So You Want to Accept Cryptocurrency on Your Web Site! Let’s Conquer the Hurdles
After the meteoric rise of Bitcoin and other cryptocurrency values in late 2017, many web site owners are now asking whether it’s a good idea to integrate cryptocurrency into their web sites for purchases and/or donations.
While there are tons and tons of web articles about cryptocurrency in general these days (many focused on investing), there aren’t many written from a web developer’s perspective. So, let’s take a look at this phenomenon and see if it makes sense for your web site at this time.
Account Setup and Corporate Bureaucracy
The first barrier to all of this is that, in order to accept crypto, you need to be able to receive it and store it — and you probably also would want to be able to transfer it and/or liquidate and withdraw it. For smaller companies, this is a fairly easy task that can be handled in a few ways by a trusted stakeholder. An easy option is using a giant site like Coinbase.com.
Coinbase is pretty much the standard site where you’re going to want to sign up, no matter who you are, if you’re in the U.S and want to experiment with crypto — specifically, Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Litecoin (LTC). → → Here is a link to get you started. ← ← And, although this is NOT the point of this article, please know that if you sign up via that link, which you’re going to need to do anyway, they give me $10 … so it’s a referral thing, true, but like I said, you will need this account anyway, and it’s free for you!
Update: Whatever you do, DON’T use a CC to buy BTC or any other crypto. This used to be quite common, but these days most CC companies treat such purchases as cash advances, which will incur transaction fees and also exorbitant interest rates.
For larger companies, where accounting and legal departments get involved in steps like this, I suspect the process will be much slower than the one I just broadly described, as such corporate departments will (rightly) want to implement various controls and policies related to many aspects of this new avenue. I’ll touch more on this later.
So, right away, smaller organizations and independent web site owners are at a bit of an advantage, at least on this front, because a single person can get this setup rather quickly.
Testing the Waters
To get a feel for how this works, I’ve setup some various accounts for myself at a number of online exchanges to purchase some cryptocurrency and move it around, simulating buyer-seller transactions. The main point of this was to establish some wallet addresses — virtual addresses to which anyone can send certain cryptocurrencies. I’ll show them below. (Again, go to Coinbase to get your wallets setup, as it’s free and easy.)
All in all, it is a fairly smooth, straightforward experience. But, that’s coming from a user (me) who works with technology all day, every day. And, even for me, there were a few moments where I had to read things a few times — usually because the concepts were new or a little confusing with terminology I hadn’t encountered before. Crypto tends to require two skill sets: tech and finance. If you’re fairly savvy in both of those worlds, you’ll do great!
But, if you’re non-technical and/or non-financial, you may need to involve a trusted outside individual for guidance, and that person’s time may cost you a bit of money as well. Keep that in mind as part of your cost-benefit analysis on whether to “go crypto” with your business.
And that brings us to the next hurdle, which is that crypto isn’t yet mainstream. While “crypto” and “Bitcoin” are indeed buzzwords today, the percentage of the population that actually has gone through the trouble of obtaining some (and using it) is considerably less. Ask around at your work (assuming you’re not in Silicon Valley, anyway): How many here own cryptocurrency? I’ll bet it’s a low percentage still. Of those holding it, chances are fairly small that they’re actually using it; quite a lot of people who own it are actually doing so for speculative investing purposes.
So, as a business owner or web site manager, you have to ask yourself who your target demographic is, and whether they (1) possibly own cryptocurrency now and might use it, and/or (2) will consider getting it and using it for your business, especially when normal money transactions (cash, checks, credit cards) work fine.
You might weigh those considerations against the possibility that, by accepting cryptocurrency, you may well expand your customer base. (And, don’t forget, for some sites with larger user bases, you also have the opportunity to encourage Coinbase account signups, just as I’ve done above. That, alone, is worth $10 per signup. And no-doubt other exchanges also offer incentives like that. So, a large site could earn a few dollars in this manner.)
Right now, the fact that you accept crypto as payment is still fairly novel, and may garner some attention. So, it’s a nice marketing initiative, really, as ot confers a bit of tech-savviness to your business. Although, as far as actual results go, I would also point out that on my own web site as early as perhaps 2013 or 2014, I put a small badge and some text about how I would accept Bitcoin as payment. I figured why not… But, no one ever offered to pay me that way.
It’s too bad, really. Can you imagine if I’d done, say, a $10,000 web site, and maybe forgot about a few Bitcoins in my virtual wallet? At around $11k each (today), that’s a tidy sum. Here’s a story of how that happened to someone famous, in a major way:
50 Cent has discovered that he is a Bitcoin millionaire, thanks to some long-forgotten album sales. In 2014, he…www.bbc.com
Once you have an account to receive your cyypto, and customers willing to spend them, the obvious element still missing having something to sell and/or asking for donations. Let’s look at those scenarios:
Donations and Other Non-Merchandise Transactions
So, let’s say you’re a blogger, or maybe a nonprofit looking to take in some donations in this manner. In this case, any further barriers are very low. All you need to do is to publish your wallet addresses (such as the ones I’ll show below, created at Coinbase) on your web site or other marketing materials (e.g., via a QR code) and you’re basically ready to go. Here’s an example:
Donate Bitcoin (aka “BTC”):
Donate Ethereum (aka “ETH”):
Donate Litecoin (aka LTC):
Those are all REAL wallet addresses that I made at Coinbase in about 1 minute. (And yes, you can send me actual cryptocoins right now, if you like, at any of those addresses.) You’ll find that creating these wallet addresses is very easy, and you can create multiple ones.
For example, you might be a nonprofit and want to make up two Bitcoin wallets and two Ethereum wallets, and you might have a web page where it says “Support Our Organization” with two sections below: (1) one for operating expenses, and (2) one for program expenses.
