Looking For Growth in 2017
Accepting Bitcoin Could Increase Your Revenue
The launch of Bitcoin in January 2009 heralded the arrival of a new virtual currency that wasn’t dependent on sovereign countries or central banks for issuance and control. At first, it seemed similar to a game for the more technically savvy where you could “mine” Bitcoins by solving intricate puzzles to earn Bitcoins. Several exchanges formed quickly after the introduction of this new digital currency making it simpler for individuals that wanted to convert euros, dollars, etc. into Bitcoins. The top 40+ sites to buy Bitcoins are listed here.
The infrastructure that enables Bitcoin is commonly referred to as blockchain. The Wall Street Journal (WSJ) CIO blog defines the elements of blockchain technology.
- A blockchain is a data structure that enables the creation of a digital ledger of transactions that is shared by a network of computing devices.
- The blockchain depends on cryptography to allow each network participant to manipulate the digital ledger in a secure way without centralized oversight. Once a block of data is recorded on the blockchain ledger, it’s very difficult to edit or remove the transaction.
- If a network participant requests to “add” a transaction to the blockchain, other participants must evaluate the transaction using complex algorithms to validate and accept the proposed transaction. Once accepted, the transaction is added to the blockchain.
The Bitcoin blockchain is public and permission is not required to participate and contribute to the digital ledger. The WSJ blog describes promising other uses of the blockchain technology which could reduce expenses and time for, as an example, stock trade transactions where a clearinghouse is typically required for settlements that may take several days. In addition, the clearinghouse is remunerated for their services. Using blockchain technology, the clearinghouse is eliminated; enabling buyer and seller to complete the trade within seconds while reducing the overall transaction expense. Multi-national organizations and even sovereign governments are realizing the significance of blockchain transactions.
Just this week two nations made major announcements regarding blockchain technology. On October 26, 2016, South Korea announced plans for a digital currency based on blockchain technology. At Monday’s 12th annual FinTech Demo Day in Seoul, the chairman of South Korea’s Financial Services Commission (FSC), Yim Jong-Yong, announced that his department will “Lay the systemic groundwork for the spread of digital currency.” On October 27, 2016, Scotland announced plans to start a stock exchange using blockchain technology. Business network CNBC reported on October 27, 2016, that rating agency Standard & Poor’s believed the rising investment in blockchain technology suggested a “transformation” in the financial industry could be underway.”
With all the positive press about blockchain technology, why isn’t every large, medium, and small business adopting Bitcoin as a payment option? The secret is many businesses ARE accepting Bitcoin. In an October 2, 2014, article in ITBusinessEdge, Kim Mays describes how the CEO of BloomNation, Farbod Shoraka, began accepting Bitcoin and found a new niche market of tech-savvy Internet users who have a need to send flowers. Additionally, BloomNation found new global customers that are requesting floral arrangements and paying with Bitcoin since it’s an international currency with the same value regardless of the nation where buyer and seller reside. Cointelegraph.com lists the 10 most popular vendors that accept Bitcoin and some may surprise you:
- DISH network
- Sacramento Kings
In fairness, Bitcoin has received some negative press regarding problems with their exchanges. Hacked.com documents the Bitcoin exchange issues with the most notable being the hack of the Mt Gox exchange in 2011. As we’ve documented in the 1stel blog here and here, improvements in cyber security should be a major component of online planning regardless of the size or type of organization.
Conduct your own research. Reach your own conclusions. Virtual currency may not be right for your business but you may find revenue streams emerging from new market segments, just like the CEO of BloomNation.
Randall Smith – 1stel Marketing Analyst