If you’re a merchant, or own a business or storefront, you may have heard about accepting Bitcoins, Litecoins, Dogecoins or any other sort of crypto currencies out there. You may also be wondering what in the world these things are and why they matter. We’ve put together here at CoinManual a short beginners guide for getting started with Cryptocurrencies, including these iconic coins, as well as some important information you’ll want to know.
What are Crypto Currencies?
At their core, cryptocurrencies are digital coins (meaning they are stored online) that are exchanged between people, businesses and other organizations spend and receive. There are many types of cryptocurrencies, the two most popular being Bitcoin and Litecoin.
Just like a regular currency, it has a value based on who trusts it. For example, the United States is trusted by many nations and so its currency, the U.S. Dollar, is used extensively. Cryptocurrencies are trusted for a multitude of reasons including:
- There is a technology involved called a Blockchain that (from a very basic standpoint) verifies the authenticity of the currency. This means that no counterfeit coins can exist.
- A limited number of coins are generated each day, and those that receive them use equipment worth thousands (and even million) of dollars to do so.
- Over the last five years, millions of people have exchanged billions of dollars to hold assets in cryptocurrencies like Bitcoin and Litecoin.
- It is much cheaper and faster to send and receive cryptocurrencies than it is to send and receive other currencies like the U.S. Dollar
This trust has been growing exponential and now includes major companies such as Overstock and Dell, who support the cryptocurrency Bitcoin. This guide will go over the reasons why these businesses (among thousands more) accept Bitcoin as a payment option, why you should consider to do the same and, if interested, how to accept Bitcoin or Litecoin.
What are Bitcoin and Litecoin?
There are dozens of cryptocurrencies, but the two we’ll discuss in this guide are Bitcoin and Litecoin. Bitcoin is by far the most popular and widely accepted cryptocurrency. It is the original one, created in 2009 and has an immense value. If you added up the value of every Bitcoin, they’d be worth the equivalent of more than $7 billion.
Litecoin is meanwhile a less popular, but still well-known cryptocurrency. It runs on the same technology behind Bitcoin but has a different identification, just as the U.S. Dollar and Australian Dollar operate different, can be exchanged for one another, and are backed by different people. It still is counterfeit-proof and has the same elements of trust as Bitcoin.
Both currencies are distinct from one another – a Bitcoin cannot be mistaken for a Litecoin. They both have different values and there are different amounts of them that exist. Both, like all cryptocurrencies, cannot be duplicated or forged. They are both considered to be legitimate and trustworthy concerns.
What is with all the Bitcoin and Litecoin hype?
Bitcoin and Litecoin received a lot of attention in late 2013 because they became extremely valuable. Their prices inflated and received widespread attention on media sites such as Forbes and CNN. When the prices dropped in early 2014, the attention subsided. However, Bitcoin is not stock in a company. Bitcoin does not succeed by having a higher or lower price. In the long term, Bitcoin will eventually have stable and consistent prices, but more importantly none of this affects you as a merchant. Whether a single Bitcoin is worth $1000 or $10, you can accept it for whatever equivalent value you want in dollars, pence or any other currency of your choice. Using a merchant provider allows you to take advantage of this.
Are Bitcoin and Litecoin safe? What are the risks?
Bitcoin and Litecoin are as safe, if not safer than accepting cash or credit cards. This is because the digital currencies are uniquely signed and impossible to duplicate. This means that no one can send you a counterfeit Bitcoin or Litecoin. There are risks, like any currency, but in a day-to-day operation of accepting Bitcoin and Litecoin you will actually have less to worry about when accepting Bitcoin or Litecoin as opposed to accepting cash and credit cards. It is also impossible for users to reverse charges and take back the currency they send you once you accept payment.
Accepting these digital currencies is a lot like accepting cash, but is also completely digital like accepting a credit card. This means your customer gets the benefit of a quick and painless transaction, while you skip the trouble of chargebacks, fraud alerts and other concerns related to accepting credit cards.
In the long term, there are discussions about the regulation of Bitcoin and Litecoin, but these have to deal less with merchants and businses owners, but instead with the exchanges. In reality, these regulations will offer more legitimate and safer businesses to conduct your Bitcoin business with, meaning a safer operation for you and your customers.
Are there any fees?
Yes, and no. It depends on how you accept Bitcoin and Litecoin. You can either accept Bitcoin and Litecoins to a personal wallet, or accept them through a merchant provider.
Personal Wallet: You accept Bitcoins and Litecoins and you keep them stored as Bitcoins and Litecoins
The only fees when using a personal wallet are the transaction fees, which are set by the Bitcoin and Litecoin network. These fees cost, at most, mere pennies for even the largest of transactions. It’s like having practically no fees. You will have to later take the cryptocurrency and exchange it to dollars or spend it at other businesses at accept Bitcoin or Litecoin.
Merchant Provider: You accept Bitcoins and Litecoins and you immediately convert them into your local currency, such as the U.S. Dollar.
Merchant Providers typically charge about one percent – a fraction of what a typical credit card company charges in fees. Merchant providers allow you to instantly turn the cryptocurrencies you accept into your local currency at the market price, saving you the hassle of exchange it later. However, exchanging it into the local currency also means you cannot take advantage of the low-fee benefits of paying others in cryptocurrencies.
How do I get started?
If you’re interested in at least seeing what the fuss is all about with Bitcoin and Litecoin, getting started costs nothing and is easy. Depending on whether you want to setup a wallet or a merchant provider, both are easy and available choices for most businesses.
Getting a wallet: Visit the Bitcoin or Litecoin website to learn more about each currency and how to setup a wallet account that stores the currency. We don’t recommend this if you aren’t very tech-savvy.
Getting a merchant provider: Depending on what country you live in there may be a merchant provider available for you to choose from.
If you live in Australia we recommend you reach out to Coinjar, who provides $5 when you sign up, as well as an easy way to accept Bitcoin and pay just 0.5 percent in fees.
If you live in the U.S. we recommend Coinbase for Bitcoin and GoCoin for Litecoin and Bitcoin. Both charge about one percent in fees – which is still a fraction of what you’d pay in credit card fees. All of these providers will instantly turn your cryptocurrency into dollars that you can often get in your bank account by the next business day.
Be sure to also add yourself to a free Bitcoin Directory or two so people in your neighborhood know you accept Bitcoin and other cryptocurrencies. It may also help to put up signage advertising that you accept Bitcoin and/or Litecoin. If you do a lot of business in credit cards, even just a handful of customers paying instead with Bitcoin could save you a lot of fees in the long run. There are many more ways to take advantage of Bitcoin, Litecoin and other cryptocurrencies, but this is just a short taste of how the currencies work and how you can accept them without any fuss.
Merchants matter – You matter.
In closing, let us note that (believe it or not) you merchants are the most important part of Bitcoin and Litecoin’s success. As more merchants choose to accept cryptocurrencies as a form of payment, more people will ultimately learn about the currencies, choose to adopt them and subsequently pay in Bitcoin and Litecoin. While millions already use Bticoin and Litecoin, the numbers have a long way to go for mass adoption. It depends on merchants at least trying to accept Bitcoin and Litecoin for this to be an ultimate success. We hope more businesses choose to accept Bitcoin and give it a try. It costs nothing to try and it could even bring you new customers, let alone save you cash on credit card fees.