You might be wondering what is the relationship between e-commerce and cryptocurrency? Whether you’re a crypto king or just starting out, you’ve probably considered accepting Bitcoin as payment for your e-commerce business at some time. With all the buzz around cryptocurrency, blockchain, and NFTs, all e-commerce business owners should learn how to utilize cryptocurrencies for online transactions. Despite the recent volatility in cryptocurrency prices, major e-commerce platforms such as BigCommerce, WooCommerce, and Shopify already enable crypto payments through crypto wallets like Coinbase, BitPay, GoCoin, and Coin Payments.We’ll go through what cryptocurrency is, how it works, and the businesses that accept it in this blog, as well as its benefits and drawbacks. Finally, we’ll show you how to safely accept cryptocurrency on your e-commerce store.
What is cryptocurrency?
Cryptocurrency is a kind of digital money that isn’t produced or controlled by a bank or government (i.e., it’s not fiat currency), allowing users to spend money anonymously. Bitcoin is the most well-known currency to date, and it may be purchased, sold, and saved on exchanges like Coindesk as well as used to purchase online items across the world. To complete purchases, bitcoins must be kept in a digital wallet on your computer or online exchanges (e.g., Coinbase), and you ‘make a purchase’ by sending Bitcoin from your virtual wallet to the vendor’s.
Top 4 cryptocurrencies to know
The four most important cryptocurrencies, according to the major exchanges: Bitcoin (BTC) Ethereum (ETH) Litecoin (LTC) and Ripple.
- Bitcoin — the original cryptocurrency
- Ethereum — more energy efficient than Bitcoin
- XRP (Ripple) — lower transaction costs and used for international transfer
- Bitcoin Cash — not bound to Bitcoin’s limited supply, so easier for widespread adoption
Stores that accept Bitcoin and cryptocurrency
Bitcoin and other cryptocurrencies are accepted at these locations today:
- Overstock.com — overstock apparel and items
- eGifter — premium branded gift cards
Is cryptocurrency a viable option for e-commerce stores?
Large e-commerce platforms and merchants now take cryptocurrencies for transactions, but should they? And should you? Let’s consider the benefits and drawbacks before making a decision.
Benefits of cryptocurrency in e-commerce
Lower transactions fees when it comes to e-commerce
Transaction costs vary widely by credit card company and payment solutions like Stripe or Square, which charge fees ranging from 3 to 5% on each transaction. Many internet retailers include these expenses into their selling prices. Traditional payments networks, such as credit cards and PayPal, generally have fees. Cryptocurrency transactions are often free or cost less than 1%. When sending cryptocurrencies to national fiat currencies like USD, though, there is a cryptocurrency conversion fee.
For anonymous transactions and for the bank-averse
By means of encrypted wallet addresses, cryptocurrency allows for anonymous transactions. It’s basically like using untraceable cash. This enables your consumers to make purchases without revealing their personal information, as well as allowing you to conduct business without worrying about any privacy laws.
Reduce fraud and chargebacks
The blockchain technology that enables cryptocurrencies was created with the goal of reducing fraud in mind. When you accept cryptocurrency, it can’t be reversed or falsified, so fraudulent chargebacks or returns are far less likely.
Disadvantages of Cryptocurrency in e-commerce
While the value of national currencies (e.g., the US dollar) is little fluctuating, cryptocurrencies are highly volatile. Despite the fact that there were several improvements, some large declines are possible. e-commerce firms that need cash flow for inventory replenishment and other day-to-day operations will be extremely vulnerable to a substantial drop.
No Buyer Protection
Consumers have been protected from credit card companies in the event of fraudulent charges or purchases since 2008. Consumers may require more confidence in the business or brand before utilizing crypto payments, as crypto payments lack any protections or remedies.
Bitcoin mining uses more electricity each year than the country of Argentina, and its carbon footprint is comparable to that of New Zealand. Following Elon Musk’s announcement that Tesla will no longer take Bitcoin due to environmental issues, the price of Bitcoin dropped considerably.
The IRS classifies Bitcoin as a “property,” which means that you must report your Bitcoin transactions and gains/losses from owning the “goods” – according to the IRS, any currency other than US dollars is a “good.”
A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received, according to the IRS.
How to Accept Bitcoin On Your Site
Simply add a BTC payment processor to your online business to begin accepting Bitcoin. Most ecommerce platforms (e.g., Shopify, Magento, WooCommerce, and BigCommerce) already have integrations in place, so look for them in the app stores.
Choose a reputable bitcoin payment gateway that provides you with both security and convenience. Make sure to research several BTC payment gateway solutions. The following are some things to consider:
- Transaction fees,
- Payout frequency,
- Supported currencies,
- Supported countries,
- And customer support
Once you start taking bitcoin payments, be sure to appeal to your target audience’s openness and tech-savviness. “Bitcoin accepted here” may be used as a slogan on your site.
Unable to integrate directly to your store?
Take advantage of the fact that your target audience is likely to be open and tech-savvy when you begin accepting bitcoin payments. You may utilize “Bitcoin accepted here” as a slogan on your website.
- Add payment buttons to your website; consider utilizing the Coinbase API to generate your Bitcoin buttons.
- Integration with your existing checkout flow – Create an API Bitcoin solution that seamlessly connects to your shopping cart.
- Invoices – Rather than shopping carts, invoice your clients. There’s even a handy gadget called the “Coinbase Invoice Generator”.
E-commerce and Cryptocurrency: Wrap It Up
If you decide to accept Bitcoin and other cryptocurrencies on your website, make sure that your system, transaction, and money are all as secure as possible. Make sure your crypto exchanges and wallets have strong passwords and multi-factor authentication (MFA) enabled. Also, ensure that your systems are kept up to date, backed up, and encrypted on a regular basis.
Consider keeping a portion of your funds in cold storage, such as a flash drive, and don’t keep large amounts in your wallet for lengthy periods of time if these resources are important to your business.
Although new technologies might be perplexing and frightening, cryptocurrency has the potential to revolutionize e-commerce and international trade as we know it. However, while you may not be comfortable with this, at least you’ll have a greater understanding as the internet and e-commerce industry develop.
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