A talk about the evolution of money – and why I believe you should get out ahead of the curve in your online business by accepting Bitcoin today.
Now, I admit it. I’ve had a bit of a personal fascination with Bitcoin for the last few months. Just ask my wife. 😉 She’s tired of me talking about it.
However, I think my interest is very much justified. I’m going to explain to you why.
More importantly, I’m going to make the case for why I believe that you should begin accepting Bitcoin in your business. If you’re running a business (and around here, we focus on online businesses specifically), then I think it only makes sense to accept the internet currency.
Getting set up to accept Bitcoin in your business is pretty easy.
But, more pertinent to you is… Bitcoin is going UP in value while the dollars you’re collecting now are going down. If your interest is in providing purchasing power to yourself via your business, then that’s a pretty relevant statement, no?
What Is A Currency, Really?
A currency is a form of money. And money is nothing but an idea backed by common confidence. What gives money any value at all is the common agreement that it has value and that you’ll be able to go somewhere else and spend that money and they’ll find it valuable, too.
Now, for multiple centuries, gold and silver has been considered the primary money. Countries would hoard it. People would earn it and spend it. Pirates would try to steal it. And all of this happened because the world agreed that gold was valuable. It met all the properties of money, which are:
- Limited supply
As time went on, countries began to develop representations of gold. These were pieces of paper (like the dollar bill) which represented an equivalent value of gold. Gold was the basis of money for awhile. And that kept all currencies stable and trustworthy.
However, it changed.
Why The Dollars You Collect Are Becoming Less Valuable
Through a series of government and central bank moves, the world’s currencies were decoupled from gold. In 1944, the Bretton Woods agreement set up an adjustable foreign exchange market for currencies. The US dollar would remain tied to gold, while all the other currencies were tied to the dollar. As that system began to show cracks, President Nixon officially cut the dollar from gold in 1971.
The irony is that while Nixon said taking us off the gold standard would strengthen the dollar, the result has been the exact opposite.
Today, we have a system of floating currencies – all based on nothing. The dollar remains the world reserve, however the dollar is devaluing due to massive increases in debt and the creation of new currency out of thin air in a monetary system that revolves around debt.
This debt can happen precisely because our currency is no longer backed by anything.
Today, the world currencies are nothing but symbols. They are still backed by confidence, however that confidence is eroding.
Ask your grandparents about what things used to cost. You’ll hear stories about buying a loaf of break for a nickel. Nowdays, a single gumball will cost you 5X that much.
But, you find this across the board…
- The average price of a home in 1960 was $12,700. In 2013… it was $289,500.
- The average price of a car in 1960 was $2,600. In 2013, it was $31,352.
- The average price of a loaf of bread in 1960 was 22 cents. In 2013, it was $1.98.
Simply put, the purchasing power of the dollar is decreasing. It just happens slowly enough for most of us that we don’t tend to notice.
The Risk To People And Businesses
As the dollar loses buying power, it takes more dollars to buy the things that you want to buy. If it happens quick enough, it causes a situation where people are working their tails off just to stay above water.
It makes it harder to truly earn more than you spend.
Our businesses are subject to the same effect. Services can cost more. Labor costs more. And it can get to a point where business owners are working quite hard and just managing to pay their bills. Any savings they put away in the bank are losing value along with everything else kept in US dollars.
And don’t think this is an issue just for the U.S. This is very much a worldwide problem.
Unless you are constantly raising your prices, your business is actually generating less income. Income not in terms of quantity of dollars, but in terms of actual purchasing power.
What Is The Future Of The US Dollar?
The dollar is the basic form of exchange for businesses. The more the better – obviously.
But, since the dollar is a dwindling asset, your business isn’t really creating the kind of wealth that is long-lasting. That is, unless you invest wisely.
And I don’t think it is going to get better. In fact, I suspect it is going to get worse.
The world is slowly moving away from the dollar as the world reserve currency. The rest of the world sees the dollar dwindling because of a ton of debt. And not to get political, but a lot of countries are just annoyed at the U.S. because we use our reserve currency status to try to control international affairs.
Many countries are creating agreements to trade directly and bypass the dollar. There is a growing sentiment that the world would be better off with an international reserve currency – and not the dollar.
At the same time, President Trump has big plans. He has a big infrastructure plan he wants to implement. He’s picking currency wars with China and I think he sees devaluing the dollar as a way to be more competitive. Then you have various acts of the Federal Reserve to put into the mix – and the Fed usually gets everything wrong. All this adds up to one thing…
I think the dollar is going to be dropped quite a bit more. And as it loses reserve status (which is a process and not something which happens overnight), it will slowly become just another currency of the world. More like the Mexican peso.
The Future Of Currency And The Money We Use
I think we have some big shifts in the world of finance and money in our future. And I’m not talking very far off.
The world is going to gravitate to a new reserve currency and the dollar is going to drop in stature.
On top of that, we’re going to see a lot of private market creations pop up to solve the problem. And that brings us to crypto-currencies like Bitcoin.
Whether you know it yet or not, cryptocurrencies are going to play a very large role in your life in the coming decades. The market is going to rise up and solve the problem with new solutions.
