Bitcoin 101_ what it is, how it works, and why accepting it can benefit your small business – grouponmerchant what is bitcoin blockchain

Bitcoin 101 for your business

On january 3, 2009, the software that runs bitcoin was first released. Until this year, it remained a fringe form of payment, but now it is really starting to take off. A lot of people still have no idea what it really is, so if you fall into that camp, believe me, you are not alone!

For help in understanding more about it, I turned to adam kitain, CEO and co-founder of my coin solution. He is the perfect guy to explain all things bitcoin, because his NYC-based company helps businesses understand how to use it and integrate it into their payment systems.

Here are excerpts from our bitcoin 101 conversation around what it is, how it works, and why accepting it can benefit your small business:

What is bitcoin?

Adam kitain: what do you think it is?

Well, I know some stuff about it.What is bitcoin blockchain bitcoin is a virtual currency. It’s borderless. It’s not issued by a central authority.

AK: wow, yeah, you know more than most people! Bitcoin is built around a technology called the block chain, which is a verification of transactions – and that’s how it works. It’s really not that complicated, it just different from what we’re used to.

At a high level, you swipe your mastercard at the cash register. The cash register pings a mastercard server. MasterCard verifies you have that money available.

With bitcoin, the people who are verifying are called miners – it is a network of people who are independently verifying that you have that money to spend. It’s a much more efficient and elegant solution to money without that centralized third party.

Miners are constantly verifying those transactions, and in reward for that effort, their compensation is the printing of new bitcoins.What is bitcoin blockchain that’s what keeps the transaction fees so low. With bitcoin, transaction fees are very low. There is a famous instance of one individual sending another $16 million of bitcoin, and the transaction fee was 6 cents. For merchants who sell goods with low margins that 3% you are paying to visa or paypal adds up.

What are the pros of accepting it as payment other than bypassing those transaction fees?

AK: the first pro, is yes, bypassing transaction fees.

The second is chargebacks. If I buy a T-shirt with a credit card, I can call my credit card company and say “I never got the T-shirt,” and I’ll get refunded. Some merchants have very high chargeback rates, and it can get expensive. Bitcoin doesn’t have that.

The third is something I refer to as “the bitcoin bump.” the dish network just started accepting bitcoin, and they were featured in newspapers and on TV everywhere – they got a lot of exposure.What is bitcoin blockchain A lot of merchants are seeing this great opportunity for marketing and finding new customers just by accepting bitcoin.

Why do businesses not accept bitcoin?

AK: regulatory concerns. As much as the government has provided guidance and a good ecosystem and been a supporter of bitcoin, because it’s so new and washington works so slowly, there are still a lot of questions. There is very little risk though. The exchange that the merchant uses will transfer the dollars to their bank account. Whether or not bitcoin goes up or down, it won’t affect you.

Tell me about these exchanges.

AK: the two biggest are bitpay and coinbase. We help merchants integrate bitpay or coinbase with their website, so when customers check out, they can choose to pay with paypal, a credit card, or coinbase. CoinBase gets the bitcoin, and at the end of the day, coinbase sends that to your bank account.What is bitcoin blockchain they charge 1% for all transactions, but the first $1 million worth of bitcoin sales is free.

Why should people care about bitcoin?

AK: when you pay for something using a credit card, you give the merchant a LOT of info – the credit card number, date of expiration, CV code, your name, address, and phone number. When you pay using bitcoin, you are giving the merchant just enough information, but not so much that your information can be stolen. There is a lot of consumer protection built in.

Have any questions about bitcoin? Leave them in the comments section below, and I’ll do my best to answer!

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Monika jansen is a copywriter and editor who is happiest pounding out blog posts, website content, and other marketing materials for her clients, who tend to be startups and professional service providers.What is bitcoin blockchain she is a blogger for growsmartbiz and the managing editor of uberstories. You can follow her on twitter (@monikacjansen) or find her on linkedin.

Any views, opinions, advice, or endorsements herein are the author(s)’s and are not necessarily the views of groupon or its partners.