In the Operating Expenses part, you would publish your wallet addresses for BTC and ETH that are designated for that purpose. In the Program expenses, you’d do the same with the other BTC and ETH wallet addresses. This is just one of an almost infinite number of application ideas for this technology.
One More Note for Nonprofits
I might add, for nonprofits especially, that your finance committee would probably want to have a discussion about policies regarding donated crypto, as the funds are not guaranteed to stay constant such as they do in a bank account. If someone donates 10 BTC to your organization, as of this writing, that would be worth $108,990. Tomorrow, that could well be worth $90,000 or $120,000 (or any other number you pick out of a hat). (One potential solution is to look into “Instant Exchange” on Coinbase, which will automatically convert incoming crypto to USD and store it in your online USD wallet so that the money is not affected by market swings.)
Also, although my example doesn’t show it, note that you need not think in whole numeric increments with cryptocurrency. You usually can still think in dollar amounts, and your crypto will be converted to decimal via tools offered by online services. So, if something is listed for sale, today, as $99, then that’s .00895 BTC. You needn’t buy BTC or any other coin in whole amounts, either; you can easily purchase any fractional amount of cryptocurrency to get started.
Payments for Merchandise
I find this scenario potentially headache-inducing, depending on your web site setup. It’s true that Coinbase has some great-looking ready-made tools for merchants. It’s probably a good idea to start there when looking for solutions. Bitpay is another popular solution. But, the ways in which a web site can handle ecommerce are many. If you happen to have your online store organized in a ways that meets any of the models offered in that link, then you’re in luck.
If not, you’re looking at fairly high development costs at this time, and you may also need to revisit some of your processes involved in your online sales.
For example, a crypto-based transaction is not always as lightning-fast as, say, a Visa transaction. So, the coding required to handle potentially very long delays would need to be addressed.
- For sellers: Merchant fees seem reasonable, at the moment. If you keep your crypto at Coinbase (which, again, is not your only option, but they’re perhaps the largest player in the U.S. at the moment), there’s no charge or transaction fee to accept payments. (I guess they profit from the float.) They then charge a 1% transaction fee for liquidating back to dollars. (If you move more than $1 million/month, the fees are less.)
- Fees buyers: Fees incurred for using crypto would vary depending on who the user is and what wallet they are paying from. As I understand it (and I admittedly might not yet be fully informed here), within the Coinbase network, the fees for all parties are fairly well defined and set. But, not all of your customers will be from the same crypto-universe.
There are many, many ways to store Bitcoin, for example, completely outside of that one single exchange. As I understand it, the sender (buyer) pays transaction fees, and such fees can vary depending on the transaction amount, time of day (i.e., business of the network) and other factors. And these fees have gone from relatively small to ridiculously high, making small transactions absolutely impractical for some currencies like the largest one, Bitcoin.
That all said, adoption from sellers will no-doubt continue. I’ve heard of incentivized crypto pricing from sellers, for example, where the USD price may be X but the BTC price may be a bit lower. This would be because the seller is saving money on merchant and transaction fees. But, again, whether a user is willing to pony up what is increasingly becoming a rather high average transaction fee; that’s another question, perhaps beyond the scope of this article, but one that should be a part of any seller’s pricing strategy.
But, back to web considerations for the moment… Even as a web developer myself, I’ve long held that,for certain types of web sites, it’s usually better to use an ecommerce platform rather than to build it yourself. At least, until you hit some critical mass where you have a substantial budget, it just makes life so much easier. So, what I would personally recommend, would be as follows for various web scenarios:
- Very Small / Independent Businesses: Sure, run your Wordpress or whatever, and a small online shop, and look into the Merchant tools mentioned above to see if they can be readily integrated with whatever you use to manage your shop offerings. If not, probably don’t pursue this, at this time. However, if you’re so small that your shopping pages are one-off listings of various items or services, and your sales tend to trickle in slowly, then you may be able to offer crypto as an option where you handle each transaction manually. You could publish your wallet addresses (or send it privately upon inquiry) and accept payments that way.
- Small- to Mid-Size Businesses Doing eCommerce for Merch: Find an ecommerce platform that allows crypto payments like Bitcoin, Ethereum, and maybe a few others, and port your web site’s ecom store to that. Shopify, for example, allows Bitcoin, according to their web site. So, right there, that’s a great place to start looking. (Make sure to research this issue on the platform site itself because platforms are currently reevaluating their offerings vis-a-vis crypto, and whatever you read on some random site might not be current.)
- Large Enterprise Sellers: If you’re running a large, custom-coded ecom site, you may want to look into an API-type solution, such as the Coinbase Digital API. Through this, you can accomplish something similar to custom-scripting, say, the same functionality with Authorize.net. Although, keep in mind that, as transaction times are not always as fast as credit cards, you may need to be more flexible in your overall process and strategy.
- Nonprofits and Independents Seeking Donations: I’d say it’s high time to at least make this type of donation an option. It’s very low-risk, and there may well be a few new Bitcoin millionaires in your circles who may be feeling philanthropic.
In any case, the above hopefully provides a broad overview of my own opinion on this growing trend. If anyone has any questions, please feel free to drop me an email and/or a response here. Or, if you’re a crypto-expert and I’ve misrepresented anything, I’d also love to know.
💰 Jim Dee heads up Array Web Development, LLC in Portland, OR. He’s the editor of “Web Designer | Web Developer” magazine and a contributor to many online publications. You can reach him at: Jim [at] ArrayWebDevelopment.com.
Feeling Crypto-Generous / Crypto-Thankful?