Bitcoin is one of many such solutions.
And I think our future is going to see currency competition. But, it will be driven by the marketplace, not central planners.
Of course, the current system won’t go down without a fight. And governments don’t like things they can’t control. So, there will be some confusion as things shift. But, I don’t think crypto-currencies can be stopped. In fact, I think you’re going to see nation states get into the game, too, with their own crypto-currencies.
It will be some interesting times. 🙂
Bitcoin Is The Internet of Money
If you look back at the amount of change the Internet has brought onto major industries, it is astounding.
It wasn’t long ago that phone booths and phone books were common. We all had to shop for special long distance plans and major monopolies were built around it. Today, you can Skype somebody on the other side of the world and have a video conversation with them for free.
Email used to be super geeky and hard to use. Now everybody has it and you can send/receive them while sitting on the crapper using your phone.
Communication and the distribution of information has been totally transformed. It is decentralized and near instantaneous.
Can the same thing happen when it comes to money?
Absolutely. And it is.Bitcoin and other digital currencies have the capacity to do to banks what email has done to the post office.Click To Tweet
Bitcoin today is at the point that the Internet itself was in in the early 90’s. But, the level of change between then and now is on par with the level of change we will see when it comes to finance in the coming decade.
In fact, today, anybody with a basic mobile flip-phone can now send or receive money using Bitcoin. The other half of the world (probably at least 3 billion people) who don’t have access to fancy banks and brokerage accounts can now participate in the world of international finance.
What happens when money – when VALUE – can be sent/received with the ease of email?
No third-party middlemen. No 3% credit card fees. No artificial boundaries where people in other countries can’t get the credit card they need to buy from you.
Awesome things happen, that’s what. 🙂
When Businesses Enter The Internet Of Money (Here’s What’s Different)
Online business is a gorgeous thing. I mean, this is what I do. And I help others do the same.
A business which has no location and can operate on the worldwide stage – all from the comfort of your home. It’s pretty amazing.
But, since our online businesses are currently rather tied to using the OLD financial system, we have to deal with things like:
- Transaction fees averaging 3% and going higher.
- Weird holds on funds in merchant accounts in order to offset risk of fraud or chargeback
- Chargebacks, where business owners almost always lose even if they’re completely honest
- Credit card processors getting nervous when your volume picks up (such as during a launch or promotion) and they sometimes react just by shutting you down
- International walls where people in most other countries around the world cannot purchase your products because they cannot get a credit card
Now, let’s contrast this with a business which accepts Bitcoin…
- Transaction fees which are substantially lower. Instead of 3% or more, you’re usually paying the equivalent of a few pennies.
- Zero risk of fraud, which means no chargebacks, no holds.
- No waiting for funds. Bitcoins arrive often instantly, or perhaps within a few minutes as the transaction confirms. No need to wait 2-3 business days for funds to settle.
- Literally anybody with Bitcoins, regardless of location, can now do business with you without any risk.
So, you want to sell a service or perhaps a digital product to somebody in Nigeria? If they pay you with Bitcoin, there is no risk at all. Barely any credit card processor is going to accept a credit card from Nigeria, and that’s if they can even get one. Bitcoin eliminates the issue.Open your online business to a literal worldwide market - with no fraud risk.Click To Tweet
That’s the internet of money.
Value can be exchanged with the ease of email.
Plus, Bitcoin Goes UP In Value, Not Down (A $27 Purchase Now Worth $40)
The dollar is decreasing in value. It isn’t usually obvious to us, but it is. On the contrary, Bitcoin is going up and you can see it every day.
So, when you make a sale in Bitcoin, you’re collecting a currency which is increasing in value. This means a transaction you make today is actually worth more in the future.
The first transaction I processed here at the Blog Marketing Academy using Bitcoin was just $27 worth. That was on 10/31 and it translated to 0.038228 Bitcoin. Today as of this writing, that $27 in Bitcoin is now worth about $40. In the span of just over 3 months, the purchasing power of that Bitcoin increased by about 33%.
And this will definitely continue. As of this writing, one Bitcoin is running just a bit over $1,053. It could be higher by the time you read these words.
Now, it is also important to note that it could also go down. Bitcoin is still pretty volatile in terms of value. However, that is changing and it is far more stable than it was just a year ago.
The reason it is going up in value is based on simple law of supply and demand. More people want it and that brings up the price. More money enters the market and the price of each individual coin increases.
And that’s an important thing to know about Bitcoin. It cannot be devalued because of central planners or inflation. The only thing that affects it is market demand.
And given what’s going on in the world with regard to devaluation of traditional currencies, various countries banning cash or experiencing hyperinflation or even the use of bail-ins where account holders bail out the big banks without any choice in the matter, the demand for Bitcoin is only going to increase.
The Mechanics Of Accepting Bitcoin
Accepting BitCoin in your business is actually pretty easy.
I personally use CoinBase. My own personal investments in Bitcoin have been via CoinBase. I also use CoinBase as a merchant.
