From Pitbull to Janet Yellen, it seems everyone's talking about Bitcoin.
Despite cooling off this week, Bitcoin has grown more than 75 percent since the New Year and hit $1 trillion for the first time on Jan. 7, 2021.
And while enthusiasm and participation in crypto are at an all-time high, a question remains for indie hackers: What can founders gain from accepting Bitcoin?
Here are a few thoughts on how founders can capitalize on Bitcoin’s rise and what some say will be the biggest wealth transfer in history.
Crypto 101: For those living under a rock, cryptocurrency is a digital currency created by cryptography. Cryptocurrencies — such as Bitcoin, Ethereum, and 6,000+ more — are not physical or issued by a central authority like a bank. Crypto uses a decentralized network and works through a distributed ledger known as a blockchain.
What’s new: Bitcoin’s value has skyrocketed more than 400 percent over the last year, reaching an all-time high of $58,367 per Bitcoin on Feb. 20, 2021. As of Feb. 25 at 10:45 a.m. EST, Bitcoin’s market cap sits at about $947 billion. As Bitcoin and other crypto’s value soared over the last year, scores of mainstream businesses — including PayPal, Microsoft, AT&T, Wikipedia, and many more — have begun accepting crypto on their platforms.
New customers: Accepting Bitcoin and other cryptocurrencies open your business up to the widening pool of crypto owners around the world and quickly receive payments from any country. It’s estimated that globally about 100 million people own Bitcoin and about 33 million Americans own some form of crypto.
Reduced transaction fees: On Shopify, you can set up your checkout to accept payments with cryptocurrency. Mastercard also will let merchants accept payments in crypto. Coindesk reports that PayPal will offer Bitcoin payment functionality in 2021 and Visa may add crypto payments in the future.
Attract younger demographics: Demographics on crypto owners are hard to pin down — and much of the data skew toward Bitcoin investors — younger people tend to be more enthusiastic about the digital assets.
About 18 percent of people ages 18 to 34 own Bitcoin, according to a survey by The Harris Poll on behalf of Blockchain Capital. Fifty-five percent of those aged 18 to 34 said they are ‘very’ or ‘somewhat’ likely to purchase Bitcoin in the next 5 years compared to 26 percent of those aged 35 and older, the same survey found.
Lower transaction fees: Platforms like Shopify, Stripe, and PayPal charge anywhere from 2.9 to 4.4 percent per transaction. That can really add up depending on your revenue. With Coinbase or Bitpay, you can receive customer payments for about 1.49 percent commission.
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Long-term assets: With their finite nature, Bitcoin and other cryptos have zero risks of inflation. Most crypto traders view their cryptocurrency as long-term assets. You can of course automatically convert Bitcoin to USD or other national currencies.
Crypto is becoming mainstream: As mentioned above, many Fortune 500 companies and big banks are warming to crypto. The list includes Microsoft, Overstock, Home Depot, Intuit, and many others.
The cryptocurrency exchange Coinbase may soon go public at a staggering $100 billion valuation. If it does, it with be the highest initial valuation of a U.S. tech company since Facebook.
Tesla made waves when it bought $1.5 billion in Bitcoin and announced it would accept it as payment, which helped boost the coin’s value an additional 20 percent in following days.
While crypto may open up new opportunities, accepting it as payment may not work for every company.
Bitcoin is volatile. Crypto assets can easily drop 15 percent one day and then jump 25 percent another. Those rapid changes may be too turbulent for some.
The market is young. Many people still associate crypto and specifically Bitcoin with its early days being used to fund illegal businesses. While its reputation has improved significantly over time, it could deter some people from doing business with you.
Crypto is not FDIC insured. There’s no buyer protection for crypto transactions. Once you send crypto, it’s gone. You can use escrow services like Clearcoin, however, that can prolong the transaction.
Do you or your business accept payment in cryptocurrencies? Why or why not? Please share your thoughts.