Lots of reasons, say bitcoin-loving entrepreneurs. The digital currency is better at protecting privacy than, say, credit cards are. And a bitcoin business makes it easy for people anywhere in the world to buy, no matter what the local monetary situation or restrictions might be.
For many business owners, though, the decision is a purely practical one: bitcoin transactions are simply cheaper to process … and sometimes quicker too. For them, anything that puts more money in their wallets or accounts faster is a good thing.
Transaction fees for bitcoin payments tend to be around 1 percent, compared to the 2 to 5 percent hit imposed by credit cards. Plus, there are no foreign transaction fees. Finally, because payments don’t move through banks, money transfers from buyer to seller on the same day — with credit cards, the waiting period can last a week or more.
Customers who pay with bitcoins benefit in other ways too. Their financial data is much more secure than it would be with credit cards, and transactions are – if not completely anonymous – not easily traced to their identities.
By now, bitcoin fans — who tend to be a highly tech-savvy bunch — are already probably aware that internet operations like reddit and WordPress (more on that one below) take bitcoin payments. But a growing number of other types of businesses, including those of the traditional brick-and-mortar variety, are also embracing the virtual currency:
Bitmit is rather like eBay. It’s a shopping platform accessible to people from all over the world who wish to buy or sell goods for bitcoins.
For bitcoin users, the advantage is obvious: there is no need to work through countless types of currencies used by buyers and sellers in different countries or to incur foreign transaction fees from credit card companies.
For customers who might be wary about handing over their money – fiat or otherwise – to a person known only by a pseudonym on the site, Bitmit offers an escrow service: “On orders with enabled escrow option the (b)itcoins are … transferred to the seller (only) when the buyer has set the item status to received or when the buyer has rated the order positively. It puts a stop to potential fraudsters because there is no chance to commit a successful fraud.”
Update: Bitmit has since closed it’s doors after problems with security.
Bitcoins for Boston
Bitcoins for Boston is a relief fund created by Trey Copeland. It is intended to raise $10,000 for the hospitals that treated victims of the April 15, 2013, Boston Marathon bombings. The site is intended to be up for just one month.
“On May 15, 2013, all donated bitcoins will be cashed out at market value and donated to the Boston Marathon Bombing fund at Boston Medical Center,” the site states.
Such charitable ventures are ideal for the currency. As Bitcoin Magazine has noted, “Donations have been a mainstay of the bitcoin economy since the very early days and it makes sense because of the ease at which bitcoins can be sent with virtually no transaction fees.”
Bitcoin Coffee sells a variety of premium coffees and teas. The Alabama-based business’ tagline is “where cryptocurrency meets café.” The company stresses that it accepts bitcoin because it cares for privacy, although it does also offer the option to pay with a credit card. The default setting shows all prices in bitcoin, though customers can opt for US dollar amounts.
EVR Bar in Midtown Manhattan
EVR’ s co-owner, Charlie Shrem, declared, “When we opened a few months ago, I said that we needed to be the first New York bar to accept bitcoins.” That’s not at all surprising, considering that Shrem is the CEO and co-founder of the bitcoin payment processor BitInstant. He also is co-chairman of Bitcoin Foundation, which is devoted to advancing the digital currency. Shrem ways bitcoins are better for business because they cost less in transaction fees and enable faster money transfers.
On April 17, Foodler, the site that offers online ordering for delivery from over 12,000 restaurants, announced it would accept payment via bitcoin. Christian Dumontet, co-founder of Foodler, explains: “Interest in bitcoin is soaring … we wanted to provide an easy way for the more than 11 million people with bitcoins to pay for their meal deliveries.” Bitcoins can be transferred to a customer’s Foodler account to appear as credits in the form of US dollars that can be used to pay for orders and even for tips.
Pacific Tradewinds Hostel
The Pacific Tradewinds San Francisco Backpacker Hostel caters to “off-the-beaten-path” backpackers. Hostel rates are an affordable $29.50; by keeping the price under $30, San Francisco’s 15.5 percent tax on hotel stays over that amount doesn’t kick in. Owner Darren Overby tells visitors the hostel appreciates direct bookings and cash payments, so it doesn’t incur commission charges and fees. Considering that travelers who use hostels are typically budget-conscious, it makes sense for the hostel to offer a payment option that takes less of a cut in fees.
A-Class Limousine is the first (and, for now, only) limousine company in the New York area that accepts bitcoins. As do other bitcoin-loving businesses, A-Class Limousine identifies the savings on credit card processing and transaction fees as the most important factor in choosing to accept bitcoins. But it also considers it a safer bet for its clients, as it “is secured by complicated encryption making it impossible to crack or hack” their data.
Mega, a cloud-based data storage provider that describes itself as “the privacy company,” emphasizes its use of advanced encryption to protect customers’ privacy and security. It set up Bitvoucher to make it possible for users to pay for upgrades with bitcoins and avoid having to give out personal information the way credit cards and PayPal do. The Bitvoucher page proclaims: “your personal details are not our business.”
OKCupid began accepting bitcoin payment on April 16, making it “the biggest brand name” to date to sign on with the digital currency, according to the Financial Times. With four million users, OKCupid is part of IAC, a media and internet company whose holdings include Ask.com, Vimeo and Match.com. While OKCupid boasts of being “completely free,” it also offers an “A-List” premium subscription for $10 a month.
Declaring “we want to be out in front,” OKCupid CEO Sam Yagan told Forbes, “There’s no question that these digital currencies are going to be the future.” Yagan says he sees a parallel between bitcoin’s business model and his own: “We use math to get you dates and they use math to make transactions secure.”
WordPress announced its embrace of bitcoin on Nov. 15, 2012, when it posted Pay Another Way: Bitcoin. The blog hosting and management provider explained that its mission is “making publishing democratic – accessible and easy for anyone, anywhere.”
According to WordPress, the company found that “limits on traditional payment networks” interfered with its goal of accessibility.
“PayPal alone blocks access from over 60 countries, and many credit card companies have similar restrictions,” it noted, explaining why it sought out a new form of payment that would not be blocked. “Unlike credit cards and PayPal, bitcoin has no central authority and no way to lock entire countries out of the network.”
Whether it’s a matter of improving their bottom lines or about supporting the values of individual freedom and privacy, a growing number of businesses is finding that bitcoin fits the bill.