Should Your Startup Accept Bitcoin Payments?
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Should Your Startup Accept Bitcoin Payments?

1 Bitcoin(BTC) equals $666.08 Canadian Dollar(CAD)
*info from google.com at the time of writing

You’re starting up a brick and mortar business and you’ve heard of this new type of money that people are using called ‘Bitcoin’. However, you don’t really know what it is, what’s involved, or how much complexity it will add to the overwhelming task of just simply getting your business off the ground.

How Risky is it to Accept Bitcoin?

Is there any value in businesses accepting this relatively new crypto-currency?

First, let’s examine what Bitcoin is. Put simply; it’s a digital currency that is not regulated or controlled by any one bank, government, or organization. It is being referred to as a ‘decentralized crypto-currency’. A bitcoin itself is a string of numbers that has been produced by complex math through a software system often referred to as ‘bitcoin mining software’. These strings of numbers (Bitcoins) are a finite resource. There are a fixed number of Bitcoins that can possibly be ‘mined’ and they become increasingly difficult to mine with each Bitcoin that is created. This explains the rapid increase in value.

The first retail bitcoin transaction took place in May 2010. Jercos Pizza sold a $25 (USD) pizza for 10,000 Bitcoin (BTC). Converting that to Canadian dollars at today’s exchange rate would work out to a $6,649,962.17 (CAD) pizza!

Steamrollers, the burrito restaurant at 1195 Robson St. in Vancouver, B.C. began accepting Bitcoin as payment in May of 2014. According to Restaurant Manager, Daria Fomina, it is proving so far to be a wise business decision. Daria says there has been a lot of interest and curiosity from her customers, and the restaurant has had Bitcoin transactions every day. A tablet app takes care of the transfer from the customer’s online ‘bitcoin wallet’. Daria could’nt predict how well Bitcoin transactions would work at full scale (i.e. if it were popular enough to be the main payment method). It would, she added, certainly add a layer of complexity with the fluctuating exchange rate that Bitcoin experiences. In the meantime, she says it is proving to be a nice small investment stream for the restaurant. Bitcoin is up about 70 percent since Steamrollers began accepting it as payment. Daria also added that implementing Bitcoin transactions required no more operational resources (training, infrastructure, etc.) than debit transactions.

Should Your Startup Accept Bitcoin Payments?

The answer to this emerging question lies within your own risk tolerance level and your unique set of startup circumstances. On the one hand, the right type of business could generate extra PR opportunities from such a move. Also, if Bitcoin becomes ubiquitous and prices rise, it could rapidly increase your revenue. On the other hand, at the early stages of a business when cash flow is king and the overall risk is relatively high to begin with, it may add unnecessary complications. Bitcoin prices could also tumble based on increasing government regulation and security breaches.

Bitcoin is in its infancy and many would argue that it’s too big a risk and a foolish idea for a new company to take this on. On the other hand, some of the most foolish, riskiest ideas have paid big dividends. The question as an entrepreneur that you have to ask yourself is, ‘Can I afford the worst-case-scenario?’ If you are considering accepting Bitcoin, educate yourself about it, consult with groups who have expertise in the area, and stay on top of the news and fluctuating exchange-rates.

Image attributed to BTCKeychain.

About Chad Fryling

As Entrepreneur-In-Residence for Futurpreneur Canada, Chad has an excellent track-record helping young entrepreneurs across the country get their businesses off the ground. He has helped over 200 businesses from almost every industry and brings a wealth of experience across multiple industries, from construction to education to technology startups.