Should Bitcoin be on Your Radar?

It's hard for a week to go by where a news story on bitcoins doesn't find itself in the limelight. Often associated with the speculative dreams of Wall Street investors or savvy programmers, bitcoin is equally relevant for business owners, too. If you've been avoiding looking into bitcoin because it just sounds like a bunch of technical mumbo jumbo, here's your chance to get a quick summary of the currency and how it can benefit your business.

Back Up: What is Bitcoin?

Bitcoin is actually considered a cryptocurrency, because it uses cryptography to secure and process transactions. Instead of a single financial institution keeping a ledger of your withdrawals and deposits, bitcoins rely on a public ledger that is maintained by millions of individuals throughout the world. To receive bitcoin from you, I give you a temporary digital address and you initiate the transfer, which is securely verified through the public ledger that ensures no funny business is going on.

Are Bitcoins better than what we've got?

The advantage to using bitcoins is that there is no single bank, company, or government that controls them. This means that fees associated with exchanging bitcoins are a fraction of what you may be used to with credit card companies or other payment processing merchants. Regardless of the merchant you use to manage your bitcoins and the size of your transactions, you'll find yourself paying less than 1% – and sometimes less per transaction. Because the currency doesn't have a nationality, it doesn't matter if you're accepting bitcoins from someone in Illinois, Canada, Egypt, or South Korea. And although the ledger is public, your business' details are not associated with bitcoin transactions, meaning you don't have to worry about companies mining your personal information.

It's important to note that one of the biggest critiques of bitcoin is its volatility. Because it's a relatively new currency, the value of a single bitcoin fluctuates much more than more traditional currencies, like the US Dollar. Today, 1 Bitcoin is worth twice as much as it was last year.

Hundreds of thousands of businesses already accept Bitcoin

Microsoft, Dell, Amazon, and Target are just a few of the over 100,000 businesses that already process bitcoin payments. These companies almost always immediately convert these transactions into USD to control the risk of bitcoin's volatility as well as for practical accounting reasons. Their adoption has increased the size of their potential consumer base and reflected an innovative and welcoming image for their brands.

What do I need to do to start receiving payments in Bitcoins?

If you're ready to take the plunge into accepting bitcoins as payments, you can take a look at BitPay, which manages bitcoins for some of the companies listed above (you can find a full list of merchants here). You can process the payments online or use a tablet or smart phone if you make transactions in person. Bitcoin.org has an additional collection of information related to taxes, gaining visibility, and setting your business up to receive payments.

While some businesses may benefit from traditional currencies, it's worth giving bitcoins a one-over to see whether it makes sense for you.