Denver Bankruptcy Attorney, Benjamin Yablon, announced today on HaystackHelp Radio that his firm is accepting Bitcoins for legal services. This is believed to be the first law firm in Colorado to do so. According to the Greeley Tribune, the Cosmic Mart in Greeley became the first company in the United States to officially begin accepting Bitcoins for common goods like gas and grocery items.
Overstock.com, The Sacramento Kings, TigerDirect and several Las Vegas Casino's have all made the decision to accept Bitcoins. The list is growing because businesses and nonprofits recognize and are embracing this new and growing payment option.
Why all the interest? According to the Cosmic Mart Owner, Shahzad Sarwar, this their way of attempting to bypass credit cards. Sarwar claims they could hire two more full time employees for what they pay in credit processing fees. Though there are many benefits, the savings in processing fees paired with the security Bitcoin offers is why businesses and nonprofits are taking notice.
Many companies rely on credit card processing as a necessary evil. Nearly everyone has a credit card and they are using them. The problem lies in the processing fees, which is a large expense for businesses. Consider this, our local food co-op pays $23000 in fees per year. It's not uncommon for charities earning as little as $20,000 per year to pay $600 or more in fees. Now keep in mind, these are fees charged to accept money in a different form other than cash. How is this so different than Bitcoin? The answer is it's not.
Typical charges for credit card processing ranges from 2.9-3.2% + 30¢ for each transaction. Nonprofits are offered a discount of .1- .3%. A small nonprofit earning $20,000 per year is typically charged 2.9% +30¢ per transaction, costing about $685 per year. It may not seem like that much but consider this, for a charity feeding low income families, this could feed another 8 people. Now imagine this nonprofit is 5 years down the road and the annual income $100,000 per year, (which would be AMAZING), that would be over $3000 per year to just process credit cards. In this example that would feed another 40 people.
The fee savings are just one of the benefits to accepting Bitcoins. Another is the time it takes the money to be deposited it into the businesses account once the payment is processed, which can be as long as 5 business days with credit card and bank transfers. A Bitcoin purchase or donation is confirmed in as little as 10 minutes and is given directly to the charity or business, no middleman, no fees, no credit cards, no charge-backs. The transaction is final. There are small fees but in the range of 1-5¢ per transaction.
It was reported that a BitCoin transaction worth $6.5 Million was completed for the processing fee of 6¢. This is UNHEARD of. If this transaction were to run through Paypal, it would have cost $188,000 in processing fees and had it gone through the bank, which usually charges 3.5%, it would be have cost $227,000. Now image what could be accomplished if these fees were not going to banks and processors but instead remained with the business or charity.
It makes sense for businesses to consider utilizing Bitcoin in light of fee savings, rapid processing times and the avoidance of credit card breaches and database hackings. These benefits don't apply to just businesses and charities but to all people. This is a peer to peer currency. According to CNN, “BitCoins is the Napster of Finance.” Think of the way Napster changed music and file sharing, that is exactly how Bitcoin will change finance and our money transactions.
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