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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

First impressions matter – how to win over investors immediately

(BUSINESS FINANCE) Impressing investors is nerve-wracking, but these tips can help you to nail your first impression.

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Going in for your first pitch meeting with investors can be nerve wracking—especially if you haven’t yet met these investors in person. Fortunately, if you land a solid first impression, you can set the right tone for the meeting, and make the rest of the presentation a little easier on yourself.

But why are first impressions so important, and how can you ensure you make one?

Let’s start with a recap of the benefits of a strong first impression:

  • A reputation framework. Our brains are wired to make quick judgments about our surroundings. Accordingly, we tend to judge people based on our first interactions with them, with little opportunity to change those initial judgments later on. If you strike investors as a smart, likeable, and capable person early on, they’ll see your pitch deck in a whole new light.
  • Memorability. First impressions stick with people. If yours stands out from the other entrepreneurs pitching these investors, they’ll be more likely to remember you, specifically, and therefore may be more likely to eventually fund your project.
  • Personal confidence. If you know you’ve nailed the first impression, you’ll feel more confident, and as you already likely know, confidence makes you a better public speaker. You’ll speak more deliberately, more passionately, and with fewer mistakes.

So how can you make sure you land this impression?

  • Arrive in a nice vehicle. Show up in a luxury vehicle, or at least one that’s been recently detailed, sends a message that you’re already successful. This isn’t a strict necessity, but it can speak volumes about what you’ve already achieved, and how you might look when you drive to meet your future clients.
  • Dress for the occasion. Along similar lines, you’ll want to dress nicely. You don’t need to have ridiculously expensive clothes, but you should wear standard business attire that fits you properly and has no signs of wear. It’s also a good idea to get a haircut, shave, wear tasteful makeup, and make other small touches that improve your overall appearance.
  • Smile. Smiling is contagious, and it instantly makes you more likable. Don’t force a grin (or else you’ll look like a robot), but do flash a genuine smile as often as appropriate during the first few minutes you meet your prospective investors.
  • Use your investors’ names. When you speak to your investors, try to address them by name as often as possible. People love to hear the sound of their own names, so it might help you win their favor. As an added bonus, it will help you reinforce your association with their name and face, so you eliminate your risk of calling someone by the wrong name later on.
  • Warm up with something personal. It’s tempting to get down to business right away, especially because your investors’ time is limited, but in most cases, it’s better to warm up with something personal—even if it’s only a few lines of a conversation. Tell a funny joke you heard earlier in the day, or share an anecdote about how your morning has been going. It makes you seem more personable and charismatic.
  • Find a common link. If you can, try to find something in common with each of your prospective investors. You might comment that you got your tie at the same place they did, or that you use the same type of pen. Look for subtle clues about their personalities, lifestyles, and hobbies, and forge a connection through those channels. People disproportionately like other people like them, so the more commonalities you can find with your prospective investors, the better.
  • Watch your posture. Your posture says more about you than you might think. Keep your back straight with your shoulders back, and walk confidently with your hands out of your pockets. This is crucial for projecting confidence (and feeling it internally as well).

If you can land a great first impression, you’ll set the stage for a killer presentation—but don’t think you’re out of the woods yet. You still need to make sure you have a fantastic pitch deck in place, and enough knowledge on your startup idea to handle the toughest investor questions. If this is your first pitch, don’t worry – it does get easier – but the fundamentals are always going to be important.

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Business Finance

Anyone can invest in startups in a new, more bite-sized way

(BUSINESS FINANCE) With this new platform, startups can now seek funding in different ways than the traditional paths, using blockchain to set themselves up for financial success.

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Blockchain’s democratization of currency and investing continues to roll along, and it has just dug it claws into startup funding and investing.

A startup up called Securitize wants to offer an Initial Coin Offering (ICO) platform service for startups. The company believes this platform improves the equity experience on both sides of the aisle.

For startups, the ICO format streamlines the access to capital “without the overhead of needing to cultivate personal relationships and go through individual due diligence procedures.” Put simply, it takes less time and logistics to earn funding.

That trend of reducing logistical issues is also beneficial for investors. Traditionally, being a startup investor or equity holder is restrictive for numerous reasons. For outside investors, there are restrictions around investor accreditation to determine who can invest, and how much. Employees compensated with equity struggle with getting equity converted into an actual asset, if it ever gets converted at all.

According to Securitize, thanks to the ICO format, “investors can buy-in knowing the assets are completely liquid from day one.”

Furthermore, because currency investments differ from traditional business investing, more people can get in on the action.

That last point is important, since investing in cryptocurrencies this year is a bajillion times larger than the volume being pointed at startups. When these two world convene, startups get more eyes (and more dollars) pointed at their companies.

All that said, the floodgates aren’t open to free-market bedlam investing by anybody’s Uncle Ricky. Take 22x, a Securitize project that offers “tokenized equity in 30 startups – up to 10 percent of each.” For this project, you must be an accredited investor with a yearly income of 200k and a net worth over $1 million. These restrictions (among others) still allow Securitize to operate within the rules of US law; however, that barrier is still lower than traditional venture capital firm accreditations.

The implications of a more diversified set of funding will be interesting. Perhaps companies will be able to prioritize their journeys differently to align with new funding incentives. Its certainly a worth option to consider, and one that is important to follow as the first sets of companies embrace it.

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Business Finance

Startup offers Kickstarter campaign analytics so you don’t fundraise blindly

(FINANCE) If you’re considering using Kickstarter to fund your next big idea, you need to be armed with data so you’re not going about it blindly.

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You might have heard the common adage “if you fail to plan, you plan to fail.” If you’re starting a company, this rings especially true.

Whether you’re building software or a physical product, there are a lot of strategies to take into consideration, especially if you’re crowdsourcing funding.

If you’re planning on fundraising on Kickstarter, take a look at BiggerCake.

Created by Tross, a crowdfunding data and consulting firm, BiggerCake allows you to take a deep dive into the analytics behind a variety of Kickstarter campaigns.

(Author’s note: we normally don’t write about companies using Kickstarter because scams are rampant, but we know Kickstarter has been a useful tool for a lot of companies.)

So here’s how BiggerCake works. Campaigns are separated into categories by industry, like art, design, journalism, and technology. From there, you can see within each category like most funded, most backers, and highest average pledge:

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Let’s take Salsa for example, a photobooth built to help you make money — it’s already raised over 817% of its goal and almost $250k.

You can see the data behind the backers and pledges from a daily and hourly standpoint, as well as a favorite feature of mine: the ability to view average funding per day and average funding pace, since you don’t want to end your campaign too early.

Don’t be an idiot: always look at the data. Seriously though, if you’re planning on using crowdfunding to finance any of your company, please take some time to look through this resource.

It’s an easy way to learn from other makers’ successes and failures from objective, data-based standpoints. And you know how we love some good data.

Besides the funding pace and average pledge, take a look at common themes among the most successful Kickstarter campaigns on BiggerCake, and ask yourself some of these questions:

-What time is best to release my campaign?
-Is there a common thread among the copy or graphics/videos?
-What are the most successful incentives?
-How can I emulate the best campaigns?

The best part? It’s free. And after taking a look at the ToS, it doesn’t look like there are any big catches, so take advantage of this free resource while you can.

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