Many of the reasons that a business should want to accept and hold Bitcoin are the same as the reasons that an individual should wish to do so. Bitcoin is a fixed supply, self-sovereign money: a digital bearer asset that cannot be devalued through the inflation caused by money printing or taken against your will by third parties who have unilateral control over your funds such as banks.
But why accept and use bitcoin in a business rather than simply only accepting your nation’s fiat money and then exchanging that for bitcoin as desired?
Here are six strong reasons to do just that:
The first reason is that it makes Bitcoin –and thus also your bitcoin holdings– more valuable.
Bitcoin is money in a very real sense. It is designed from the ground up as a bearer asset – that is, if you hold the private keys to a certain amount of bitcoin, then you have unilateral control over that bitcoin. In this way, it functions very similarly to cash, and not at all like a bank balance, where a third party is authorising –or potentially denying– transactions that are made.
While we can imagine a world where Bitcoin is only ever used as a store of value and speculative asset, in this world there is no underlying value. Bitcoin’s value is in its ability to be transferred from one person to another, and so for Bitcoin to continue to flourish, it must be used as money.
The second reason is that it attracts customers.
People who use Bitcoin want to support the Bitcoin ecosystem. A business that accepts Bitcoin will attract people that use Bitcoin. According to polling data in early 2024, around 5% of people in the UK owned some amount of bitcoin. This polling shows the UK is currently behind the adoption curve compared to many other countries, and so further growth can be expected.
On the other side of the same coin, as your competition begin to accept Bitcoin, you may lose the business of existing Bitcoiners if you do not also begin to accept it in your business as well.
Maybe you’ve heard that people don’t want to spend bitcoin. After all, why spend an asset that only increases in price over time? Aren’t they shooting themselves in the foot by spending their bitcoin that could be worth much more one day? To answer these questions, please refer to the article: Understanding Opportunity Cost.
A third reason is that accepting bitcoin avoids high fees and complications.
By accepting bitcoin as payment, you now have a simple source of bitcoin income with clear, known fees and no additional complications or concerns. You can reliably accept the bitcoin in return for the goods and services that your business offers and sleep well knowing that only you control the keys to that bitcoin.
Without accepting bitcoin, you would need to make use of cryptocurrency exchanges to exchange the fiat you received for bitcoin, potentially dealing with complex sign up processes, constantly changing fees, and the risk of theft until you can safely withdraw the bitcoin from the exchange and put it under your own control.
The fourth reason is the growth of the circular economy.
Your business has expenses. Right now, most of those expenses can likely only be paid in fiat currency. But as Bitcoin adoption grows, you will begin to get expenses that first can be paid in bitcoin, and –sometime later– must be paid in bitcoin. You may also be a supplier of goods and services to other businesses, themselves choosing to accept bitcoin payments.
By accepting bitcoin as payment in your business, you are future-proofing your operations for this coming Bitcoin circular economy.
One very notable expense for many businesses is employee pay. For all the same reasons as anyone else, your employees may wish to receive some part of their salary in bitcoin directly, bypassing the complexities of fiat exchange that you yourself are bypassing by accepting it. By offering your employees the ability to take a part of their pay in bitcoin directly, you are providing an excellent benefit to them that saves them time, money, and difficulties as well.
The fifth reason to accept bitcoin payments is that it is self-sovereign.
While this was touched on in the introduction, there are additional reasons that a self-sovereign form of money is a strong positive for a business separately to the more common reasons that it is for an individual.
As a business, you rely on access to your money to stay in business. You have outgoing cashflows that rely on the incoming cashflows for your business to remain solvent. If your bank were to suddenly deny you access to your money –whether it be through accident, legal force, or malicious actors– how long would your business be able to remain functional?
By accepting bitcoin payments, you always have immediate and complete control over your funds, and no one is able to lock you out of them or deny you the ability to spend them. Bitcoin acts as a lifeboat for businesses that may find themselves unable to access fiat banking rails – a problem that is only likely to become more common during times of economic crisis.
The sixth reason is that Bitcoin has no chargebacks.
Credit card and some other fiat payment systems allow for chargebacks. As a business owner, you may provide goods or services to a customer, only to find that they later dispute the payment with their card provider and execute a chargeback. Often, fighting these chargebacks will cost you more time and money than the payment is worth, and so you simply accept this as a cost of doing business.
Bitcoin has no chargebacks. Transactions over the Lightning network can be considered final immediately after reception, and transactions recorded on the blockchain can usually be considered final after the transaction has been confirmed once by being written to a block. This eliminates all concerns around chargebacks and stops this common type of customer theft.
But maybe…
