In the near future, this question:

“Should I start accepting crypto currencies like Bitcoin and Dogecoin as payment for my businesses goods and, or services?”

…will be filed alongside currently common knowledge business and marketing practice questions like:

“Should I have a website for my business?”

“Should my business have a mobile presence for smart phones?”

“Should I market my business on the internet?”

This virtual currency being used right now will play a BIG part in your business in the near future. Some businesses are even having marketing success by appealing to the communities that support these currencies. Let me tell you why you should start accepting crypto currencies in exchange for your goods and services.

But first – what is crypto currency?

Crypto-Currency 101

(This is my attempt to digest what crypto currency is and how it works. Skip to “Here’s why you should really care.” if you just want to get to the money part.)

Definition and Structure

Crypto Currency is not tangible and exists completely on the internet in digital form. You cannot hold a Dogecoin / Bitcoin / Litecoin in your hand.

Crypto currency is a peer-to-peer network of powerful peer machines connected over the internet with a common purpose. The purpose of these machines is to maintain the currency’s ledger. This ledger is a list of EVERY transaction EVER on this currency. Each different crypto currency, or ‘coin’, has its own ledger. These ledgers are referred to as the coin’s ‘block chain’. The block chain serves a number of purposes, but its main purpose is to track the balance of every wallet address, along with a list of transactions into and out of every wallet address. All crypto currencies’ ledgers of all transactions within that currency are available to the general public. Wallets interact with this ledger to pass coins from wallet address to wallet address. Coins only exist on this ledger within wallet addresses.

There is NO QUESTIONING this ledger. This ledger is gospel. If the ledger says wallet address ‘123456’ has 100 coins in it… it will always have 100 coins in it, until wallet ‘123456’ explicitly tells the block chain to move an amount to another wallet address.

These crypto currencies are engineered so that there cannot be ANY forgery of coins. Someone cannot create a wallet address on that ledger, with an amount, without receiving that money from some other wallet on the ledger.



These coins hold value. Each coin has its own exchange rate to normal currencies (U.S. Dollar, Chinese Yen, Euro, etc…) that fluctuates.

How does an individual interact with this ledger?

The answer is with a wallet client. This is similar to how you use email. You log in to your email client to send and receive emails through your email’s server. The wallet client acts in a similar fashion. The wallet client uses its public wallet address – which can be given to anyone – along with its private keys to access the ledger and move currency to another wallet address. While this wallet can ‘request’ coins from another address, it cannot pull it. It can only receive coins from others on the ledger who have sent to that wallet address, and expressly send money out to other wallet addresses.

Peers – What and who are they?

Peers on this network are referred to as ‘miners’. These are specialized computers running algorithms for this currency to help maintain the integrity of the block chain (THE Ledger). In exchange for their computing power, these miners are rewarded with the coin from the currency they are mining.

These rewards come from 2 places:

From the transaction itself in the form of a transaction fee. This is usually a VERY small fraction of a percent of the transaction itself From the currency’s block rewards to miners. This method is used to introduce more of the currency into the ecosystem. Each coin has its own block reward schedule and inflation policies to keep the miners incentivized to maintain the ledger and keep the transactions moving fast through the ledger.

The more valuable a crypto currency possesses, the more sophisticated and powerful its mining network becomes as a result of the value the miners place on that coin. Previously this was done only by crypto currency enthusiasts and hobbyists. Now this is becoming big business for computer hardware manufacturers who sell purpose-built mining computer equipment.

Confused Yet?



No worries. Because ultimately, you as a business owner need to care NOTHING about all of that. In fact, the amount you care about it is akin to the amount you care about how credit card transactions are executed over telecommunication lines. The ONLY thing you care about is if you sold a product or service for $100 USD, regardless of whether your customer used a credit card or crypto currency, at the end of the day there needs to be $100 USD in your bank account (or something VERY close to that after the fees).

Here’s why you should really care

All the reasons you like AND dislike credit cards is why you should start accepting crypto currencies. These crypto currencies (or virtual currencies) put equivalent, VERY REAL, U.S. Dollars into your bank account at a FRACTION of the fees that you currently pay for credit card transactions.



Like with credit cards, your business would need a merchant services provider for crypto currencies. These merchant services either operate a crypto currency to FIAT currency (US Dollar) exchange, or they partner with an exchange. This allows a merchant services provider to accept the payment on your behalf (just like your credit card merchant services), exchange the coins for the currency you would like (U.S. Dollar of course…), and settle daily or weekly to your bank account. Look for established credit card merchant services companies to either start offering this style service or acquiring the start-ups that are operating and offering this service now.

