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If you (like me before I wrote this post) have heard lots of references in the news to the mysterious virtual currency ‘Bitcoin’ but are not quite sure what it is yet, read on.

This post explains exactly what Bitcoin is and how it affects you as an ecommerce store owner.

What is Bitcoin?
Bitcoin (or BTC) is a peer-to-peer virtual currency which can be ‘mined’ by any computer running a free application called a Bitcoin miner. Bitcoins are mined by the computer solving complex math problems, once a set amount of problems have been solved, a Bitcoin is created and stored in a free, open source digital wallet of your choice and can be used like any other currency in exchange for products and services.

All mining activities are displayed across the public Bitcoin network and permanently recorded, although it claims to be untraceable to any individual.

Sound confusing? You can find out more about Bitcoin mining in this video.

Who is Using Bitcoin?
Generally, only the more technical folks are up to scratch with Bitcoin so if you sell knitting supplies to an older aged target market you probably don’t need to worry about offering Bitcoin as a payment method.

However, if you run a tech focused online store and have lots of techie customers, it may be worth getting involved so you can add your store to the growing list of ecommerce sites that accept Bitcoins.

Advantages of Bitcoin for Ecommerce
The biggest advantage is that Bitcoin does not charge any transaction fees for customers and merchants pay rates between 1-2%. This, coupled with protection against any type of reversal or chargeback makes it a very appealing payment method. It also opens up opportunities to trade with countries which are currently ‘no go’ areas (due to credit card fraud / scams) and under 18’s. Also, payment clears instantly, a benefit for both business and customer.

Should YOU use Bitcoin?
It’s your decision, on the plus side you can enjoy lower transaction rates and move into new territories but on the other hand Bitcoin is still a relatively new and unknown payment method and it’s potentially vulnerable to hackers due its purely digital make-up.

My advice would be to only offer Bitcoin as a payment method if you have a demand for it. Otherwise, stick to more traditional payment methods and see how the Bitcoin revolution pans out.

Happy Selling!

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