What is bitcoin?
Think of Bitcoin as money for the internet. Just like dollars, euros, or yen, bitcoin is a currency, but it only exists digitally—there are no physical coins or bills. It was created in 2009 and since then, it’s grown into a global form of money.
The key difference between bitcoin and traditional currencies is that no single company or government controls it. Instead, it runs on a network of computers across the world, and transactions are verified by users. This makes Bitcoin decentralized, meaning there’s no middleman like a bank involved in handling payments.
Bitcoin operates through something called “blockchain technology.” Think of it like a giant, public ledger that keeps track of all the transactions made with bitcoin. Every time someone uses bitcoin to buy something, the transaction is recorded on the blockchain. This ledger is updated regularly and is accessible to anyone, making it very transparent and secure. It’s similar to keeping a public record of sales, but in this case, it’s spread out across the entire internet.
Why Accept Bitcoin in Your Business?
There are a number of benefits to accepting bitcoin for payment. Some of the most compelling for business owners are:
- Lower Transaction Fees
When you accept credit card payments, you’re charged transaction fees by banks and payment processors. With bitcoin, you can often reduce these fees significantly because there is no middleman taking a cut. This means more profit stays in your pocket. - Attract New Customers
As bitcoin becomes more popular, there’s a growing number of people who prefer using it for payments. Statistics show 12% of South Africans have cryptocurrency which is around 6million users. By accepting bitcoin, you can tap into this customer base of tech-savvy individuals who might otherwise pass on your business. - Fast International Payments
If your business deals with international customers, accepting bitcoin can make payments faster and cheaper. Unlike traditional banking, which can take days and charge high fees for international transactions, bitcoin payments are usually completed in minutes, with much lower costs. - Protection Against Chargebacks
One frustrating aspect of accepting credit cards is the possibility of chargebacks, where a customer disputes a payment and the money is pulled back from your account. bitcoin transactions are final—once a payment is made, it can’t be reversed, protecting you from fraudulent chargebacks.
Common Concerns About Bitcoin
- Is bitcoin Safe?
Many business owners fear that bitcoin might be unsafe or a scam. However, bitcoin itself is secure because it uses advanced cryptography. Millions of transactions are completed safely every day around the world.
One could argue that bitcoin is the safest form of payment as you cant ‘fake’ it in any way. With bitcoin there is no way for a customer to counterfeit bitcoin to send to your business, and the bitcoin network has 100% uptime for over a decade. Compare that to our ‘the system is offline’ banks. Another reason bitcoin is safe is because there is nothing for a robber to steal from the till as everything is online. There is no need to transport large sums of cash anywhere. - What About Bitcoin’s Volatility?
Yes, the price of bitcoin can go up and down, sometimes dramatically. Price volatility doesn’t have to be a concern for your business if you are simply converting any bitcoin you get into Rand immediately. Business owners who want to keep their bitcoin for the long term are not concerned about short term price volatility. - Is Bitcoin Legal?
Yes, bitcoin is legal in South Africa and there is a growing number of businesses in that already accept bitcoin as payment. One of the most well known is Pick n Pay, who allow customers to pay with bitcoin in stores country wide. Bitcoin is considered a financial product and an asset in South Africa. Businesses should apply normal income tax rules to bitcoin you receive from customers.
What to consider
Bitcoin is not a passing trend—it’s a new way of handling money that offers many benefits for both businesses and customers. It’s secure, fast, and can help you reduce fees and attract new customers. By offering bitcoin as a payment option, you show that your business is forward-thinking, while also ensuring a safe and transparent transaction process.