If you’re a home-based or other business opportunity, franchise or other small business owner, particularly if you’re one who does most of your business online or across international borders, then you’ve probably heard about Bitcoin. Perhaps you’re all too familiar and are already involved with this somewhat revolutionary approach to buying and exchanging goods and services.
For those of you who need a refresher, Bitcoin is a relatively new online digital currency that is gaining some serious traction among small business owners. Trouble is that it’s been largely unregulated up until now, which, by the way, is pretty much the point. In fact, Bitcoin’s whole purpose is to create an online peer-to-peer electronic cash system that is not managed by any real central authority. (Witness the latest financial crises in places like Cyprus for a glimpse of what must have inspired its mysterious creator.)
Here’s the thing…
The last few days have witnessed a flurry of activity regarding Bitcoin, both in the mainstream and industry press, some of which might make you more inclined to think it may be the wave of the future and here to stay. All the rest? Not so much.
Let’s just say it’s confusing.
A study last week kicked off the whole mess, finding that while Bitcoin remains popular among many small business owners and that more of them still may be wondering if they should get on board, there are substantial risks involved. More specifically, it’s Bitcoin’s exchanges that are under siege, mostly by hackers, all of which puts the whole system in peril. Then yesterday’s Washington Post ran a piece detailing the assertion by a number of Congressmen that Bitcoin needs to be regulated. It has become an “online form of money laundering” for drug smugglers and dealers, they say, prompting the fed to take action this week and shut down the world’s leading Bitcoin exchange, Mt. Gox, pending further investigation. All of which has some pundits predicting Bitcoin’s imminent demise.
Not so fast. That view may be too pessimistic given yesterday’s show of confidence by the venture capitalist (VC) group Founders Fund, more commonly referred to as the "PayPal Mafia." Announcing a new $2 million investment in BitPay—aka “the startup with ambitions to become the PayPal of the Bitcoin world”—the VC cited both the company’s exponential growth and the fact that Bitcoin is having a positive impact on many companies’ bottom lines as key reasons for its decision.
In a recent interview for Small Business Trends, Assaf Scialom of iQDesk.net offered his take on the positive side of the coin, so to speak. “Bitcoin is good for online businesses that sell virtual goods, but it can (also) be good for small businesses selling goods that are easy to ship abroad,” he said. As for the other side? While touting its potential benefits, pundits have conceded that this is a currency option very much in its infancy, which means that some degree of risk is inevitable. “Never store money that you (can’t) afford to lose with Bitcoin,” seems to be the prevailing wisdom.
As with so many other decisions in business, it’s important to carefully measure your options, conduct a thorough cost-benefit analysis and make the decision that best advances your own and your small business’ growth and prosperity. Winner takes all, or buyer beware? With Bitcoin, it may be both. It’s your call.
Tell us what you think… Is Bitcoin the wave of the future, for small businesses in particular, or in general? Why? Have you used Bitcoin in obtaining the goods and services you need for your small business? We’d like to hear about your experience…
For more information on the Bitcoin debate as it currently stands, we recommend this required reading:
“The Coming Battle over Bitcoin,” The Washington Post
“Strategist Predicts End of Bitcoin,” CNN Money
“With PayPal-Like Ambitions for Bitcoin, BitPay Raises $2M Led By Founders Fund,” TechCrunch
“Small Business Owners Continue to Evaluate Bitcoins,” Small Business Trends
“Bitcoin Exchanges Represent Considerable Risk,” Small Business Trends
“It Could Be the Bureaucrats That Kill Bitcoin,” Forbes