What? Bitcoin?
According to Jessica Besseling, senior director of business development for GoCoin, the first international payment platform for digital currencies, making it easier than ever for online and retail merchants to accept Bitcoin, Litecoin and Dogecoin payments. The company serves as a gateway for virtual currency, bitcoin is a “new way to send and receive money.” Banks are not necessary when dealing with bitcoin because owners hold the currency in a virtual wallet. Since bitcoins are virtual, they are not tangible.

Alan Walker, the co-founder of Salt Lake City’s CoinCPA, an aggregator of digital currencies that allows people to see the real value of their virtual money, describes bitcoin as “digital cash that allows anonymity.” With bitcoin, “I am my own bank. It allows for instant exchange of money internationally.”

And, in a recent ruling by the Internal Revenue Service (IRS), bitcoins are actually property for income tax purposes, not currency. For example, if a person buys a $3 cup of coffee with a bitcoin they originally paid $1 for, the coffee drinker earned $2 in capital gains while the coffee shop must report $3 in income.

Before the IRS issued its ruling, “there was a volatility risk because the value of bitcoin varied every day,” says Walker. But now that bitcoin is defined as property, bitcoin’s status as a tool for bartering has been cemented.

Bitcoin benefits for small business owners
While bitcoin is not common yet, Walker says it’s only a matter of time. He predicts that in two to five years, “bitcoin will be prevalent.”

According to Walker, bitcoin offers fantastic benefits for business transactions. They include:

• Lower transaction fees than credit cards
• No chargebacks
• Reduced fear of fraud since a bitcoin user must access specific software and enter a PIN before the virtual currency can be accessed

Transaction fees for bitcoin purchases are between zero to one percent, while credit card companies often charge upwards of three percent, or even more. “That reduces the cost of transactions,” says Walker. Also, since bitcoin is instantly transferred from its owner to its recipient, there are no chargebacks. Conversely, he says, credit card users can chargeback purchases up to 90 days.

Another benefit of bitcoin is that it opens international markets to any business that transacts with the virtual currency. That’s a huge shift for companies that previously shied away from dealing with potential customers in certain countries, says Besseling.

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Tami Kamin Meyer is an Ohio attorney and freelance writer.