I got a request from a client about 2 months ago. He said they would like to buy our service and distribute their app in China. They also mentioned that they will be paying using…Bitcoin.
The question is should you really accept that currency? Is it here to stay? What are the odds it will keep its value? Here are my encounters of where Bitcoin is going. My friend Itai Damti, who is the co-founder of Leverete estimates that there is a20% chance that bitcoin will be extremely valuable.
On my wife’s current job she was told she can get her salary in bitcoin as well if she prefers.
Japan is set to begin recognizing Bitcoin as a legal method of payment starting tomorrow.
The conclusion is, Bitcoin is accepted more and more as a legitimate currency.
So, I asked myself what should I do regarding that client?
I was a little hesitant regarding this. I wasn’t worried that the currency will suddenly disappear. The acutest question I had is how can I spend it? After all, our business expenses are not paid in Bitcoin.
Another issue I was concerned about was the value of the currency. Will we lose on it after we get it? Will it keep its value?
My first step was telling the client I need to check if we have a way to spend it. If not, it’s a problem, we need to cover our expenses.
So, none of the services we pay for regularly accepts Bitcoin, so on that front, we had a problem.
BUT, then I spoke with our developer, he said he doesn’t mind getting paid in Bitcoin as long as he can convert it to his local currency. In his case Mexican pesos.
I went back to the client and asked him If this is possible to do and how complicated that is.
The client said it’s fairly easy and gave me two solutions to go with. One of them was even a local solution in Mexico working with local banks. That was Bitso.
I asked my developer to signup to their service and this is where things became REALLY simple and cheaper.
So far, we used PayPal to pay him. They charge 3.9%, not including 2.5% of exchange rate fees. That’s expensive!
Bitcoin, on the other hand, is cheaper. How much cheaper?
IS BITCOIN A GOOD INVESTMENT?
I told you that one of my concerns was losing on the value of bitcoin. We got our payment on April 20th where 1 Bitcoin was worth $1223 (that is: $1223/1BTC) , it went up to $2567/1BTC on May 25th (At the time of writing $2555/1btc).
We basically made a nice profit on our bitcoin of about 100% on most of that amount. Not Bad!
Hold on though. At the same time, I could have told you that the exchange rate dropped by 50% and we lost on this transaction. Making profit here on the exchange rate should not be your main consideration in this case. You are a business which needs to operate and not making investments.
When I decided we will accept that transaction, I knew that if we lost it all (Which is unlikely) we would still be able to pay the bills and keep the company running. Considering our turnover it was relatively a low amount, so I didn’t mind taking the chance here.
SO, HOW DOES THIS WORK? HOW DO YOU REALLY RECEIVE BITCOINS IN YOUR BUSINESS?
We use Airbitz wallet and very happy with it. It’s really simple to use, with a friendly interface.
1. Click ‘request’ payment 2. Write down the amount you need to get paid.
3. Send the QR code by email or SMS to your client. At the moment the client scans that QR code the transaction is made and the money is transferred to your wallet. It’s really that fast and simple.
SO, WHAT’S THE BOTTOM LINE? SHOULD YOU OR SHOULD YOU NOT GET PAID IN BITCOIN?
HERE ARE THE 3 QUESTIONS TO ASK YOURSELF TO MAKE A DECISION
- Do I have how to spend that Bitcoin?
- Is the transactions accepted in Bitcoin will be a small amount of my overall turnover?
- Can the business survive a serious devaluation of the currency?
NOW OVER TO YOU?