One of my pet peeves is when small business owners don’t offer as many payment options as possible to their customers. I get very annoyed when I eat at a restaurant and they “only accept cash.” Or go to a grocery store that won’t take my credit card for purchases less than $10.
I get equally frustrated with businesses that are completely cashless and only accept credit cards, to the exclusion of those customers who prefer to pay with currency. If you’re running a small business, you should accept every form of payment, every type of credit card, and any choice of mobile app.
Except for Bitcoin.
A Bit About Bitcoin
You’ve heard of Bitcoin, but—like many—you probably don’t fully understand it. I can’t blame you. The concept is…well…out there. Bitcoin is a form of digital currency, and there are many other forms like it, but it seems to be the most well known. Bitcoin is electronically “mined” by people who know how to do that stuff and then bought and sold through online exchanges like Binance and Bittrex.
There’s no paper or actual coins. Your Bitcoin, if you are bold enough to buy some, goes into an online “wallet” and, gee, that sounds safe, doesn’t it? With Bitcoin, there’s no government backing and no central bank. That’s what’s actually appealing about it. And because there’s been a growing number of Bitcoin users—happy to make and receive payment for products and services with the currency—it’s created its own market value.
What kind of market value? As I write this, you can buy a single Bitcoin for $6,067. Does that sound like a lot? Well, in December 2017, a single Bitcoin was selling for nearly $20,000 (its highest value ever). Its lowest value in the past year was closer to $3,200, in December 2018.
Which brings me to your small business and Bitcoin. If you buy into my premise that every business should offer as many payment options as possible to their customers, then does it surprise you that I’m excluding Bitcoin from this approach? It shouldn’t. That’s because there are three significant reasons why you don’t want to dabble in Bitcoin for your business.
Reason 1: It’s too new.
Bitcoin, for all its media attention, is still very new on the scene. Most people I know understandably don’t understand it! It’s a concept that’s grasped mainly by techies, gamers, “dark web” enthusiasts, and other people who probably have too much time on their hands.
When you run a small business, you want to be careful not to be on the bleeding edge of anything. Let others—particularly big companies—take the risks. Once a concept, a model, or a trend is validated and proved effective, then it’s OK for you to jump in. Maybe you’ll lose out on some big dollars by not being first in, but that’s OK.
Bitcoin is not your business. Your business is your business. Let others monkey around with this new technology, and good for those few who strike it rich.
Reason 2: It’s too niche.
Despite all the publicity, Bitcoin is really not being used much by anyone. If you Google the companies that accept the digital currency as payment, the list is very short. Yes, there are some very risky investment funds that are making money there.
There’s an updated list from late 2018 of companies that accept Bitcoin that includes a few name brands like Overstock.com, Microsoft, and Subway. But let’s face it—the big stores like Walmart, Target, and even Amazon haven’t signed off on it yet. That should say something. If they’re not willing to deal with the digital currency, why you should you be? They can afford to take losses. You can’t.
Obviously, if the day comes where 5%, 10%, or 20% of your customers are demanding to make payment in Bitcoin, then it will be time for you to respond. But, for now, it’s just too small a marketplace.
Reason 3: It’s WAY too volatile.
You saw the prices above. You’ve probably also read the news reports or gossiped with your friends about the fluctuations in Bitcoin values. My niece—a schoolteacher—asked me a year ago if she should invest in Bitcoin, and, after she revived me from my panic attack, she agreed not to.
The fact is that the Bitcoin market is not that large and many of the major “miners” of the currency are consolidated in a number of mining pools based in China. There’s too much risk of market manipulation. There’s not enough buy-in from the major market makers around the world. As a result, the currency has fluctuated wildly.
You’re not a treasury manager. You’re not some type of foreign currency exchange guru. You’re running a small business. When someone buys something from you for $10 today, that $10 should still be worth $10 a week from now. There’s no guarantee of that when you’re dealing in the Bitcoin world.
All of that being said, I truly hope that Bitcoin succeeds. I love the concept. I love a currency being free of national politics and manipulations. I love the idea of buying and selling products without hard cash. I love that a digital currency could save a small business big dollars on financing, credit card, and transaction fees. I love all of this. But I don’t love Bitcoin, yet. Stay away for now. Let’s revisit this issue in a couple of years.
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Hmmm you are making a good point… I’m a small business owner (I have a restaurant), and I found this article (https://nowpayments.io/blog/top-restaurants-that-accept-cryptocurrency). It seemed very inspirational to me. I still believe it’s a great way to attract younger and more progressive audience to your business, and besides—you can keep the bitcoin and there won’t be such problem.
Re accepting Bitcoin: The suggestions not to do so clearly presume that someone would keep the bitcoin.
Why would you do that?
Do not keep the bitcoin!
Sign up with a cashing service (BitPay or CoinBase or other) and have them cash it for you on the spot. You never hold the bitcoin – these services show a wallet (as a 2-d barcode/qr code). Your customer pays them
YOU WILL NOT be affected by the price volatility because these services will settle quickly (instantly for retail/small amounts, in enough time for mail-order).
Additionally, you will enjoy safety: Since Bitcoin transactions are irretractable, you will not get any bad payments. All your money will be ACH-transferred into your bank account the next day.