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Bitcoin use is on the rise – what your company must know

(Business Finance) Bitcoin is a digital currency that is making waves, and could impact your business, whether you understand the concept or not.

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Cryptocurrency use is on the rise – better get a grip on it

You may have heard the terms Bitcoin, Silk Road, cryptocurrency, PeerCoin, CoinFunder, and so forth, and if you’ve turned a deaf ear because it sounds geeky, that’s a mistake. Cryptocurrency is a digital currency that some say is a fad, others insist it is the currency that will eventually become mainstream.

Victoria Treyger, the CMO of Kabbage, which provides working capital for small businesses. She says she joined the company because she loved the message: To understand customers better and provide them with cash when they need it. We’ve been writing about Bitcoin for years, and Treyger agrees that Bitcoin and other digital currency is important to business.

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“Bitcoin use is on the rise; however, most people today still do not understand the use, distribution, and regulation of Bitcoins. The big question concerning Bitcoin and your small business is whether you should accept Bitcoins in the first place,” said Treyger.

She adds, “There are many advantages and disadvantages in implementing Bitcoin into your business plan. Yet at the end of the day, it’s a decision you as a small business owner need to make when taking into account Bitcoin’s regulation, security, value, taxes, security, and acceptability.”

Because Bitcoin is inexpensive and fast, it is popular in the financial world, and Treyger says it is “tech-forward, which also garners many followers for the digital currency.”

Bitcoin is not currently regulated by any government agency, Treyger notes, so it is an international form of currency available to anyone with Internet access. So far, not many businesses accept Bitcoins, making Bitcoins difficult to spend and seemingly useless even as their exact value fluctuates daily. So will the Bitcoin bubble eventually burst?

In her own words, Treyger dives into what Bitcoin is, how it works, and what you need to know for your business.

Who regulates Bitcoin?

Bitcoin currently has no government or protocol regulation. Instead, there are Bitcoin miners who essentially process Bitcoin transactions and secure the network. Because there are so many Bitcoin users spread out across the world, it is highly improbable that a form of regulation will ever be implemented.

So far, the only type of regulation that could emerge is some sort of government regulation that either bans the use and distribution of Bitcoins or designates laws for legitimate uses of Bitcoins. And if a regulatory system were put into place, it would create higher transactions costs for Bitcoin, taking away one of its main advantages. Bitcoin is also resistant to any form of regulation, which makes it potentially the prime type of currency for questionable activities.

Bitcoin is argued to not be a legal currency. Its value fluctuates and changes daily, and the volatile nature of Bitcoin’s value could cause the bubble to pop due to the perception is gives to users. As a Bitcoin user, you can hold onto your individual Bitcoins in the hope that the value increases or you can exchange them into legal tender for their current projected value. If the value of Bitcoins steadily decreases for a long enough period of time, it could cause users to sell all of their Bitcoins, causing the Bitcoin network to crash.

Is Bitcoin secure?

Fraudulent use of bank accounts and credit cards can be reversed easily, yet Bitcoin does not offer the same services. All Bitcoin transactions are final. The only person who can decide to issue a refund through the Bitcoin network is the person who has the currency in their Bitcoin wallet.
A wallet is a digital platform that holds your Bitcoin codes for fast, simple, and easy use. Because there is also no Bitcoin regulation, no Bitcoin user can be forced to issue a refund.

Consumer losses are generally greater on the Bitcoin network than any other payment plan network because of the lack of mandatory refunding. Most other payment networks set up consumer protection to avoid stolen funds and hackers. So if your Bitcoins are stolen or lost due to network failure or hacking, there is no way to ever get them back and there is no sort of insurance on them.

To turn Bitcoins into legal currency, a Bitcoin exchange must be used, which charges a small fee and also opens your wallet door up to hackers. The FDIC does not protect Bitcoin wallets either, so wallets are constant targets for hackers.
Exchange sources are also large targets for hackers because they receive thousands of keys to wallets every day to perform exchange transactions. If their network is compromised, all of those Bitcoins are gone for good. Bitcoin software is still being developed to try to make the system as a whole more secure and accessible, but for now if you insist on using Bitcoins, exchange them quickly.

User error also leads to a lot of Bitcoin security issues every day. Bitcoin wallets essentially hold keys or passwords for Bitcoins that can be accidentally deleted, lost, and stolen. There are independent insurance companies that offer insurance on Bitcoin wallets as well as third party service providers that can handle all of your wallet information for you. Bitcoin is still currently working on security procedures to implement to give their users greater protection.

What is the value of a Bitcoin, and how do I handle Bitcoins during tax time?

Bitcoins gain value based on consumer and merchant implementation into use. Bitcoins are only valuable if they can be accepted as a form of currency, and this is backed by the trust that its users instill into it when they purchase them.

The value fluctuates based on amount sold and distributed. There is a fixed amount of Bitcoins that will be sold to the public, and as demand for Bitcoins increases, so does its value. Bitcoin’s price is determined by this same principle of supply and demand. Because there is a predetermined number of Bitcoins, which are distributed at a decreasing rate, demand for Bitcoins outweighs supply, keeping inflation at bay.