At the time of this writing, these merchant services charge the following rates to exchange:

CoinBase.com – 0% fiat exchange rate up to $1,000,000, then to 1%, but ONLY for bitcoin.

BitPay.com – 1% exchange rate with a monthly fee depending on volume, but again ONLY for bitcoin.

GoCoin – Doesn’t publish rates on site.

Let’s now do a side by side comparison of credit card and crypto currency merchant services.

Credit Cards VS Crypto Currency Comparison

Credit Cards Crypto Currency Popular YES! Getting there (and fast)! Secure: Yes Yes – even wallet balances hosted on their servers. Instant Verification

of Funds: Yes Yes Secure Communications: Yes You bet! Transaction Fees: 2.75% (if you’re getting a competitive rate) 0.1% if you’re auto exchanging back to USD

0.01% if you’re keeping the coin on some merchants. Chargebacks: Consumer can reverse charges making you incur a loss for the purchase AND a chargeback fee. NO Chargebacks – see the crypto 101 section on wallets.

What will this transaction look like?

At the time of purchase, the merchant (you) would give your wallet address to the customer. The coin used by the customer would need to be supported by your merchant services. GoCoin.com (for example) currently supports these coins: Dogecoin, Bitcoin and Litecoin. Depending on the preferred coin, your merchant services would (in real time) tell you the amount of coins to charge your customer for the equivalent value of USD at the market at that time.

Now, because the wallet address is a long string of characters, your point of sale system (or your mobile app on your phone) would display a QR Code with the wallet address. The customer would use their wallet on their mobile phone to scan your wallet address and send the appropriate amount of coins to your address. Your point of sale system or mobile application would notify you of the incoming transaction now written in the coin’s ledger, and the coins are yours. If you’ve set your merchant account to auto convert to U.S. Dollar, these coins would immediately go to the exchange and be converted to U.S. Dollars for deposit into your account for end-of-day settlements.

Here’s a picture of St. Louis’ Strange Donuts payment display and their first Dogecoin customer.

For a demo of what these transactions look like, here’s a person using it online, but the exchange of scan, send, and receive would essentially be the same in person.

Now, on to common objections and questions…

Objection: “Crypto Currencies are VOLATILE !!”

Response: Doesn’t matter if they are or are not volatile. You as a business are charging the equivalent coin for US Dollars at the exchange rate at that time, and settling at that guaranteed exchange rate provided to you by your merchant services provider. If a particular coin becomes too volatile, the merchant services will simply stop supporting it.

Objection: “Didn’t somebody HACK bitcoin?”

Response: No. No one has ever hacked any crypto-currency. To do so would mean someone possessed quantum computing power of mythical proportions. What HAS been hacked in the past are online wallet accounts on shoddy websites with poor security. The same style hacking as Yahoo Mail, Gmail, Bank of America, etc… Viable merchant services have much, much better security and will guarantee your wallet balance.

Objection: “Nobody Uses Dogecoin, Bitcoin, Litecoin, [insert coin here]”

Response: Not true. While this is a fairly small user population right now, like smart phone adoption, it is growing exponentially and will eventually be a very common method of payment as it gets easier for consumers to use crypto currencies as a form of payment. Do you remember when we used to write checks for all of our transactions if we didn’t have cash? I do. While today these users are a niche group of consumers, companies are running promotions and marketing activities promoting the fact that they accept crypto currencies with a lot of success.

Objection: “Aren’t crypto currencies against the law?”

Response: Absolutely not. In fact, the IRS recently clarified their position on crypto-currencies and how they can be used for transactions. Merchant services will provide all the necessary accounting information for your transactions. There’s been more recent legislation proposed to recognize crypto currencies as actual currencies, but your merchant services providers should fill the gaps in these accounting requirements in the meantime.

Objection: “This will never catch on.”

Response: When technology allows for things like a 2,000,000% cheaper fee for the same services… it’s going to be big. This technology is VERY disruptive. Disruptive technologies typically see rapid adoption (see iPhone). For example, this tweet was an $11,000 donation to a charity. Previously, in order to send this digitally, this would have needed Paypal or another payment processor that can move the money to that charity’s account. Those fees would have been anywhere from $50 to $161 for that transaction. Because the donor used Dogecoin, this transaction cost $0.01 -> That’s a PENNY… a copper Lincoln…over Twitter.

How do I get started as a business?

Check out the merchant services listed above. They’re all pretty good at educating potential clients on the technology and how it works.

Full Disclosure: I participated in mining Dogecoin to better understand the technology behind crypto currencies, and I did not know how to spell ‘Shawarma’ before authoring this blog post.

Please put any questions in the comments and I’ll do my best to answer them.

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