PODCAST EPISODE TRANSCRIPT
6 Reasons Why You Should Be Accepting Bitcoin In Your Online Business
Bitcoin is a digital crypto-currency that is most definitely growing in use and value. In this episode, we discuss the currency and why I believe business owners should get out ahead of the curve and begin accepting Bitcoin payments in their business.
Episode #159 | Episode Date: March 7, 2017
In this episode of Coffee Break, we’re taking a little side road off the usual fare and discussing the issue of money itself.
The reason I think this topic is important is because we have to understand the very medium we deal in when it comes to generating money with our business. Most of us deal in the US dollar and we tend to think that higher quantities of dollars is automatically better. But, when you look at the nature of the dollar itself and it’s colossal lack of purchasing power over the last few decades, we see that more isn’t necessarily better.
We run our businesses – or seek to build them – in order to provide purchasing power to ourselves.
So, we discuss Bitcoin here as something new. We’ll discuss the cryptocurrency and its advantages. Plus, we’re talking about 6 specific reasons why I think all business owners (but, especially online businesses) should be considering accepting Bitcoin payments as a payment option on their checkout pages.
Now, this is about a post that I actually published at the Blog Marketing Academy Blog not too long ago. And obviously, it is the kind of thing that is going to be most relevant if you are actually processing sales online. But I will say, it really comes down to processing sales wherever they happen to be; even if you are running an online business or you are involve in an offline business, this might be relevant to you. Because the topic of Bitcoin inherently gets us into the topic of money and currency, which forms the underlying bedrock of what we are all trying to produce here. I mean, this whole podcast is essentially about building up a blog based business so that we can help people and therefore earn money, right? And usually, we are earning money in dollars, US dollars. I would imagine that most everybody listening to this is making money in US dollars. Now, it could be that you are listening to this from another country and perhaps you do process transactions in a different currency, but most of my audience is doing business in dollars. And quite frankly, even if you are living in another country, there’s a decent chance that you deal with US dollars in some way in your life.
So what we are going to be talking about here is 6 Reasons why I think that you should be accepting Bitcoin in your online business.
Now first, let’s talk about the paradigm that we all typically operate with and that is…
Taking Credit Cards
Now, typically speaking, when you buy something on the internet you are using a credit card or you are using PayPal. But either way, it is subject to a lot of the same type of issues. The first thing is that you have a credit card fee, typically running around 3%. Stripe; which is a really popular credit card processor, runs a 2.9% transaction fee plus 30 cents flat. So for every transaction that you run, you are paying 30 cents plus 2.9% of the order value. And so, obviously, you are doing a little bit better the higher transaction size that you have, because if you do some little tiny sale like, $7, $10 or something like that, well then that 30 cents flat transaction fee is going to be a bigger percentage of the whole and then you got the 2.9% on top of that. And so, in a lot of businesses; credit card fees are a pretty big expense. And if you are running a fair amount of volume, that expense can even be higher.
Another issue with credit cards is that typically, it is going to take you 2 to 3 days to actually get your funds… sometimes longer, depending if there’s bank holidays and that type of thing. But you process the transaction on a Monday, for example and you probably won’t actually get that money until maybe Wednesday or Thursday. And that is pretty normal. So you kind of have to take that into account. Now, obviously, if you are running a pretty constant stream of business, it really doesn’t matter that much, but sometimes it does especially if they do the next thing, which is putting a hold on your fees. A lot of merchant accounts out there will actually withhold a portion of the money that you have made in order to cover the risk of fraud and charge backs and things like these. And therefore, especially people who have done big launches, in a lot of times who end up in this situation where there is a pretty good chunk of money sitting there being locked up by the merchant account and they simply won’t give it to you until you meet certain criteria. And it is really annoying.
Another issue with taking credit cards is that there is that risk of charge back. The charge back is when the buyer disputes the charge on their credit card. Now, sometimes, those disputes are legit and that they don’t recognize the transaction, maybe it was a stolen credit card, whatever. These things all can happen with credit cards. Sometimes, the person just wants to get a refund and they didn’t have the balls to ask you for it so they just dispute the charge and they don’t even bother contacting you. Quite frankly, I have special words for that because as a business owner, that kind of like hurts my business, so why would you do that rather than just come to me and ask for a refund. We’re going to give it to you. But anyway, it happens. And the unfortunate thing is that merchants almost always lose charge backs. The burden of proof is on the merchant and quite frankly, in most cases it is not worth the time to chase it down and try to reverse that. And so, typically, you are going to lose… The customer is going to get their money back and on top of that, for all of your effort, you are going to get charged a charge back fee which I believe Stripe charges about $25. That is flat rate. I mean, it doesn’t matter; you are going get to be paying 25 bucks on top of losing the money from the sale. And you pretty much always lose.
