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<p>As more <a href="https://www.bolt.com/thinkshop/should-retailers-accept-cryptocurrencies">retailers accept crypto</a>, you may be wondering how to get involved. The challenge is knowing how to accept cryptocurrency payments without sacrificing customer-pleasing features like <a href="https://www.bolt.com/">one-click checkout</a>.</p><p>Read on to learn the pros and cons of accepting crypto. We’ll also explore how to overcome the technical difficulties of accepting crypto for your online store. If you’re thinking about accepting Bitcoin for your online store, we’ll show you how <a href="https://www.bolt.com/">Bolt</a> can help.</p><h2>What is cryptocurrency?</h2><p>Cryptocurrency is a digital currency that allows for secure peer-to-peer transactions without a central authority, such as a bank or government. Transactions are logged on a shared ledger called the blockchain and are visible to anyone.&nbsp;</p><p>Bitcoin is the most talked-about currency, but others exist as well. For example, Ethereum, Solana, and Dogecoin. It’s also likely that new currencies will be created as it becomes more mainstream.</p><h2>How are cryptocurrencies made?</h2><p>Creating a cryptocurrency requires a lot of computing power. Bitcoins, for example, are mined using advanced hardware that races to find the next hexadecimal number in the blockchain.&nbsp;</p><p>If you solve the problem first, you’re rewarded with bitcoins. It’s basically a puzzle, and the difficulty increases after <a href="https://bitcoin.org/bitcoin.pdf">every 2,016 blocks</a> are created.&nbsp;</p><p>But mining isn’t the only way to acquire cryptocurrency. You can buy, sell, or trade bitcoin on cryptocurrency exchanges.</p><h2>Why would you want to accept cryptocurrency payments?&nbsp;</h2><p>Merchants and retailers are still debating the value of accepting crypto. But cryptocurrencies are gaining acceptance, and people are looking for ways to spend them.</p><p>Goldman Sachs estimates that the digital economy is an <a href="https://www.goldmansachs.com/insights/podcasts/episodes/01-11-2022-eric-sheridan-f/transcript.pdf">$8 trillion-dollar</a> opportunity. Retailers who recognize the potential are positioning themselves to be part of the cryptocurrency economy.&nbsp;</p><h2>What are some advantages to accepting cryptocurrency?&nbsp;</h2><p>We’ve identified four benefits for retailers who accept crypto.&nbsp;</p><h3>Fast payment processing</h3><p>Cryptocurrencies are decentralized and don't depend on a central authority. As a result, transferring funds is limited only by the actual time needed for the blockchain to validate the transaction. In contrast, credit cards and banks often delay funding by as much as 72 hours.</p><h3>Lower fees</h3><p>Another advantage to being decentralized is the cost per transaction. Fees on crypto transactions are often less than 1%, and in some cases, they can be as little as 0%. Fees for merchant credit cards, bank cards, Paypal, and other payment processing services <a href="https://www.bankrate.com/finance/credit-cards/merchants-guide-to-credit-card-processing-fees/">average</a> 1.5–3.5%. Some even add a per-transaction fee as well.</p><p>Note: You can avoid fees altogether by accepting Bitcoin directly to your personal wallet. More on that later.</p><h3>New potential customers</h3><p>Adding cryptocurrency payment options may put you in front of a wider group of potential customers. Up to 40% of shoppers who pay with crypto are new to the merchant, and they spend nearly twice as much as credit card users.&nbsp;&nbsp;</p><p>Accepting crypto can be even more valuable if your audience is men 18 to 45. Sixty-six percent of<a href="https://www.cnbc.com/2021/08/30/cryptocurrency-has-a-big-gender-problem.html#:~:text=Demographics%20as%20financial%20destiny&amp;text=More%20than%20six%20in%2010,whom%20are%2045%20and%20older."> cryptocurrency investors are men under 45</a>.</p><h3>Brand identity</h3><p>Cryptocurrencies are key to monetizing the metaverse. Many brands are already creating virtual stores and finding creative ways to use <a href="https://www.bolt.com/thinkshop/nfts-ecommerce-overview">NFTs for ecommerce</a>.</p><p>Brands that accept crypto are perceived as cutting edge and forward-thinking. They’re also better positioned to bridge the gap between the virtual and real world as the metaverse grows.</p><p>Even if you don’t anticipate a lot of crypto customers, it demonstrates your commitment to serving your customers and building community.</p><h2>What are some of the disadvantages of accepting cryptocurrency?&nbsp;</h2><p>Merchants have struggled with how to accept cryptocurrency payments. Until now, it hasn’t been easy. Here are some of the disadvantages you may face as an early adopter.</p><p><strong>Technical complexity </strong>- Using cryptocurrencies are complex, both for the customer and the merchant. The customer has to navigate apps and crypto wallets, and the merchant has to decide how to accept, manage, and track transactions.&nbsp;</p><p><strong>Volatility</strong> - The total value of all cryptocurrencies has grown to about <a href="https://www.bankrate.com/investing/crypto-vs-stocks/">$2 trillion</a>, but price swings can be dramatic. The reason for this volatility is that crypto isn’t backed by any hard assets (with the exception of stablecoins). Its value stems solely from demand.</p><p><strong>Universally acceptance</strong>—Not all countries have legalized cryptocurrency. And some countries are still working out their crypto policy.</p><p><strong>Growing number of currencies</strong>—There are currently more than <a href="https://coinmarketcap.com/?page=101">19,000 cryptocurrencies</a> available, and that number is growing daily. Accepting all of them is impractical. So, merchants must decide which currencies would benefit them most.