he writes in this thread. “While it’s not huge at the moment, the signals look like that's set to change and the concept could take off.”

    There are certainly some benefits for small businesses looking to integrate bitcoin. The irreversible nature of BTC transactions saves sellers from customer chargeback fraud; something UKBF member Greenacres experienced last October.

    Bitcoin integration also allows vendors to avoid the standard 2-4% charge of credit card transactions - with charges from third party BTC vendors standing at around 1% - and the payment usually takes less than ten minutes to process. An immediate financial win for a small business. As Adam White, Coinbase’s director told Entrepreneur:

    “Small businesses, on average, are paying higher credit card fees than Walmart is. Large businesses can negotiate lower credit card transaction fees. Small shops can’t.”

    For those looking to trade internationally, bitcoin can cut further costs. Its decentralisation allows exporters to avoid dealing with multiple currencies, exchange rates and expensive cross-border fees.

    However, even with the draw of some financial relief, there’s still a palpable amount of unease for UK Business Forums members. For WebDesires, bitcoin remains inextricably tied to legally and morally dubious goods, as something “only crooks and idiots use”. Hortonas_tjh agrees; he’s only ever seen bitcoin traded in the dark parts of the internet. 

    For antropy, the currency is too unpredictable. “You might list your prices in BTC and end up getting paid far less than you need,” he writes. “If you hold BTC for any length of time, you become vulnerable to fluctuations. And of course if you convert to GBP too frequently it will cost you. So you have to hold on to it.”

    There’s no question around the additional trust needed to work with bitcoin. Since there’s no perceptible BTC to give or receive, a payment is only confirmed when a record of a transaction is made. For a business owner to provide immediate access to the purchased product or service there’s a risk of bitcoin fraud: the seller must work under the assumption the buyer won’t spend the BTC elsewhere before the transaction has cleared.

    To avoid the expenses of frequent currency conversion, there’s also faith needed in both the continued value of BTC and the security of a bitcoin wallet. Managing a wallet alone opens users up to a complete loss of funds should they forget their password or encounter a security breach: 19ninety tells a cautionary story of a user who mentioned his bitcoin – worth thousands – on a gaming forum and had the amount stolen by a hacker overnight.

    There’s no doubt, as DEFCON1 admits, that bitcoin has had some bad press. Yet with the security of ordinary currency regularly compromised, he says he’d be happy to accept bitcoin for his business, provided he manages the risk by “not holding too many”. Above all, he’s interested in differentiating his business in a competitive market.

    Would you consider integrating bitcoin, or does its “murky” reputation still bother you? Let us know by logging in and commenting below.

  2. Edd Dutton

    Edd Dutton UKBF Contributor Free Member

    Posts: 31 Likes: 10
    Interesting article. We accept Bitcoin for small transactions (for the reasons outlined above). I personally love the idea of the blockchain, cryptography and decentralised cryptocurrencies and the influence they could have on industries worldwide.
    Posted: Jan 23, 2017 By: Edd Dutton Member since: Dec 13, 2016
  3. Kat Haylock

    Kat Haylock Community Editor Staff Member

    Posts: 301 Likes: 130
    What persuaded you to accept bitcoin, Edd? And do you find you get many customers using it?
    Last edited: Jan 23, 2017
    Posted: Jan 23, 2017 By: Kat Haylock Member since: Jul 11, 2016
  4. Dan Izzard

    Dan Izzard Digital Marketer Full Member

    Posts: 1,053 Likes: 306
    @Kat Haylock since I already use a Monzo account it wouldn't be a massive jump to use something like a cryptocurrency through that kind of app set-up. I prefer to call it bitty coiny though
    Posted: Feb 6, 2017 By: Dan Izzard Member since: Nov 21, 2013
  5. Kat Haylock

    Kat Haylock Community Editor Staff Member

    Posts: 301 Likes: 130
    I think re-naming it "bitty coiny" would certainly erase its reputation as the currency of the deep dark web :D
    Posted: Feb 6, 2017 By: Kat Haylock Member since: Jul 11, 2016