On May 18, 2010 a message appeared on a BitCoin forum. Laszlo Hanyecz, an early developer and miner of BitCoin, was willing to trade crypto for pizza. “I’ll pay 10,000 bitcoins for a couple of pizzas,” he wrote. “Maybe 2 large ones so I have some left over for the next day. … what I’m aiming for is getting food delivered in exchange for bitcoins.”
Fellow Bitcoin user and forum member Jeremy “Jercos” Sturdivant agreed to the deal. On May 22, 2010 a pizza delivery made history when the coins were exchanged and two large pizzas were soon delivered.
See Lazlo’s original post on Bitcoin.com
From Online Experiment to Mainstream Commerce
Laszlo Hanyecz had made the offer as a way to explore the potential of Bitcoin and, at the time, forum users thought it was a joke. One user even joked that Lazlo should enjoy his “free pizza” since Bitcoin was worth next to nothing at the time. In 2010, Bitcoin was worth roughly $0.004 (US) which made 10,000 Bitcoins worth around $41. (Today, the deal would be worth over $400 million.)
Since then, however, Bitcoin has become the leading form of cryptocurrency and is accepted as direct payment by many companies. Other forms of cryptocurrency have also emerged and as people become more familiar and comfortable with it, businesses are looking for the best ways to incorporate it into their systems.
Pros and Cons of Accepting Crypto Payments
Before deciding whether or not to accept cryptocurrency as payments, there are some things worth considering.
Crypto offers more security than traditional payments which has made it more appealing to many companies. During 2020, credit card fraud rose 35% with many scams targeting small businesses. The blockchains used in crypto, however, provide extra security. The transaction is verified by a third-party and the details are not kept in a centralized hub. Instead, everything is held in a single encrypted wallet making it much more difficult for scammers to hack.
On the other hand, cryptocurrency is viewed by the IRS as property and so it requires extra bookkeeping. This includes dealing with capital gains taxes when it is bought, sold or used and you are required to track the value of the crypto both on the day you received it and on the day you use or sell it. All of this can require specialized knowledge and dedicated work time – a cumbersome prospect for some companies.
Finally there’s the risk involved with the crypto market, which remains extremely volatile. The laws of supply and demand apply to all cryptocurrency, which affects its value. Other factors, including government regulations, media hype, and the role of influencers can also affect the value of crypto. If the crypto you accept as payment today goes down in value, there’s no recourse and you could essentially be left with nothing. By the same token, however, it also means the payment you accept worth $50 today could be worth $500 when you convert or use it.
Taking the Plunge – How to Accept Crypto Payments
If you’re ready to begin taking crypto as payments, there are options for you beyond figuring out peer to peer trading with an in-house crypto team. Several companies have emerged with payment processing options to keep companies nimble and flexible when it comes to a variety of crypto options.
Coingate offers services for individuals and businesses. You can accept payments, send invoices, and convert crypto to traditional currency – or to another form of crypto – within its system. (Coingate website)
BitPay, founded in 2011, prides itself on having seen the potential early and established its platform while Bitcoin was still in its infancy. BitPay boasts a flat 1% fee with no fees or minimums on its business programs, and it works with over 90 different crypto wallets. (BitPay website)
Coinbase offers its own wallet and integration on shopping platforms. Their platform can accept several forms of crypto as well as processing US Dollars. (Coinbase website)
Accepting cryptocurrency for payments is still seen as cutting edge to some companies. The reality is that accepting crypto will likely become as commonplace as accepting social media. Before long companies that don’t have a process for crypto payments will be losing out on more than a different form of currency – they’ll be losing out on business.
Get Started with Crypto Today
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