How BitCoin is changing the way you make payments on the Internet
Bitcoin is the world’s first digital currency. It has been making waves in the economic as well as eCommerce circles since it introduction in 2009. Bitcoin recently has been subject to media exposure. Thus, many people are now wondering if Bitcoin is the answer to the modern day economic problems as well as whether it has any value to your store to give in an edge in the present cut-throat competitive scenario.
Here, you need to understand that Bitcoin is fundamentally a currency, which is similar to the US dollar, euro, or yen. Bitcoin, which is often incorrectly compared to the credit card companies. However, it is a decentralized digital currency. It uses the same cryptographic principles as well as a lot of heavy math, and this makes it possible to send as well as receive BitCoin payments over the Internet. These payments and receipts are enforced and regulated using the public/private key cryptography. Which is the same industry standard for encryption as well as verification mechanism that is used to secure SSL as well as SSH.
BitCoin has a fair degree of success due to its unique nature. Considering it as an economy, its market cap has exceeded $ 1 billion. Today, individual Bitcoins are approaching the value of gold. Even the banking community has recognized the advantage of the Bitcoin economy. According to Merrill Lynch, Bitcoin can become a major means of payment for eCommerce and has the potential to become a serious competitor to traditional money providers.
Advantages that BitCoin Offers as Payment
With Bitcoin, as an eCommerce store operator, you get a number of advantages. In a nutshell, Bitcoin offers an eCommerce store to accept a form of cash as a payment that comes with a lot of simplicity as well as all it advantages. At the same time, it retains the convenience of remote credit card payments that customers now expect as commonplace. Since Bitcoin is a cash equivalent, these are not susceptible to charge backs as all payments are final. This is as if customers had paid you in physical banknotes.
Since Bitcoin is decentralized compared to major credit card vendors such as MasterCard, Visa, and American Express. However, this process creates overheads, which requires store owners to pay fees on transactions as well as comply with seemingly arbitrary arguments sometimes. Since Bitcoin is decentralized, it requires no specific business practice requirements or intrinsic fees. You can also run the business the way you see as most efficient.
Bitcoin is convenient
Accepting payments using Bitcoin is convenient due to its digital nature. You get all the benefits of cash payments, since funds are instantly transmitted over the internet. This ensures that customers continue to receive instant gratification as is in the case of card-not-present transactions. Bitcoin also reduces barriers to purchase. Due to its decentralized nature, there is no regulatory or infrastructure overhead and bitcoin purchases can be accepted internationally. This also means that payments can be accepted from any country, which is regardless of the customer’s local currency or the political climate in that country. This can be done without incurring additional fees, costs, or overhead.
Security and Cost.
Bitcoin is a cryptographic currency as it provides un-compromised as well as unrivaled security compared to either cash or even credit card payments. Bitcoins are intrinsically free of transmission-theft risk because they utilize the same public as well as private key cryptography as credit card statements. Hence, even in the event of complete store compromise, Bitcoin paying customers are not at a risk of theft caused by an unauthorized release of public address. Last but not the least, another advantage of Bitcoin is that it offers reduced transaction fees, while compared to current credit card networks. Traditonal credit cart networks actually require many players, such as credit card network, payment gateways, and others, which contribute to the transaction fees.
To summarize, Bitcoin seems to have heralded and ushered in a new and secure form of payments which has the potential to do away with the dangers of online shopping and other fraud related issues. In the next section, let us look at how to accept Bitcoin.
Appendix: How to accept Bitcoin : There are many options available, but the most widely used are BitPay and Coinbase.
This is one of the most widely used Bitcoin payment services. It is used by more than 12,000 businesses. It has various plans starting with 1% transaction fees and other flat rate plans. The savings potential of Bitcoin can range from $ 30 to $ 3000 per month.
1. Create an account with BitPAy
2. Install the free Magento module
3. Flush the cache
4. Select select My Account -> API Access Keys. Click Add New API Key, enter a meaningful memo, and click Save Changes.
5. Now get the necessary API key. Go ahead and configure Magento. Open BitPAy configuration by visiting system -> Configuration -> Sales -> Payment Methods and expanding the Bitcoins section.
6. Activate the payment method by setting Enabled to YES. Enter the API key that you have generated. Click SAVE Config to commit the changes.
7. Now the BitPAy module is configured with an API key and is enabled. Customers may pay with Bitcoins now by simply selecting the new Bitcoins method.
8. Now customers can pay in Bitcoins after proceeding to the order review step of the checkout. Bitpay generates a receiving Bitcoin address, which is generated dynamically and displayed along with a QR code for the convenience of the customer.
9. Now the customer will see the confirmation that their payment was accepted after paying through the Bitcoin software of their choice.
10. Now that customer has paid for the order, a final place order will be presented in the form of a button click, which upon actioning, the customer will be taken to the order confirmation page.
11. Congratulations – Your store is now accepting Bitcoin payments!
Coinbase is similar to PayPal. It provides many bitcoin related services to both customers as well as merchants. Coinbase charges are NIL for funds which are not exchanged to the merchant’s local currency. For funds which are exchanged, there is a 1% transaction fee after the first $ 1 million.
1. Register for a Coinbase account.
2. Install the free Magento Module
3. Flush the Cache
4. In Magento Admin, visit System -> Configuration -> Sales -> Payment Methods, and expand the Coinbase section
5. Now create an application on your coinbase account. The system configuration section provides an handy link so that you can launch this.
6. Note the redirect URL from the system config page
7. Click Create Application.
8. Coinbase will associate your new application with your account as well a generate a client ID and client secret. This will authenticate the Magento module.
9. Enter the client ID and secret into the coinbase section in your Magento system configuration. ensure the Enabled field is set to Yes, and click Save Config to commit the changes.
10. Once the client ID and secret are saved, authorize your new Magento application to accept payments. You are provided a handy link again.
11. Click the link to open the Coinbase authorization interface.
12. Click Authorize.
13. Coinbase will redirect back to your Magento system config
14. You will see confirmation that the account is connected correctly.
15. The Bitcoin payment method will be made available for customers.
16. When a customer chooses the Bitcoin payment method and completes the order, they will be redirected to a PayPal Express-style payment screen
17. Here they can either log into their Coinbase account and pay. Alternatively, they can pay using an external Bitcoin wallet.
18. Customer will see a confirmation that the payment was received successfully.
19. Click the Return to … Store button. The will send the customer back to your Magento store.
20. Your store can now accept Bitcoin payments!