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Five years into its existence, the virtual currency bitcoin has survived a host of headline-grabbing controversies and is gaining legitimacy with major U.S. retailers. Small-business owners may find new opportunities in joining them, but should carefully consider the risks before jumping in.

First, a little background. Bitcoin is a digital currency that works on a peer-to-peer network. It’s not backed or controlled by any government. You keep bitcoins in a digital wallet and spend them by exchanging public and private security keys.

Bitcoin gained considerable notoriety in 2013 because of its use by Silk Road, an online black market shut down by the FBI for offering, among other things, illicit drugs, fake passports and hit men contracts. The currency once again made headlines when the world’s largest bitcoin exchange, Mt. Gox, filed for bankruptcy in February 2014, claiming hackers had stolen 850,000 bitcoins worth a half-billion dollars.

Wild speculative swings in the value of bitcoins have added to their Wild West aura. In the past year, one bitcoin has gone from $105 to a rate of around $541 as of mid-August 2014.

Despite all that, bitcoin is gaining legitimacy as a mainstream payment source. Apple added bitcoin wallets back to its app store this summer after removing them for undisclosed reasons in February. California has reversed a ban on currencies other than the U.S. dollar, making bitcoin a legal form of payment. And perhaps most important, major companies such as Dell, Dish TV, Expedia and Overstock.com now accept bitcoin payments. Overstock.com says bitcoin payments have averaged $15,000 a day since it began accepting them in January.

The number of small businesses that take bitcoin has been growing, too. If you’re considering joining them, there are a few things to keep in mind.

Customers. Do your customers want to pay with bitcoins, or even know what they are?

The average bitcoin user is a 32-year-old male, according to an online informal survey by the Simulacrum blog. Anecdotal evidence suggests he is also libertarian-leaning and an early adopter of technology.

If you have or seek that kind of tech-savvy customer, bitcoin acceptance can give your business cutting-edge credibility, says David Mondrus, co-founder of the Bitcoin Association, a nonprofit group working on fostering wider adoption of such “cryptocurrencies.”

Pittsburgh-based digital marketing firm The Content Factory is just that type of business. Owner Kari DePhillips works remotely from Concord, New Hampshire, where she saw bitcoin becoming increasingly popular. Nearby Manchester, New Hampshire, is home to a large bitcoin Meetup group. She attended out of curiosity, and saw that businesses there needed her firm’s services. Looking for a competitive advantage, she offered them the opportunity to pay in bitcoin beginning in January 2014.

The firm now receives roughly $8,000 per month in bitcoin revenue. “It’s made us appealing to startups who need our services and use bitcoin as a preferred method of payment,” says DePhillips. “We’ve definitely attracted certain clients in part because we accept bitcoin.”

Volatility. Probably the biggest fear for most businesses in accepting bitcoins is their constantly changing value. Those price fluctuations represent risks, says Jeff Born, finance professor at Northeastern University’s D’Amore-McKim School of Business. He advises companies, especially small businesses, to quickly cash out bitcoins they receive as payment. “I wouldn’t want to keep an inventory of these things for very long because their value is so volatile,” he says.

It was certainly something DePhillips thought about when mulling over pros and cons of the currency. “I worried about the volatility,” she says. “If I invoiced for $5,000 in bitcoin, it could be worth $3,500 the next week, depending on how the price was running.”

BITCOIN GLOSSARY Using bitcoin requires learning some new lingo. Here’s a handy cheat sheet. Bitcoin address: A string of letters and numbers that represents a possible destination for a bitcoin payment. A unique address is used for each transaction. Most bitcoin software will generate a new address every time you create an invoice or payment request. Bitcoin wallet: A secure account that stores bitcoins for later use. Private key: A secret number that allows bitcoins to be spent. Every bitcoin address has a matching private key saved in the wallet of the bitcoin owner. Bitcoin processor: A company that accepts bitcoins and processes the transaction, usually saving the bitcoins to your wallet or converting them and transferring them to your bank account. Blockchain: A chronological ledger of transactions that is shared on a distributed digital network. The network can be public, with unlimited access (as with the bitcoin), or private and permission-based. Cryptocurrency: A form of currency based on mathematics instead of printed money.

