We’ve added bitcoin as a payment option. We’re interested in how bitcoin works and so we’ve added it to the site as a payment option.
What is Bitcoin?
Bitcoin is the first decentralised peer-to-peer payment network that is powered by its users with no central authority or middlemen. That leads, at least in theory, and mostly in practise, to some interesting benefits for its users. There is no need to disclose card details to anyone, there are no intermediaries to slow down, block or charge for the payment, there are no cross-border payment issues, and there are lower (and often zero) processing fees.
Merchants enjoy the above benefits as well. The payment processor is not your obligatory partner in the process of accepting bitcoins from customers. While working with a payment processor can bring benefits, its not a requirement. We use bitpay at Easy Optical to process bitcoin payments, but this is not a requirement. The technology to pay with bitcoin and receive payment in bitcoin is virtually all free and open source.
What are the Risks?
With so many advantages to using bitcoin as a means of payment, it might be reasonable to ask why bitcoin acceptance by shops is not more common. Well, there are plenty of disadvantages to the use of bitcoin as a store of value or a means of payment. The bitcoin payment protocol is jargon ridden and the concepts which underpin it do not necessarily have easy analogs to existing payment methods such as credit cards or Paypal. It is a relatively new technology and has a steep learning curve compared to payment methods that are mainstream. Bitcoin is also used as a payment method for so-called ‘dark net market’ purchases, and for that reason people may not want to use bitcoin because of the associations it has.
Perhaps the biggest risk of holding bitcoin is the high degree of volatility of the change in its value compared to other currencies . People are understandably wary of holding a currency that is very volatile. Its not uncommon for the price of bitcoin to go up or down 10% in a day.
So then Why Use Bitcoin?
Considering all of the above, its reasonable to ask: why accept bitcoin at all? The world of cryptocurrency is maturing, and this includes the development of the same tools (futures, options, currency hedges) in the bitcoin world as those that are available for mainstream currencies. Its now possible to set up a free wallet with no intermediaries, buy bitcoins with credit card (CoinMama, Coinbase, Btc-24, etc), to hold those bitcoins in a wallet in the currency of your choice (Abra) with therefore no currency volatility and a lot of the bitcoin complexity abstracted away, and to transfer those bitcoin to your bank account instantly (CoinBase, Abra). As yet these innovations have not meaningfully added to the cost of using or owning bitcoins, and we are guessing that this trend is set to continue.
We’d like to point out some of what we think are spectacular use cases for bitcoin:
Remittances: if you have a bitcoin wallet and the other person halfway across the world (or standing next to you) has a bitcoin wallet, you can transfer bitcoin to them instantly, at no cost to you or to them. Compare this to what Western Union or Moneygram would charge and the time it would take. We think no comparison.
Currency exchange: even if the remittance was available for free, there would normally be a currency exchange cost to convert say GBP to USD or vice versa. In a bitcoin exchange transaction this cost is not there.
Banking for the unbanked: Can’t complete the paperwork to open an account at NatWest or Bank of America? A free bitcoin wallet app running on your phone or your computer is all you need to accept payment from others, and to pay others.
Bank fee reduction: how much do you pay to receive a wire into your bank account from abroad? How much do you pay to send a wire abroad? We pay something like USD$25 each way. Doing these transfers by bitcoin reduces this cost to virtually zero, and its instant. Compare that to the three to five banking days and USD$25+ it takes using the SWIFT network.
Selling online: want to have a shop online but don’t have the volume (or the patience) to justify the time and expense of a Paypal account or a credit card merchant account? With a free bitcoin wallet you can send and receive payments with no middleman inserting themselves into the process.
Buying online: Many shops, both online and brick-and-mortar allow you to pay with bitcoin. Easy Optical for example! Other examples include: Target, CVS, WordPress.com, Subway, Victoria’s Secret, PayPal, Expedia, Home Depot, Kmart, Sears, the Apple App Store, eBay, Dell and Zappos.
There are more and more use cases. The above only scratches the surface. If you have any questions or comments about bitcoin, do feel free to get in contact.