&nbsp;</p><p><strong>Tax Implications</strong> - Several countries regard cryptocurrency as property, not as a currency. That means it’s subject to capital gains tax.&nbsp;</p><p>The UK, the US, Italy, Canada, and India treat crypto gains as taxable. Other countries may have complicated tax laws, and some impose no tax at all. For example, Germany allows you to avoid taxation if you hold crypto for more than a year. However, if you sell it within the first year, any gains are taxable. Be sure you understand the tax rules that may affect your business.</p><h2>How to accept cryptocurrency payments</h2><p>There are two common ways to accept cryptocurrency payments: directly and with third-party payment processors.</p><h3>Direct payment</h3><p>Because cryptocurrencies&nbsp; aren’t controlled by a central authority, you can exchange money directly from one account (or wallet) to another.&nbsp;</p><p>First, you have to generate a QR code that links to your “address” or the alphanumeric string that identifies your wallet; then a sequence of events follows:</p><ul><li>The merchant sends the QR code to the customer&nbsp;</li><li>Customer scans your QR code&nbsp;</li><li>Customer enters their private key (which acts like a password)</li><li>The transaction appears on the blockchain (the public ledger)</li><li>All the other computers on that blockchain validate the transaction&nbsp;</li><li>Ownership of the crypto is transferred.&nbsp;</li></ul><p>The process takes about 10 minutes and incurs no fees. However, it does result in a lot of administrative work on the merchant’s part:</p><p><strong>Recording the transaction</strong>&nbsp;</p><p>Some accounting software like Freshbooks and Quickbooks can handle crypto transactions. If you don’t have accounting software that can help, you’ll need to enter those transactions manually or send them to your accountant.</p><p><strong>Converting crypto to cash</strong>&nbsp;</p><p>If you plan to hold on to the crypto, you can leave it in your wallet for now. You would then want to monitor the market to decide when it’s in your best interest to convert it.&nbsp;</p><p><strong>Tax liability&nbsp;</strong></p><p>If the crypto increases in value before you convert it, you’ll be responsible for recording the cost basis and paying taxes on any capital gain.&nbsp;</p><p>For example, if you sold a $1,000 item when the exchange rate was 0.025 BTC, and waited to convert it to cash when that same amount of bitcoin was worth $1500, you would have to pay tax on the $500 difference.&nbsp;</p><p>Since prices fluctuate quite a bit, you could also potentially lose money or miss the window when exchange rates are in your favor.</p><p><strong>Managing the impact on your operations</strong></p><p>Before deciding to accept crypto directly, ask yourself these questions:</p><ul><li>Will you need to train staff?&nbsp;</li><li>How will you handle refunds or exchanges?&nbsp;</li><li>Will your customer service team be able to field calls and questions adequately?&nbsp;</li><li>Are you dependent on cash flow for your business&nbsp;</li><li>Can you risk holding crypto until a later time?</li></ul><h3>Third-party payment processors</h3><p>The alternative is to use a third-party payment processor for crypto payments. There's usually a fee for this feature, but it’s 1% or less. And a processor will take care of the issues that make direct payments cumbersome.&nbsp;</p><p>For example, some processors compare rates on several exchanges to find the best rate at the time of sale. The customer and the merchant have a chance to review the proposed rate. If both agree, the sale is completed at that rate.&nbsp;</p><p>Each party knows exactly what they paid or received, regardless of any price changes on that day. The merchant receives the amount of crypto equal to the sale price (less the 1% fee). And the customer only transfers enough of his cryptocurrency to satisfy that amount.&nbsp;</p><p>If your payment processor integrates with your accounting software, that task is handled as well. And if you’re not “holding” crypto, you don’t have to be as concerned with recording the cost basis, gains, or price fluctuations.</p><p>Some third-party processors allow you to choose both direct and managed forms of crypto payment. This gives you the flexibility to hold on to some crypto but convert other transactions at the point of sale,&nbsp;</p><h2>What to look for in a payment processor</h2><p>Providing your crypto customers with the same seamless buying experience they're used to when using any other form of payment is key to successfully accepting cryptocurrency payments for your online store.&nbsp;</p><h3>Things to consider when choosing a processor</h3><ul><li>Transaction fees</li><li>Payout frequency</li><li>Volatility insulation: Is the rate frozen? If so, when?</li><li>Number of currencies supported</li><li>User interface: Is it easy for your customers to pay with crypto?</li><li>Self-managed vs. processor managed</li><li>Fraud protection</li><li>Ease of accepting foreign payments</li></ul><p>The benefits of accepting crypto are indisputable, which is why <a href="https://www.bolt.com/blog/bolt-wyre">Bolt acquired Wyre</a>. With Wyre’s technology, Bolt will make using crypto as simple as one-click. Your customers won’t have to worry about navigating third-party apps or figuring out exchange rates on their own. Paying with Bitcoin can be as simple as paying by credit card.</p><p>Bolt’s smooth, one-click checkout process removes friction for your customer. And soon, Bolt will let you offer one-click crypto payments.&nbsp;</p><p>Increasingly, your shoppers want to consider crypto, so you have to be ready. Get started today.. <a href="https://www.bolt.com/#!">Get your 3-minute demo now.</a></p>