And then the other thing; and this is a pretty big thing that we are going to be talking about with Bitcoin is that with a credit card, when you are dealing with credit cards or even when you are dealing with PayPal, there is a pretty good chunk of the world population that is not going to be able to do business with you and that is because wherever they happen to live, they just don’t have access to credit cards. It is really hard to get credit cards. Sometimes, you credit card processor just flags a particular country saying, “Oh, that’s a high-risk area, we are just going to decline this card.” Boom! That’s it, even if the thing is completely legit.
And so, you have issues like that where we are running this worldwide businesses over the internet but yet we cannot conduct business worldwide without jumping through all these stupid hoops that have been placed there by third party middlemen. And those third party middlemen are going to be banks and credit card processors and things like that.
So let’s now move over to the topic of Bitcoin…
What Is Bitcoin?
You have probably heard of it. It is definitely getting more popular, but it is still kind of a minority currency; most people are not using it, most people don’t understand it. When they delve into it, they kind of get into this computer(y) language and they are like “Oh I don’t really know” and they just kind of write it off. But here is what it is at a basic level…
It is what is called a “Crypto-currency”. Now, you know what a currency is. A currency is a mode of transaction between people. The one that we use is the dollar; that is a currency, but there is also the Won, the Rubble, the Euro… There are lots of different currencies out there.
Now, Bitcoin is a currency that is completely and totally digital and it is called crypto-currency because it uses basically “Cryptography” in order for it to work. Cryptography is where you get like scrambled up stuff that basically has to be decoded. IT is kind of like a code for other things. And I am just going to leave it at that. 🙂
And so, it keeps the whole currency thing really secure. And the way that Bitcoin is actually put together, it keeps it from doing all the typical problems that we have with credit cards. It means a fraud pretty much can’t happen, you can’t have charge backs, and you can’t have double spends… There are lots of different things that go along with it. It is a really, really secure currency. The other thing is that it is decentralized. Decentralized means there is no third party that can control it. Most world currencies; in fact, pretty much all of them are controlled by somebody. If you look at the US dollar, it is primarily controlled by the government and more accurately, the Federal Reserve which is the Central Bank in the United States.
Now, the Federal Reserve controls the central supply and therefore, they ultimately control the value of that currency. And unfortunately, one of the things that they are doing is constantly creating new currency out of thin air; it is kind of the way our system runs actually and therefore, the nature of it is that they are devaluing the currency. The US dollar has a limited life span; this is one that a lot of people don’t understand. It has a limited lifespan because the value of it is constantly declining because of the very structure of our financial system. And it is controlled by the Federal Reserve, whereas Bitcoin is not controlled by anybody. There is no company behind it. It is an open source currency.
It is kind of like WordPress… WordPress itself has a company that made it, but developers can go out there and do their own thing with it. But with Bitcoin, it is controlled via an open source community; there has to be massive amounts of agreements and there’s basically some bureaucracy involved. That means that you cannot make changes to the Bitcoin protocol, willy-nilly. And it is decentralized; no central authority controls it. That is a pretty big deal for why it works the way it did to us.
The Bitcoin is actually valued by simple laws of supply and demand. IT is not something where the value of it is dictated by how much supply of it there is. In fact, the supply of Bitcoin is forever capped at only twenty-one million Bitcoin. And the way that the Bitcoin protocol is designed; most of the Bitcoin are already out there, but it has kind of got its curb where it is slowly going to be approaching twenty-one million up until I think 2140. After that, there will be no Bitcoin ever again.
And so, by the very nature of Bitcoin, it can really only go up in value unless everybody just kind of decides they don’t want it anymore. Well, is that likely to happen? Not really. You can’t really get rid of Bitcoin unless you can literally unplug the entire internet. And that is not likely. It’s not!
Bitcoin gets its value because of confidence in the currency. And that confidence is increasing; volatility and the value of Bitcoin is decreasing… It goes up and down, it can be in some wild swings sometimes, but overall, the pattern of Bitcoin is that it is getting a much more stable. But yet, it is going up in value because it is designed to do so. And Bitcoin itself really represents what I personally believe is going to be the next reality of money on this planet. I think that in the next 5 to 10 years we are going to be going through some pretty big monetary changes in the world. Right now, the world economy does tend to operate on the US dollar, because the US dollar is the World Reserve Currency. And that has allowed the United States to get away with a lot of stuff that we would not have otherwise have been able to do. A lot of other countries are getting a little pissed off about that. And there’s a general movement away from the use of the US dollar as that World Reserve.
