Virtual Currency and Your Business

As digital currency becomes increasingly common for businesses to conduct business online, the fees associated with online transactions rises to the top of the list of liabilities to be considered. The convenience of taking virtual currency comes at a cost. When looking for financially sound solutions to this problem, you may hear about Bitcoin and the possibilities this new form of currency brings for managing online transactions around the world.

Bitcoin is a digital currency which can be used to purchase goods and services online. Unlike credit cards, however, Bitcoin transactions do not require credit card processing fees. Bitcoin is also a global currency, meaning it is not governed by any specific country’s rules and regulations.

As Bitcoin grows in popularity, Bitcoin holders are beginning to seek out businesses that will accept Bitcoin in exchange for products and services. Sounds like a win/win for any business that conducts transactions online, right? Bitcoin certainly has its advantages, but let’s take a look at exactly what it is, the purchasing power it has, and how to do business with it.

Bitcoin is acquired through online marketplaces, transferred between parties, or mined using computers that process data. In this respect, Bitcoin isn’t as widely circulated as other forms of currency, and as such, is limited to those who know and understand the Bitcoin marketplace. This may or may not apply to your customer base.

Bitcoin is currently unregulated, though the US Securities and Exchange Commission has just indicated that initial coin offerings (ICOs) for cryptocurrencies like Bitcoin will be regulated as a security.

Bitcoin is stored in a digital space, either on servers or on the owner’s personal computer. Though you can now find terminals where you can acquire Bitcoin and POS devices that allow brick and mortar stores to accept them, Bitcoin is always stored digitally. So, like anything else stored digitally, Bitcoin is vulnerable to hacking efforts, viruses, deletion and being lost in the event of your death or incapacity because your family cannot access your account. Bitcoin is also uninsured by the FDIC.

Transactions conducted with Bitcoin are anonymous, which may or may not serve your business’s interests.

Some companies now provide merchant solutions for companies wanting to accept Bitcoin in exchange for goods or services. While the logistics of doing business with Bitcoin may be covered using these merchant services, the issues with the currency itself, such as the lack of regulation, remain.

If you are interested in accepting Bitcoin as a payment method in your business, let’s talk and we can evaluate the potential risks and liabilities associated with your specific business and advise you on how to maximize your success when getting into the world of cryptocurrency.

We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule. Or, schedule online.