Much of that volatility can be controlled these days by using a bitcoin processor such as BitPay, CoinBase or Coinkite. Such services deposit your funds in bitcoins or convert them to cash, sometimes immediately. For example, BitPay can instantly convert bitcoin payments into U.S. dollars and deposit the money into the merchant’s regular bank account.

That solved the problem for DePhillips. “BitPay came out and allowed you to accept bitcoin without having to touch bitcoin,” she says. “You could convert all or part of the payment to cash right away.”

Security risks. The Consumer Financial Protection Bureau is warning consumers to be aware of threats posed by hackers, who could drain a bitcoin account if they get access to a user’s private keys. Fraudsters may also set up fake bitcoin exchanges or other intermediarie, then steal customers’ funds. The bureau notes that virtual currency accounts are not insured by the Federal Deposit Insurance Corporation or National Credit Union Share Insurance Fund, so the government will not cover losses if a virtual currency company fails.

If you have problems with bitcoin or other digital currencies, you can now submit a complaint to the CFPB, which will try to get a response from the company in question. But it’s always important to first research any bitcoin provider you’re considering using to make sure it is legit. Make sure you know how to contact the company in question, and read the fine print so you kow your rights. If something goes wrong, “the company may not offer the kind of help the consumer would expect from a bank, debit card or credit card provider,” the CFPB said in a written statement.

Costs. On the plus side, one bonus for merchants accepting bitcoins is that transaction fees are lower than those for credit card payments. A merchant who accepts charges of $1 million each year at a 3 percent credit card transaction fee is paying $30,000 in fees each year, explains Mondrus. In contrast, many bitcoin payment processors charge 1 percent — or less. BitPay has removed all merchant costs for its entry-level plan, and Coinbase doesn’t charge for the first $1 million in monthly sales.

Bitcoin is also not subject to the costly charge-backs that come with credit card payments. The only way bitcoin payments can be reversed is if the merchant chooses to issue a refund, eliminating an element of financial risk for businesses.

Still, integrating bitcoin payments into your existing infrastructure does require an investment of time and money, including finding a processor and making the necessary website programming changes. New York City-based LegalAdvice.com, which offers online legal advice, decided against adopting bitcoin payments for that reason.

Although Chief Operations Officer David Reischer was familiar with alternative currencies and had invested in them, he saw neither the demand for nor the benefits of accepting bitcoin. “It seems like a novelty. Even if bitcoin does have some long-term possibilities for surviving for a number of years in the future, the costs to implement the protocol to accept it on our website don’t seem worth it,” he says.

In addition, even with the recent California decision, Reischer has questions about whether each state or country will allow bitcoin to continue, he says.

Taxes. In March, the Internal Revenue Service issued a notice declaring that bitcoin payments worth at least $600 will be treated as property rather than currency. Therefore, in the eyes of the tax agency, every change in value of the bitcoins you hold is essentially a short-term capital gain or loss if they are not held for more than one year.

“In theory, firms should be keeping track of the price paid — the value of goods transferred — for each coin and the value received and expense paid when each coin is disposed,” says Born. “In short, it will be a record-keeping nightmare to accept bitcoins since the IRS ruling.”

The ruling worries DePhillips, who hasn’t quite figured out how to best track each transaction. She’s relying on her accountant to sort it all out at the end of the year. “That’s obviously a concern,” she says. “Do we put it in as an asset like cash? That has to get nailed down this year.”

For people who hold bitcoins and sustain capital losses, there is not much relief. The IRS limits deductions for such losses to $3,000 per year on personal tax returns.

Those types of limitations have prompted financial consultant Chris Byrne, former chief architect of Wells Fargo Bank’s retail banking division, to advise clients in heavily regulated industries to stay away from bitcoin and other alternative currencies. He tells banks, investment firms and publicly traded companies to be cautious about accepting such forms of payment because they engender too much risk.

For others, he says it’s important to do a cost-benefit analysis. “Understand your market and understand your customers and make your best risk-benefit assessment based on that understanding,” he says. “If you’re at all uncomfortable, if you don’t see that upside with your customer base and your market, it’s not worth the risk.”

See related: Can my business add a surcharge for card-paying customers?, How can I protect my point-of-sale system against security breaches?