Because the Bitcoin market is currently so small, the price of Bitcoins is extremely volatile. If your business accepts Bitcoins, depending on the day, you could gain or lose money based on exchange rates. Inflation could cause the downfall of Bitcoin eventually, leaving them worthless. Technical failures, waning interest, and government regulation could all garner Bitcoins useless one day.

Despite that Bitcoin is not a legal form of currency, tax issues still arise. Not claiming Bitcoin income could lead to audits from the IRS. For now, there is no exact way to designate the value of your Bitcoins for tax purposes but regulations will eventually be put into place.

How widely are Bitcoins accepted?

Widespread use of Bitcoins as currency has not fully taken off yet, if at all. Few businesses accept Bitcoins, which make it hard to spend and use them. This is probably because a lot of people still don’t even know what Bitcoin is or how to use it properly.

Its use is so small, which makes the value extremely volatile. Bitcoin can be seen as unstable, which deters more people from implementing it into their business plan. As a result of its unpredictable nature and potential use in questionable activities, most merchants have not accepted Bitcoins as a form of payment for their stores.

When considering whether to accept Bitcoins as a form of currency for your small business, there are a few key things to remember. Bitcoin transaction fees are quite small, usually between zero and one percent. Because Bitcoin is a digital form of currency, there is much higher risk of fraud and hacking, and all transactions are final, meaning there is no consumer or merchant protection plan put in place to keep your Bitcoins safe.

Bitcoin and consumer protection

Because Bitcoin lacks these basic consumer protections, a lot of customers could be deterred from buying from vendors who use Bitcoin as their primary payment type. The fluctuating value of Bitcoins also means that your business could lose or gain money each day based on Bitcoin supply and demand.

Because no government agency currently regulates Bitcoins and Bitcoin is an online marketplace, it is extremely vulnerable to fraud and hacking. The risks for a small business are equal or greater than whatever benefits you could get out of using and accepting Bitcoins. The major thing you need to think about is liquidity and whether you want to have your business tied up in Bitcoin currency.

Bitcoin is extremely risky, which could be part of its appeal, but think about what the consequences are for you and your business. For now, it is hard to tell what the future of Bitcoin is. As a small business owner, you have a few things you definitely should take into account when determining whether accepting Bitcoins as a payment method makes sense.

The American Genius is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.

Business Finance

Ramp: Corporate card launches to push you to spend LESS

(FINANCE) Ramp up your biz with higher credit lines and simple tools for expense monitoring. Ramp wants to take your worries away with their features.

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You launch your startup. You get the business going and need corporate cards for expenses. Standard issuers may decline to serve you because they see your business as a risk. Or, they offer you a low credit limit. But, you need to purchase pens, paper, coffee, and beer (you are a startup).

Before you head down the rabbit hole of “how will we pay for all those breakfast tacos?” there’s a new corporate card company ready to serve your needs. Ramp launched recently with the goal of providing higher limit corporate cards for startups.

Not only does Ramp provide corporate cards, it makes it easier for businesses to control employee spending. Rather than giving everyone a card with unlimited spending amounts, or only giving cards to certain employees, Ramp allows you to create spending rules and set spending limits for employees.

Also, there are no fees for using the cards. Every employee can have their own white card without any fees attached. The company plans to earn income through transaction fees, just like other card companies.

And, according to this story in Tech Crunch, Ramp allows you to integrate with some accounting software and to centralize receipts and attach them to expenses.

The company has launched with $25 million in backing and has several high-profile startups already using its services, including Candid, Truebill, 8 Sleep and Ro.

To make things easier for companies, Ramp offers a flat 1.5% cashback rate across the board on all purchases, whether you take a ride share or purchase computers, you get the cashback regardless. Ramp said startups can expect limits set 10 to 20 percent higher than traditional card companies.

The company may create competition for Brex, which launched in 2017. Unlike Brex, which has a more complicated points systems, Ramp aims to make cashback, monitoring and setting spending limits a simpler process.

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Business Finance

Why product liability insurance is critical for companies

(BUSINESS FINANCE) The best way to protect your company, and more importantly your customers, is product liability insurance. It keeps your standards up, and lawsuits down.

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If your small business manufactures products, you need to think about product liability insurance. No matter how good your designs are, or how polished your quality assurance strategy is, there’s a chance one of your products could come to harm a customer. And if that happens, your customer could contact a personal injury attorney and bring a case against you. Personal injury cases are somewhat common, and could cost you hundreds of thousands, if not millions of dollars if you’re not protected.

Product liability insurance coverage could protect you in the event of such a case. But what exactly is it, how does it work, and how are you supposed to get it?

The Basics of Product Liability Coverage

Let’s start with a high-level overview of product liability insurance. While different carriers and different policies will afford you different types and levels of protection, most product liability coverage is designed to shield your business from the fallout of a company-produced product that causes injury or harm to third parties.

Product liability insurance typically covers the legal fees associated with any product liability lawsuit, as well as medical costs, compensatory damages, and business damages that arise from the incident.

How Products Can Fail

How does a business become liable for a harmful product?

