Why Your Business Needs To Get Ready To Start Taking Bitcoin Again
The reasons for Bitcoin’s stability are debatable.
PHOTO CREDIT: Getty Images
When Steam announced at the start of December 2017 that it would no longer accept Bitcoin, no one could blame it. Transaction fees had risen from twenty cents when the platform had started accepting Bitcoin, to as much as $20. After taking nearly four months to move from around $980 to a little over $1,000 at the start of 2017, the price of Bitcoin had jumped from just over $2,000 in mid-July to over $14,000 when Steam finally pulled the plug. It would top $19,000 a few weeks later... before dropping below $8,000 within a month.
With that kind of volatility, Bitcoin was no longer functioning as a currency. It couldn't hold its value. Buyers didn't know how much they were paying for a good or a service and suppliers had no idea how much they'd receive.
Those days though, are over. Bitcoin's dollar price on September 6 was $6,498. Two months later, the price was $6,466. Although the price had dipped by about $300 over that period, overall it had been remarkably steady. The 30-day volatility rate at the end of October was just 1.53 percent. That makes the cryptocurrency a more reliable form of investment than parts of the stock exchange. In October, as Bitcoin was bouncing around inside a narrow band, NASDAQ fell more than 9 percent.
The reasons for Bitcoin's stability are debatable. Volumes are much lower than they were when the price was rocketing, and have remained steady. It's possible that the speculators who rushed in when media attention was at its peak have either moved away or are holding on for another rise. There's less panic and less FOMO.
Whatever the reason, Bitcoin's new stability is a huge opportunity for entrepreneurs.
Bitcoin was intended to function as a currency. Customers were supposed to use it to pay for their goods, and businesses were supposed to be willing to accept it. Now that Bitcoin is holding its value, it can start to fill that role again. And that means big opportunities for retailers and suppliers.
More than $113 billion worth of Bitcoin is now sitting in wallets and on exchanges waiting to be spent.
That's a giant amount of money. For anyone who bought before last November, it can represent a giant amount of profit too. The value of those holdings might change very little now. They'll go up and they'll go down but their values might not change much more than a regular, fiat currency would change.
People who have been holding Bitcoin wondering how high it will go will now be reaching a point where they're ready to start spending it.
So businesses should be ready to start accepting it.
Steam was right to stop accepting Bitcoin when the price was a bubble, volatility was high, and transactions fee were exorbitant. But volatility is now low and set to remain that way. At little more than 40 cents, the cost of a transaction is cheap.
What is rising is a feeling that potential customers have billions of dollars' worth of Bitcoins and are getting ready to spend them.