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Should we be accepting Bitcoin as payment for our branded clothes?
Have we reached the time when businesses pay each other with cryptocurrency?
Bitcoin and other cryptocurrencies are now well entrenched in the minds of the savvy tech users and financial investors but what about consumers and traders? Many people I asked over this last weekend had heard of bitcoin or the blockchain but were not really sure what you can do with them or how you get them.
So far we have not been asked if we will accept payment in bitcons but I’m sure the time is not far off. And none of our trade suppliers have notified us they now accept bitcoin.
The value of bitcoin and other cryptocurrencies such as Litecoin, Ethereum and Peercoin is extremely volatile, with price movements swinging up and down throughout a 24 hour period. So the value of a sale agreed in Bitcoin on the day of the order is likely to be different on the day of the delivered branded clothing. With a typical lead-time of 7 working days from order to delivery of printed or embroidered workwear the profit of said order might be wiped-out or doubled in that time. For customers without a credit account they will pay when they place the order so the risk to us (the supplier) is negated but for credit account customers they may choose to pay when the value is high during the period of credit given.
We then need a way of using the bitcoin as we will need to pay our suppliers, staff etc. If we simply convert it to a fiat currency say Sterling we have the hassle and cost of doing so. And of course we have the risk that the value has decreased from the time of receipt from the customer until we make the conversion to Sterling.
If however some of our suppliers or staff were willing to accept bitcoin then we would have a ready way to spend our sales income. But that point has not yet been reached and the price volatility is the restricting factor.
For investment purposes the wild swings in price may suit risk takers but for a business we need price certainty.
To read more about Bitcoin check out the Wikipedia article.
To find out about other cryptocurrencies this is a non-complete list. If you want to strat trading cryptocurrencies Commodity.com is a good place start finding out what's involved and what the risks are. Be sure you understand what you're doing and what you have to invest/trade.