The House Small Business Committee heard testimony on the potential risks and benefits for small businesses that accept the virtual currency bitcoin on Wednesday during a hearing.
Introduced in 2008, bitcoin allows people to digitally exchange currency through the Internet. It has grown in popularity as an alternative payment system despite not being backed by a government or other holding entity.
“Rapid changes in technology such as bitcoin can create both opportunities and risks for small business,” House Small Business Committee Chairman Rep. Sam Graves (R-Mo.) said. “We want to help small businesses navigate this issue by providing information to help them with these considerations. I’m pleased with our thorough discussion of this alternative payment method. (Wednesday’s) examination of bitcoin’s potential pitfalls and advantages added to the committee’s knowledge base and will inform Congress’s decision-making as virtual currencies are more widely used and come under greater regulatory scrutiny.”
George Mason University Mercatus Center Senior Research Fellow Jerry Brito said bitcoin has the potential to be a “permissionless” innovation that drives economic growth.
Coinbase Director of Business Development Adam White noted challenges that international bitcoin transactions pose.
“Because of the borderless and global nature of bitcoin, a bitcoin payment made by customer in New York looks identical to a merchant as a bitcoin payment made by a customer in London, Buenos Aires or Tokyo,” White said. “Moreover, there are no international currency conversion fees associated with bitcoin payments, so merchants can sell low margin items just as profitably abroad as they do domestically. The ability to easily begin accepting payments from customers around the world can open up whole new markets for merchants and significantly improve top-line revenue.”
Boston University School of Management Executive in Residence and Master Lecturer Mark Williams said businesses that are willing to adopt virtual currencies could gain a competetive advantage over those that don’t.
“However, blindly adopting technology without understanding the full risk implications can be hazardous to a company’s financial health,” Williams said. “Bitcoin is an example of new technology that has clear promise, but also poses a multitude of risks for both businesses and consumers.”