You may have already heard about cryptocurrency and how it functions. It is revolutionizing the online payment world. If you consider yourself an early adopter of new trends, you may be wondering right now how to incorporate this into your business. Accepting this digital money can open an added revenue stream for a business. It will help you reach out to new customers.
Nevertheless, it is highly volatile and might not be the right choice for business owners who want to avoid risk.
What Is Cryptocurrency and How Does It Work?
This is a type of digital money using cryptography for transferring value from one person to another over the internet. With the help of a personalized digital key, anyone can add transactions to the blockchain.
Cryptography is a type of digital exchange money
There are different types of digital money that are traded regularly. Ethereum and Bitcoin are the two most popular ones since they have the highest value. Apart from these, there are Litecoin, Bitcoin Cash, XRP, and many more.
The value of a cryptocurrency is derived from its demand and supply. For example, if more people want to purchase Bitcoin in comparison to how much is available, its value is going to be high. However, the value might fluctuate. This digital money can be exchanged to fiat currencies such as the U.S. Dollar, or other kinds of digital money. Bitcoin has become part of the financial landscape to the extent that even financial derivatives such as contracts for difference are now available from brokers like this, that allow trading Bitcoin’s price against a fiat currency, typically the US dollar.
Nevertheless, only a few crypto coins, Bitcoin among them, can be exchanged directly to fiat currencies. Others must be converted prior to being cashed out. It is a virtual wallet that stores them and records the value of the coins you have.
Accepting Bitcoin as Payment for Your Business
If you have a wallet, you can transfer Bitcoin to another person. For accepting payment, you just need to display a QR code that connects to the wallet. The other person will scan it to transfer digital money to your account. You don’t have to pay a fee for accepting this payment. Nevertheless, there are a few wallets that might charge a certain fee for spending.
Bitcoin exchange is easy now a days Source: edition.cnn.com
BitPay is a common option used by businesses. This is a payment process that is primarily designed for this type of transaction. If your business often makes international transactions, you can benefit from a service like BitPay. This makes exchanging cryptocurrency a less expensive option for selling goods and services across borders, as exchange rates for fiat currencies don’t apply.
Payments made through BitPay aren’t subjected to price volatility, so you are going to receive the exact amount that you charge, subtracting a 1% fee to BitPay.
Since this digital money is decentralized, the transactions are peer-to-peer. Hence, it is subject to the same treatment as traditional money in a bank. However, you still need to meet regulatory requirements if you accept cryptocurrencies as a business transaction.
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