Bitcoin has come a long way since its introduction in 2009, with people touting it as the world’s first cryptocurrency. It has significantly increased in popularity, and subsequently in value, successfully becoming the largest decentralized digital currency on the market. With a currency system that competes with government issued currency, most businesses are now beginning to provide payments options wherein users can transact using Bitcoin, and so should you. But you’re probably wondering how you’re going to do that as there is currently no professional managed service that does it for you.
As far as legality is concerned, Bitcoin isn’t a currency that is formally recognized by governments and financial authorities. But practically, using Bitcoin is pretty much the same as accepting payments via any other form, including gold, cash, foreign currency or gift cards. So, let’s take a look at how you can add a Bitcoin payment option to your website.
Accepting Bitcoin Directly/Indirectly
The first step towards making Bitcoin an acceptable mode of payment for your website – you must first decide whether you want to be handling Bitcoin payments on your own, or whether you’ll hire some third-party payment service provider to process you payments for you. Handling the process yourself will undoubtedly teach you how to use Bitcoin’s technology, and will also offer considerable savings in terms of lower processing fees. Just know that you’ll need at least basic technical knowledge. However, using a third-party payment processor will reduce your work considerably, despite the applicable fees and contracts. This guide lets you know how you can implement either of the options.
Accepting Bitcoin Directly
Although this method inherently involves more effort, risk and profits, accepting Bitcoin directly will significantly increase your savings as hiring third-party services can prove to be very expensive, especially in the long run. It is recommended that you use blockchain.info, which is a centralized hub that allows users to avail a choice of Bitcoin services. Synala, for example, is a free and open-source PHP script that allows users to accept Bitcoin payments, through software that runs on a site’s server to allow you to accept Bitcoin payments online. This platform features a fully customizable admin panel and boasts of great ease-of-use.
Another useful self-service platform is “Blockchain,” which contains two services that you will find useful; the Wallet and Receive Payments option, both of which are free. The “wallet” allows users to set up their own secure Bitcoin “account,” without the need to store the data on a computer or external hard drive. Block chain does everything for you, and does it safely and securely. The software comes with detailed instructions, as well as a couple of recommendations, to help you set up your account and private key. This data should be safely stored on a physical paper, and is further secured with a mnemonic phrase that should also be stored safely. Setting up a Google Authenticator account to compliment the direct Bitcoin payment method will ensure added security, making your Blockchain Wallet virtually impossible to hack. After you’ve set up your wallet, your next step will be to set up the Application Program Interface (API) for your Blockchain account to receive payments on your site. The software also features usable demo PHP and Java versions.
Precautions – As with everything, accepting Bitcoin directly will involve some issues of its own, the biggest being ForEx risk. This is the inherent risk that users face risk when they spends a certain amount worth of Bitcoin and the price fluctuates before you can initiate a transaction with that amount. If the price goes down, you receive less money than normally would have, and you make a profit if the price goes up. At the end of it, you should try your best to mitigate risk.
Accept Bitcoins Indirectly
Accepting Bitcoin indirectly reduces in less effort, and lowered risk, but it also involves less profits as you’ll be using a third party service that takes its cut. To accept Bitcoin indirectly, all you need to do is choose from any of the companies that are ready to bear ForEx risks on your behalf. The do this by offering you a guaranteed price for all of your incoming bitcoin payments, which are calculated based on the exchange rate that is prevalent at the time of payment. Now, there are currently only four major companies that provide you with Bitcoin-related services; GoCoin, Moolah, Coinbase, and Bitpay, each offering different packages while accepting your ForEX risk.
1. GoCoin’s Cryptocurrency – GoCoin’s cryptocurrency service not only accepts Bitcoin, but all other cryptocurrencies as well, including Peercoin, Litecoin, and Dogecoin. GoCoin’s transaction fees start at 1%, but come at lower rates with increased volume. This is the perfect choice for those that offers alternative cryptocurrencies and have high transaction volumes.
2. Coinbase – Coinbase will accept Bitcoin for free and will even for free swap your bitcoin for U.S. dollars, at a small 1% transaction fee plus 15 cents as Automated Clearing House (ACH) transfer fee. For anyone with trust issues, Coinbase is the platform of choice as it is one of the safest names in the Bitcoin payment industry.
3. Bitpay – This platform accept Bitcoins from users at a fee of $0 a month, with 0% fees. This means that they don’t charge and subscription fees and only charge you per transaction. It also offers premium plans with added features, useful for large or expanding businesses. Bitpay offers comparatively cheaper plans that its competitors, primarily to encourage customer to choose them over the other. Bitpay provides a special benefit for 501(c)(3) charities, rendering all their services for free.
Now that you have pretty much everything you need to know about Bitcoin, or at least enough about the two methods of accepting cryptocurrency as legal tender for your business, you can choose the option that suits your business and requirements. Just remember that the overall recommendation is to handle Bitcoin yourself, but only because of the amount of money you’ll save over having to pay a 3rd party payment service provider.