Bitcoin FAQ’s
What is Bitcoin?
Bitcoin is both a digital currency, and also the payment system through which the currency flows. As a currency, Bitcoin is analogous to other currencies except it is not issued by a national government. It is based on a computerized architecture that allows the supply of Bitcoins to increase only at a pre-defined rate and provides other attributes that make them useful as a medium of exchange. As a payment system, merchants can consider Bitcoin as analogous to MasterCard, Visa, or PayPal. A consumer pays in Bitcoins and the merchant receives U.S. dollars automatically into their bank account.
Who controls the Bitcoin network?
Nobody owns or controls the Bitcoin network in the same way that no one owns or controls the technology behind email or the Web. It is a technology protocol and can be used by anyone as long as the protocol is adhered to.
What are the advantages for jewelers in accepting Bitcoin payment processing?
There are several. First, transactions are not reversible, as they are with credit card processing. Second, the fee is extremely small. By partnering with Coinapult, Verichannel is able to offer retail stores a negotiated fixed fee of only $3.00 per transaction, total. (The fee is slightly higher outside the U.S.) There are no percentage fees on the transaction at all. Third, dollars are generally received more quickly than with credit card processing-typically within 24 hours. Four, customers who desire to pay in Bitcoin are actively seeking out those merchants who accept the Bitcoin form of payment. This can mean new customers.
Is the volatility of Bitcoin’s exchange-rate value a concern to merchants?
No. The merchant does not actually receive Bitcoins. They are processed into U.S. dollars by a payment processor, and the exact amount of the sale, in dollars, is received by the merchant. There is no exchange-rate risk.
How can the merchant be certain the dollars will be received?
Because the dollars are received so quickly, retail stores may choose to ship or deliver the item being purchased, after the dollars are already received into their account.
How much does the merchant need to understand about Bitcoin, before accepting it?
None, theoretically. Most merchants do not know how American Express or PayPal actually work behind the scenes. All that matters is that U.S. dollars, of the correct amount, are received by the merchant. The same is true of Bitcoin. It is simply another payment processing system, with less risk and lower costs than other alternatives.
For more information about Bitcoin in general, visit http://bitcoin.org/en/