There are four main ways consumers can be harmed:

• Design flaws. If your product is designed in some flawed way, and the consumer gets hurt because of it, they could have a case against you. For example, if you create a deep fryer product with a locking mechanism to prevent burns, but that locking mechanism is weak or easily overridden, a customer could get burned as a result of using the product.

• Manufacturing flaws. There could also be manufacturing flaws. The design itself might be practically perfect, but if a batch of products are made with an incorrect material, or aren’t made to specifications, they could still fail in a way that harms a consumer; for example, a skateboard with a loose wheel might cause someone to fall.

• Marketing flaws. Your product could also be marketed or advertised in a way that eventually leads to consumer harm. If you falsely advertise the capabilities of your product, and a consumer follows them and hurts themselves in the process, they could hypothetically sue you. The same is true if you claim there are no downsides to a product that has downsides.

• Misuse. Even if a consumer misuses your product, your company may still be held at fault. For example, if you don’t specifically warn a customer that misuse could lead to harm, and caution them against specific forms of misuse, they could ultimately bring a case against you.

As you can see, there are many ways your products could lead to a customer getting hurt—and some of them are hard to see coming. While you can implement safeguards at every stage of the process, there’s always going to be a chance that one of your products fails in some unseen, unpredictable way.

The Extent of Damages

You may wonder if you truly need product liability insurance. After all, in the unlikely event that a product fails, you may be able to cover the costs yourself. However, this is extremely risky. The costs of a single product liability case can be devastating, and if you face a class-action lawsuit, or multiple lawsuits, there may be no chance of recovery. Remember, you could be responsible not only for compensating the customer for their injury and their pain and suffering, but also for covering the legal fees of both sides.

Some cases can cost millions, or even tens of millions of dollars.

Product Liability Insurance Rates

Most product liability insurance policies require you to pay a monthly, or other type of regular premium for your coverage. These rates will vary based on a number of factors, including the size of your business, the type of product you’re manufacturing, the extent of your distribution, and how much coverage you desire. Some insurance companies may also want to conduct inspections, reviewing the design and manufacturing of your product firsthand so they have a better sense of your safety standards.

Still, product liability insurance rates are typically reasonable. Shop around for the right insurance provider, and consider bundling your product liability insurance policy with other policies to lower your rates even further.

Conclusion

If your business designs or manufacturers products, product liability insurance is a practical must. It’s easy to get a policy, and most policies are relatively inexpensive, but this safety net could save you from shelling out millions as a result of an unforeseen product flaw. No matter how safe your operations are, or how many supervisory checks you conduct, there’s always going to be a chance that someone is injured while using your product—and that’s when your policy will kick in.

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Business Finance

Small metros may have cheaper homes, but they might not have the jobs

(BUSINESS NEWS) Study by Indeed finds that small to mid-sized metros offer higher adjusted salaries, but don’t pack your bags just yet because your job may not be there

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When I told my parents how much my partner and I would be paying for rent at our new apartment, they quickly pointed out that I could purchase a home for that kind of money in my hometown.

Indeed recently published a study where they determined which cities have the highest salaries after accounting for the cost of living, an adjusted salary. Every city on the list is a small or mid-sized metro area which is why they dubbed their findings, “the small-city advantage.” No surprise to me, my hometown made the list.

My parents are right, I could literally buy a home for the amount of money I pay in rent every month to live in a large metro area. But the equation that determines where I, and many other workers should live, is more complex than salary minus housing.

Indeed’s study also shows that bigger metros have faster job growth and lower unemployment compared to these small to mid-sized metros. This is why the number one city on their list, Brownsville-Harlingen, TX, also has a higher unemployment rate than the national average. Some of the other cities on the list are Fort Smith, AR-OK, Toledo, OH, Laredo, TX, and Rockford, IL.

These areas are cheaper to live in, in part, because they may not offer the kind of job opportunities, and therefore social mobility, you see in larger metro areas. Sure, I could make my money go further in my hometown, but the chances of me finding a job in my industry there are smaller.

Your field of work does matter when considering whether or not the “small-city advantage” could work for you. If you work in tech or finance, two traditionally high-paying fields, then this advantage doesn’t apply.

“Before adjusting for living costs, typical technology salaries are 27% higher in two-million-plus metros than metros with fewer than 250,000 people. Even after adjusting for those costs, tech salaries are still 5% higher in the largest metros than in the smallest ones,” finds Indeed.

If a huge tech company offering thousands of high-paying jobs moved into a city like Brownsville-Harlingen, TX, over time it would get more expensive to live there. This is why people were freaking out so much when Amazon was trying to decide where to locate HQ2. It’s the hamster wheel that is currently driving income inequality in some of America’s largest major metro areas.

Finding the right place to call home is never going to be a single factor decision. Yes, salary is a huge factor, as is the cost of living, but there are also lifestyle factors to consider. What kind of opportunities would you have in this city? How much will it cost to move there? How will this effect the other members of your household?

It’s nice to play the ‘ditch the corporate world and buy a country house’ fantasy after a long day at work, but the reality is far more complex.

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