Everyone is talking about Bitcoin, the new secure way to transfer money globally. This technology is fast growing, and it offers many benefits such as its low cost and independence from banks or financial institutions. Let’s take a closer look.
Bitcoin: Why use it?
International businesses that deal with various currencies in different countries will be the major beneficiaries of the Bitcoin technology. This is because Bitcoin is an easier, faster and cheaper method of payment than others currently available on the market.
Bitcoin is a decentralised payment system, where anyone can build up a node that stores the whole blockchain to support and verify the transactions. This system is very resilient to attack because in order for the money to disappear, all nodes must be shut down.
Owners have a private key to get back any coins stored in one or more public addresses. To make a transaction, the sender needs a smartphone app, a web service or a PC software, where the private key and the amount to be sent are filed. The receiver only needs to supply their own public Bitcoin address and they will be able to immediately see when a transaction has been completed. All these transactions are registered in a blockchain, a digital system that traces all the exchanges of digital coins.
60% of the world’s digital currency transactions take place in Japan. Switzerland comes second, and there you can even top up your Bitcoin wallet at any ticket machine belonging to the national rail system. In the Swiss town of Chiasso you can even pay local taxes in Bitcoin.
The legal framework that applies to cryptocurrencies in some countries is entirely uncontrolled, like in South Africa, whilst other countries have some regulations in place. Make sure you do your research before offering this option in your international markets. No VAT is due on conversions between Bitcoins and others currencies in the EU; however, you have to pay VAT on purchases made with the currency.
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