Should Your Small Business Accept Bitcoin?
Bitcoin has made quite a few headlines lately. This is thanks, at least in part, to the somewhat spectacular failure of Japan-based MtGox, one of the world’s largest exchanges. Hundreds of millions of dollars’ worth of the virtual currency disappeared in a very real way.
Despite the controversy, bitcoin continues to muster support among many small-business owners. Among other things, they say, using the latest technology helps entrepreneurs stand out amid the competition.
Is accepting bitcoins right for your company? It depends on your particular situation and needs. Here’s what two entrepreneurs told the Intuit Small Business Blog about their experiences with the virtual currency.
Support Clients, Disrupt Tradition
“Our willingness to accept bitcoins is more of a philosophy of our firm, as far as supporting our clients and supporting entrepreneurial types of businesses,” says Braden Perry, a partner at the law firm Kennyhertz Perry in Kansas City, Mo.
“We represent entrepreneurs of all shapes and sizes, so it does allow our clients to have different options for paying us. Sometimes just providing those options is attractive to entrepreneurial types [who] are looking for legal services.”
Gregg Weisstein, co-founder and chief operating officer of Los Angeles-based BloomNation, expresses a similar sentiment.
“BloomNation is using technology to disrupt and change the way flowers are sent online,” Weisstein says. “We see a lot of similarities in the way bitcoin uses new and emerging technology to disrupt the traditional credit card processors. It seemed like a natural fit to embrace like-minded technology and tap into the niche customer base.”
Still Confident, Despite Controversy
The recent controversy, albeit disconcerting, seems to have had only a short-term effect on bitcoin. “We are still very confident in the technology behind bitcoin, and the rest of the market seems to have a similar opinion,” Weisstein says. “Although there was an initial drop in the price of bitcoins when the news first broke, the price has since rebounded.”
Perry believes the negative developments will make bitcoin better. “There are still multiple marketplaces for the retail bitcoin exchange, which individually [execute] the price, so you are relying on each of the exchange’s integrity for a fair price,” he says. “But with the likely bitcoin license regime [leaving] New York and then eventually more states, [they] will eventually weed out the bad actors without harming the attractiveness of cryptocurrency.”
Like any currency, bitcoin’s valuation fluctuates against traditional currencies, such as the U.S. dollar. To maintain the value of their transactions using the cyber money, BloomNation converts “bitcoins to U.S. dollars instantly, so that local florists are not susceptible to the fluctuations in price,” Weisstein says.
Digital Wallet: Here to Stay
Neither Perry nor Weisstein can say for sure that their decision to accept bitcoins has resulted in new revenue streams. But the trend toward the digital wallet seems to support the continued adoption of virtual currencies in the future. Overstock.com, for example, predicts a twenty-fold increase in payments denominated in bitcoin in 2014.
Although bitcoin users represent a small portion of the customer base at BloomNation, the bitcoin community seems eager to support and use the currency wherever it is accepted, Weisstein says.
Perry says his experience is similar: Only a “small fraction” of Kennyhertz Perry clients pay with bitcoins, but their ranks are growing. “Clients [who] pay us in bitcoins are, for the most part, in the cryptocurrency or technology space,” he says. “Many are entrepreneurs looking for legal guidance in a burgeoning industry.”
Dave Clarke is a business writer for Intuit and is passionate about solving small business problems.