So we are looking at a change in the monetary system for sure, coming up. We don’t know what that is going to look like; but I can tell you, that I think crypto-currency is going to be a big part of it. I don’t personally think that Bitcoin is ever going to be the world currency; some people do. I think that it probably will not. But I do think that it would probably remain a type of new reserve currency, kind of like gold. It will be like the new digital gold and it will always have value whether the world ends up transacting in it, I really don’t know.
But we have some pretty big advancements coming up in the world of currency. I think if you look at how it used to be that you would call grandma on the weekends and we have to have this fancy long distance plans and there was a whole monopoly of long distance plans. And it was a really pretty big deal just to make a long distance phone call. We all remember the phone book, right? Today, you can make a video call to somebody at the other side of the world and do it completely for free. And what is the amount of time that has gone by there? Maybe 10 or 15 years, tops. I think we have that level of advancement and change coming up in the world of international finance. And I think Bitcoin and other crypto-currencies like it is going to be a major driving force of that change.
So all that; that is kind of the nature of Bitcoin.
Now with that, I want to go into 6 specific reasons why you as a business owner might want to consider actually accepting Bitcoin.
6 Reasons Why You Should Be Accepting Bitcoin In Your Online Business
1. Lower Transaction Fees
Now, there are transaction fees associated with running Bitcoin transaction. And basically, what it is; is the way to pay what is called the “Miners”. The miners are the people who are actually recording all these Bitcoin transactions into a big international ledger called the “Block chain”. And these miners are compensated for doing that. Now, all these miners all throughout the world represent this big internet of miners that they are the ones that basically keep Bitcoin running. It is also what keeps Bitcoin decentralized. I mean, you can attack one miner or whatever and all the other ones are still running. So basically, at the end of the day, you can’t take Bitcoin down. But they get a small transaction fee. It is basically dictated by how fast you want to enter the Block chain but we are talking really, really cheap and they are a fraction; a tiny fraction of 1% versus 2.9% plus 30 cents flat rate. I mean, it is a much, much cheaper transaction. So therefore, as a business owner, you are keeping most of your money.
2. No Risk Of Charge Back
That problem of people disputing their credit cards, it goes away with Bitcoin. Bitcoin; everything that happens, all the transactions of Bitcoin are voluntary. Nobody can take it away from you. You can refund somebody if they are not happy with their transaction; I fully say you need to, don’t be a weenie when it comes to doing business, but they cannot dispute a transaction and get a transaction reversed. It is just not possible with the way Bitcoin operate. So therefore, you have zero risk of charge back. This allows you to ship that order to somebody, deliver that product to somebody and you are not worried about the fact that they might be trying to cheat you.
3. No Risk Of Fraud
The very nature of it is that it cannot be reversed. And you also know that when you receive Bitcoin, it is real! I mean there is no such thing as a counterfeit Bitcoin. It does not exist. It is impossible because of the cryptographic way that Bitcoin operates. And so there is no risk of fraud. If you receive Bitcoin from somebody, you know it is legit. Period. End of story. And so this allows you to go to number 4.
4. Take Payments From Anywhere Without Any Risk
And this goes especially for online businesses…
Think about right now, how hard it would be if somebody in the country of Nigeria or someplace like that wanted to conduct a legit business transaction with you… They are not going to be able to get a credit card. Every credit card processor in the world is going to turn that thing down anyway. It is very high risk; which, chances are it is… You just cannot conduct business with them. But if that person over there in Nigeria will pay you with Bitcoin; done deal! You know it is completely fine, there’s absolutely no risk. Not only that, because Bitcoin is as you can break with this as mobile phones; that means that anybody with a phone can now conduct business internationally.
Now, they do need to have a whole cap to the Bitcoin system, but you can use SMS text messaging and do this if you wanted to, so you don’t need any fancy device. So this allows anybody in the world to conduct business, to buy things from your business and there is no risk associated with it. That right there is huge! There are probably 2 to 3 billion people on this planet that do not have access to the fancy banking systems that you and I do. There is a lot of people out there that don’t. And that is a big block of people that are now not really able to conduct online business. But with the world of Bitcoin, that becomes possible.
5. No Merchant Holding Your Funds
With the credit card, they are going to withhold a certain block of fund and it is going to sit in this escrow account. It is basically there in order to cover fraud and charge backs and things like that. Well, being that those risks are not there with Bitcoin, there is no middleman involved, nobody there holding funds. The funds literally transfer from the buyer to you directly with nobody in the middle and there’s nobody holding funds so you get every single dime.
