7 benefits of using digital currencies
Unless you’ve been living under a rock, you’ve probably seen the news about the strong market performance of bitcoin and other digital currencies.
Bitcoin was valued at less than $1,000 on December 31, 2016 and has crossed more than $2,700 as of this writing. Other digital currencies, called alt coins, have also seen an increase in value, sometimes at a higher percentage than bitcoin.
Bitcoin is based on the blockchain. Blockchain is a distributed data base that supports bitcoin and other digital currencies. It allows for an immutable record of transactions that are pseudo-anonymous and decentralized through millions of computers around the world. Bitcoin and other digital currencies operate with blockchain technology so trust is in mathematics rather than a third party.
Benefit # 1 — Lower transaction fees
Credit card charges can be very steep, particularly with international use. They can range from 2 percent to 5 percent or more on transactions. I always feel the pain when I end up paying a few hundred dollars in transaction fees to accept payments from my clients who are in other countries. By using the blockchain, bitcoin and other digital currencies, you pay a much lower fee, sometimes none.
Benefit #2 — No chargebacks
By using bitcoin, you stop the fraud that comes from chargebacks. Sometimes customers will purchase a product and use it, then ask for a full refund from the credit card company for some falsified reason. Businesses often look at this as a cost of doing business.
By accepting payments in bitcoin, there are no chargebacks. The sale is complete when you receive the transaction from your customer. Of course, as a good business, you can refund where you deem it to be a good business decision. It is nice to know that you’re not required to give a chargeback when you believe fraud is involved.
Benefit #3 — Faster receipt of funds than through legacy financial institutions
I mentioned earlier a problem with the fees associated with international transactions. That is bad enough, but the pain is exacerbated when it takes days or sometimes weeks to see the funds appear in my bank account.
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