Bitcoin Business Model – Which business models are suitable for Bitcoin payments?
Which Bitcoin business model is suitable?
Bitcoin payment offers some advantages over traditional payment methods such as credit card, PayPal or bank transfer. What are the Bitcoin business models? What advantages does Bitcoin offer and for which business models could payment processing with Bitcoin be predestined?
Bitcoin originated as a peer-to-peer electronic cash system to enable payment on the Internet without a middleman (“peer-to-peer”).
The most popular payment method in stores is cash. With cash, you can pay quickly and anonymously. Without disclosing personal data, the buyer gives his cash and in return receives from merchant the desired goods.
Bitcoin is digital cash
Bitcoin is the cash for the internet
Privacy
When making purchases on the Internet, it is mandatory with the previous payment methods that the customer always discloses his personal data. In addition to credit card data, this also includes details such as email address, personal address and perhaps even date of birth.
But why is this data needed by the trader?
If something is ordered that is sent to me by mail, it is understandable that my personal address is required for mail delivery.
But when I buy software, a membership, or digital goods, revealing personal information or my address is not actually mandatory.
All previous payment methods have a chargeback risk from the end customer. With Bitcoin, this risk does not exist because a one-time Bitcoin payment is final and definitive. A Bitcoin payment cannot be unwound by the payer on his own authority.
With existing payment methods, this data must be proactively collected by the merchant for fraud prevention and because of potential chargebacks by the end customer.
Since there is no chargeback risk for the merchant with Bitcoin, it is sufficient if only the data that is absolutely necessary is collected.
Bitcoin owners appreciate the importance of data protection and only collect data that is absolutely necessary.
Digital goods, software, memberships
So for which Internet products is it possible to do without an address? This cannot be dispensed with in the case of physical goods sent by mail.
But for all digital goods that are delivered or made available via the Internet, the postal address can be dispensed with without any problems.
Providers of software, memberships and digital goods such as video, music or newspaper articles are predestined to accept anonymous Bitcoin payments from its customers.
An email address is all that is needed to send the digital goods to. Further information about the customer is not mandatory for payment processing.
It is true that the sale of digital goods is not a new business model per se. But with the help of Bitcoin, it can be converted to a Bitcoin business model. During the ordering process, the collection of personal data can be waived if the user has opted for the Bitcoin payment method.
Application examples can be found here:
Micropayment
A merchant must pay a fixed transaction fee and a fee based on turnover for the use of traditional payment methods. This results in average transaction fees of 20 to 50 cents and sometimes more.
Business models for selling products and services for a few euros or even a few cents are thus economically unattractive and unfeasible.
As an example, we can mention the sale of individual pieces of music, videos or newspaper articles. Selling these products for prices below €1 is not profitable with the current payment methods. Therefore, these products are sold in packages. Either as a subscription model or as an advance payment for several individual products.
But why should a customer take out a long-running subscription
when all he wants to do is read a newspaper article?
Here it offers itself as a Bitcoin business model, if the individual newspaper articles, videos or pieces of music, with the help of cryotocurrencies by micro payments are settled.
A retailer has an interest in retaining its customers for the long term. Ideally with a permanent revenue stream through a subscription model and regular debits by direct debit or credit card.
But one does not exclude the other. Try to convince a prospective customer of your product by a micro payment via Bitcoin and win him as a new customer. Subsequently, to convert the customer into a regular customer with an attractive subscription model.
Application examples for micropayments
Worldwide potential customers and new target groups
Approximately 1.7 billion people, or about 31% of the world’s population, do not have a bank account. In addition, there are many potential customers who have a bank account, but do not get a credit card or PayPal account.
This group of people can now participate in economic life with the help of Bitcoin. Either to sell goods and services yourself over the Internet and receive Bitcoin in return or to pay with Bitcoin as a potential customer.
As an extension of the Bitcoin business model, it is a good idea to offer your current product to new target groups. Bitcoin is a payment method available worldwide, which everyone can use without restrictions. Maybe potential customers in China or Korea are interested in your digital product.
New Bitcoin Business Models
Every new technology has its own momentum and offers new potential and opportunities. It will be possible to realize new Bitcoin business models that were not possible with the previous payment methods.
Initial Bitcoin business models rely on Bitcoin-only models, where payment is made exclusively with cryptocurrencies.
There are particularly promising developments in payment and remuneration for content, digital goods and services.
Similarly, there are promising opportunities for microcent payments for videos, content, games, or newspaper articles.
But even for the normal online store that wants to sell its goods on the Internet can already benefit from Bitcoin as a payment method.
If you want to get an overview of the different Bitcoin business models that already exist, then take a look at the Bitcoin directory of Coinpages.
Summary
Bitcoin offers interesting potentials for new Bitcoin business models. Existing business models will change with the help of and because of Bitcoin.
Completely new Bitcoin business models will develop, which would never have been possible without Bitcoin. These can be Bitcoin-only business models, for example.
Likewise, there is a huge potential for Bitcoin Lightning. With Lightning, micro-payments can be realized on the Internet and, in theory, everything that used to have to be provided free of charge can be billed.
The advantages of Bitcoin as a payment method at a glance
Image Effect: Are you the first record store to accept payments in Bitcoin? Then advertise with it. And in 5 years, you can advertise that you’ve been accepting Bitcoins for 5 years.
The costs for Bitcoin payments are many times lower compared to other payment methods (e.g. credit card, PayPal) (mostly below 1 percent of the total amount, sometimes even free!).
The paid amount is transferred within a few seconds to minutes and is immediately credited to your wallet.
Bitcoin payments are irreversible. The customer cannot charge back his amount like with a credit card or PayPal.
Bitcoin is borderless and can be used anywhere in the world. Perfect for internationally oriented stores that have their customers all over the world.
It doesn’t matter if you want to accept Bitcoin in your business because you:
- Are convinced of the positive development of the technology.
- Because you actively want to set a good example for the spread of Bitcoin
- Because you want to earn bitcoin to own bitcoin yourself
- Because you want to benefit from the positive image and increase in awareness if you also accept Bitcoin (and submit to Coinpages and other Bitcoin directories).
- because you want to implement a Bitcoin business model that would not have been possible without Bitcoin
There are a variety of good reasons to accept Bitcoin or consider the topic. Learn how to integrate Bitcoin as a payment method in an online store or accept it in a retail store in the various posts and instructions at Coincharge.
