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  • Jeff Haden
    Business Journalist

    Jeff Haden is a bestselling ghostwriter, speaker, Inc. Magazine contributing editor, and LinkedIn Influencer

    Jeff Haden
    Business Journalist

    Jeff Haden is a bestselling ghostwriter, speaker, Inc. Magazine contributing editor, and LinkedIn Influencer

    Much has been made of Bitcoin – an anonymous, unregulated currency. But is it worth the time and investment?

    Maybe all you know about a Bitcoin is that it represents yet another classic buy low, sell high missed opportunity: once worth less than five cents, in 2013 the price soared to nearly $1,300. (Today the value hovers around $300.)

    And maybe that’s all you need to know – at least for now.

    If you’re unfamiliar, Bitcoins are a virtual currency in which new coins are created by a slow and complex computer process known as "mining." There are nearly 14 million Bitcoins in existence and once 22 million have been created, all mining will effectively cease. Once you have a Bitcoin you can trade it online to anyone who will accept it.

    Man using calculator on workshop counter

    An invisible currency

    What makes Bitcoins appealing to many, at least in principle, is that they are not regulated by a government or central bank; that makes them anonymous and secure (and invisible to law enforcement agencies or tax authorities.)

    Yet that same lack of regulation can make volatility a huge concern. Like any commodity a Bitcoin is only “worth” what the market says it is worth – so would you accept $80 in Bitcoins today if you knew that currency would only be $60 tomorrow?

    Still, some Australian businesses have decided to accept Bitcoins as payment even though the setup process is fairly complicated. Plus while Bitcoins aren’t considered to be “money” by the Australian Taxation Office they can still be subject to goods and services tax (GST) and possibly to capital gains tax (CGT) if the value of the bitcoins you’ve received increases before you dispose of them (in other words, talk to your accountant).

    Bitcoin in business

    The main question is whether Bitcoins should be part of your future business strategy. The answer, in a word, is most likely no.Bitcoin is not – at least for the foreseeable future – like PayPal, a method of payment that grew from a small e-commerce solution to one of the world’s largest Internet payment companies. The adoption of PayPal literally forced the hands of many businesses. For example, eBay acquired PayPal after realising developing Billpoint, its own payment service, was futile since an overwhelming majority of eBay buyers and sellers wanted – and asked – to use PayPal.And that’s why Bitcoin is interesting, but in all likelihood unnecessary for the average Australian small business. 

    Verdict

    Should you keep your eye on new business trends? Absolutely. Should you try to spot changing trends in customer tastes and needs, and the way customers want to do business with you – not just in terms of payment but how they wish to communicate with you and be served by you? Definitely.

    But if your customers are not asking you to accept Bitcoins – and I’m willing to bet they are not –spending time and money establishing your own Bitcoin infrastructure is wasteful, and would be much better used improving other ways you serve your customers.

    The best businesses listen to their customers, and that’s how you build your business.  Focus on what your customers are saying, and not on the hype surrounding a payment system that is unlikely to help your business grow. 

    Telstra has provided you with access to a range of articles and information which may be of interest to you and your business. The content of our articles does not constitute the provision of financial or taxation advice, and we strongly encourage you to seek independent professional advice or consider for yourself if this information is appropriate for you and your circumstances.

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