If you sign up for CoinBase via this link, you and I both will be credited with $10 in Bitcoin. I think you need to make an initial deposit of $100 to trigger it, but I encourage you to do it because that $100 WILL be worth more later. But, you’ll also get $10 in free Bitcoin to add to the top. We both win.
Once you get things set up, you will have a personal CoinBase URL where anybody can send you Bitcoin. So, if you’re in a client-based business, you could just send them to your URL and they can pay you easily.
Mine is https://www.coinbase.com/davidrisley, so you can see what it looks like.
You can also set up a merchant account with CoinBase. Once again, easy and free to do. Then, you can integrate CoinBase with your website to collect payments.
In my case, I use MemberMouse to run my business and it has built-in integration with CoinBase.
Another big provider of Bitcoin merchant services is BitPay.
If your business already uses Stripe to process credit cards, even Stripe can now process Bitcoins.
Many merchant providers will automatically convert your Bitcoin transactions into dollars and then deposit to your account just like a credit card. Unless you really need that to pay your bills, I would suggest leaving the funds in Bitcoin that way you can benefit from the rise in Bitcoin’s value.
What’s The Long Term Prospects of Bitcoin?
Well, anybody can guess. And yet nobody knows. I’ll tell you what I think, though…
I think Bitcoin will continue to grow in value to a point where people who didn’t get into it in the early days (and today is still considered the early days) will be really pissed at themselves.
It’s easy to look at today’s price over $1,000 and think it is already sky-high and too late to get into it. But, I disagree. The total market capitalization of all Bitcoin right now is about $17 billion. Seems like alot until you begin to compare it to other markets. The total gold market, for instance is well over $6 trillion. When you compare the size of the Bitcoin market to the size of other mainstream markets, you see it is still pretty tiny in comparison.
But, the size of the Bitcoin market is growing quickly. And I expect it to grow even faster in the future as you see more capital flight out of countries with collapsing currencies, or as you find more people trying to find a stable store of value.
Even a still small Bitcoin market of just $100 billion worldwide (which, again, is small compared to other commodity markets) would put the price of BitCoin at over $5,000 per coin – over 5X higher than it is as of this writing.
I personally do not think Bitcoin will ever be THE world currency. I think other cryto-currencies will come along. Many already have, in fact. We have a future of currency competition, most likely. Bitcoin will remain, since it has the compounding network effect of growing adoption. It will likely remain a world currency, but not THE world currency. Good news is, you can use exchanges to move funds in and out of different currencies all day long, so it isn’t as if you’re stuck in Bitcoin.
I also think Bitcoin will begin to be a major force in foreign remittances. If you hire virtual assistants, for instance, Bitcoin payments will begin to be easier than using Paypal.
But, Isn’t Bitcoin Based On Nothing, Too?
I’ve heard many people say that Bitcoin isn’t based on anything either. The dollar is based on nothing, but theoretically we could tie it back to gold. And Bitcoin isn’t based on anything.
But, let’s go back to what money is: an idea backed by confidence.
That’s all it is. As long as people agree it is valuable, it will be.
And even though you can’t physically hold it in your hand, it is still valuable. Most of our own money we don’t hold in our hand. It is little more than digits typed into a computer. So, how is Bitcoin any different?
Well, it’s different in the fact that it can’t be controlled, can’t be devalued by a central bank or a government. It can’t be stolen or counterfeited.
The Reality Of Accepting BitCoin As A Business Owner
You have literally nothing to lose by having Bitcoin as an available method of payment for your business.
But, don’t expect it to be very popular. 🙂 At least for a while as it catches on more. We’re still in the very early days.
By adopting Bitcoin now, you are a trend setter. You are getting out ahead of the curve.
But, it has resulted in very little volume for me here at Blog Marketing Academy since I began offering it as an option. Obviously, the world very much still operates on dollars and it’ll be that way for awhile.
I look at accepting BitCoin today as similar to deciding to accept Paypal shortly after it launched. Today, Paypal is pretty important to an online merchant. Eventually, I think BitCoin may get to that point.
It also could be that some other crypto-currency could end up being a bigger thing. But even so, I imagine BitCoin will act as a kind of digital reserve currency for others. Either way, you’ll be good.
Let’s Wrap This Up
This was a very different kind of article than what I usually do here. However, it is an important topic.Our online businesses don't operate in a vacuum. We owe it to ourselves to understand the nature of the very currency we deal in.Click To Tweet
I’ve laid out why I believe that you should accept Bitcoin in your business.
It will help with the adoption of Bitcoin, but it will also help you with your preservation of wealth and the longterm viability of the money you make today.
Especially in these early days, I fundamentally believe that you can multiply the wealth production of your business by accepting BitCoin. Because any transactions you can take that way and keep in the form of Bitcoin will certainly be worth more in the future than it is today.
Again, I personally use CoinBase. I use them both personally and as a merchant.
If you sign up for CoinBase via this link, you will be credited with $10 in free Bitcoin. Why not, right?
Do some homework on it. Don’t take my word for it. Bitcoin is one of those things you need to wrap your head around before you dive in. But, CoinBase does a great job of making it as approachable as a Paypal account.