6. The Dollar; In Most World Currencies, Is Declining In Value
And this is something that a lot of people don’t really understand because in most cases, it tends to happen slowly enough, you don’t really notice. But it is possible that if you just remember back, maybe 4 to 5 years… compare it like going to the grocery store, you probably wouldn’t notice that the food prices have gone up. And that the prices of some other consumer goods have gone up as well. Many of us have heard the stories of how you used to be able to go buy a loaf of bread for a nickel and stuff like this, back in the 20’s or 30’s or something, whereas nowadays, it costs like a quarter just to get yourself a gum ball out of a machine. The prices have gone up. Everything costs more.
You used to be able to buy a brand new car for maybe four or five thousand dollars. I think right now, the average price of a brand new car runs into 30s… $30,000+. Evidence is everywhere that the buying power of the dollar is declining. And this is all with the US dollar still remaining at the center of most world trade. Now, imagine when that is no longer the case. The US dollar is going to decrease in value substantially. It might not be instantaneous; it is probably going to be a slow death, but it is going to happen. It is just going to happen. One day, with the dollar survives; it is going to be basically on the same level of the Mexican peso or worse. And this is just simple math.
We have a financial system that runs on the back of debt; not only government debt but public debt as well. The government has a massive amount of debt way bigger than the official debt size which is about 20 trillion dollars (?) If you look at unfunded liabilities and that type of thing, we are talking about 100 to 200 trillion dollars. Many people just don’t understand the true scale of what is going on here.
So for many reasons, the dollar is a depreciating asset. And so, for that reason, we take this back to our business… If you are taking money in and in the US dollar and then holding that money in the US dollar in your bank, then you are actually dealing in a depreciating asset. It is actually declining in value whereas with Bitcoin, it is actually going up in value. I actually bought Bitcoin strictly as an investment and I am holding it long term. If you engage in buys and sells of Bitcoin, you can lose money because it has a lot of volatility to it, but I am just holding it long term. And I have definitely made money just holding on to Bitcoin. I mean, because it is going up in value. And so, therefore, if you started accepting Bitcoin in your business, it isn’t as if you are going to have a flood of people just suddenly paying you with Bitcoin, because it is definitely a minority currency right now. But those transactions that you do process in Bitcoin, if you hold them in Bitcoin, it is actually going to go up in value.
My first Bitcoin transaction at the Blog Marketing Academy was a small 27 dollar transaction. And as of right now, that $27 transaction is worth probably about $40 or $41, probably closer to $42 right now. And so, it is going up in value between 30-40% just since I processed that first transaction and I did that back in October of 2016. So as of this recording, it has only been about 4 months; maybe 4 and half months, and it has gone up in value by 30-40%? I mean, that just doesn’t happen if you are taking your money in dollars unless you are one hell of an investor.
So all that comes to the very end; 6 reasons why I believe you should be accepting Bitcoin in your online business.
- Lower transaction fees.
- No charge back risk.
- No fraud risk.
- Ability to take payments from anybody anywhere in the world no matter where they live.
- No merchants sitting in the middle holding funds and basically being weenies.
- The dollar is declining while Bitcoin is actually increasing.
So that brings us to the end of the episode; very different, (I understand) in the type of things I usually speak about. I am personally very excited about Bitcoin. It is something that has become definitely an area of passion for me. So that was definitely one of the motivations for this episode. But I also think that all of us, as business owners, should be thinking about this. If the purpose of our businesses and the things that we are looking to build here online is ultimately to provide buying power to us now and in the future, I think actually thinking about the very currency that we work in is something that we need to think about. And I don’t think most business owners do. They just kind of taking everything for granted; that the dollar will always be there, and it is just not the case. We have to confront reality here.
To end this off, I would like to usually end with a call to action because we haven’t talked about this in this particular episode, but many of you guys know about the Lab at the Blog marketing Academy. And I will say upfront here, I haven’t actually announced this as of the time of this recording, but there is going to be some price changes coming up here in the Lab pretty soon. The prices actually will be increasing and there is going to be some other changes. The increase is actually going to be substantial, actually. But you guys right now, as listeners of this podcast, can actually look into joining the Lab and removing the chaos and confusion from the process of building up an online business so that all these stuff that we just talked about will actually be relevant to you; if it is not right now, you can look into that and learn more about it at blogmarketingacademy.com/listeners. And also, I am going to set up an exclusive to podcast listeners’ option to join the Lab at a discount and kick the tires and see how this thing works. And you better believe it that Bitcoin is a payment option there! 😉
So thank you so much for joining me in this very different episode where we have been talking about Bitcoin! I will see you on the next episode where we are kind of get a little bit more about back on top right here! See you then!