Just like smartphones and the internet before it, bitcoin is something that might seem insignificant today but could become a part of everyday life sooner than you think.
As with other disruptive technologies, business owners need to be ready for this change in order to accommodate their current and future customers.
What is bitcoin?
If bitcoin seems mysterious or tricky, don’t worry — most people can’t explain how credit cards work, but use them every day!
Simply put, bitcoin is a way of storing and transferring value digitally. Imagine combining an email address with a bank account. Bitcoin runs on a network called the Blockchain, which is a ledger of all transactions globally. Unlike other currencies, which are controlled by a central bank, no one party controls the ledger; it is autonomous and spread out of over hundreds of thousands of computers that ensure it remains secure.
So what does bitcoin mean?
Now, to transfer currency involves multiple parties — when money passes from your customer to you digitally, it usually involves at least two banks, the networks they maintain, the staff, the rent and other overheads.
In the bitcoin network, the Blockchain is automated and the only people involved in a transaction is the sender and receiver. That lowers the cost of managing and moving money.
These savings can then be passed to you as a business owner. One Australian car manufacturer, Tomcar, has saved more than $100,000 this year alone from paying their international suppliers in bitcoin!
Bitcoin also means faster money. In Australia, merchants who use CoinJar are able to transfer to their bank accounts immediately when their customers are paying with bitcoin, because the payment is instantly verified. That means when a customer pays a merchant in bitcoin today, they have the AUD balance in their bank account tomorrow.
Money, as it stands now, doesn’t work on a global scale. Businesses can be hamstrung when moving money across country borders, using antiquated systems, and transactions can take days or even weeks.
Bitcoin allows you to move any amount of value, for a few cents, instantly, and convert to a local currency using exchanges like CoinJar. We have businesses that use CoinJar simply to transfer funds to Australia for internal operating costs, because of the lower fees and faster turnaround.
Most importantly, bitcoin is your money. It acts like cash for the internet — once a transaction is complete, it is truly complete. This means that once you have received value from a customer, they cannot take that value back. Transactions are not reversible.
This puts the onus on the business to settle a customer’s problem, but also means that disputes don’t impact cashflow.
Bitcoin has already given rise to new markets. A huge portion of the world is underbanked, but bitcoin is a system that requires very little infrastructure or setup. This gives new markets access to digital finance tools and will lead to whole new markets springing up. If you could position your business to capture these markets, wouldn’t you?
What does this mean for you?
Bitcoin is simply a new to move digital value, but it’s more efficient than anything else that exists now. Businesses like CoinJar are already building products that take advantage of this network, and pass the benefits on to you. This means you can take advantage of faster and cheaper money, without having to be too technical.
As a business, it’s best to ensure that you aren’t caught up by the transition. Just as with social networking, which wasn’t even a consideration for businesses five years ago, bitcoin could potentially become a new digital tool that they must adopt in order to be relevant and competitive.
While bitcoin might not be on your radar right now, the day a potential customer comes in and asks, “do you take bitcoin?”, you want to make sure the answer is yes.
- Samuel Tate.