By making use of Payment Service Providers, ecommerce websites are able to transact and so transfer money in exchange for products. Money is nothing more than tokens that was, until recently, controlled by nation states. The Dollar is controlled by the United States, the Pound by the UK Government and the Euro by a group of nation states. Bitcoins are another form of money and just like Pounds or Dollars they can be exchanged as a currency. The Bitcoins are created and value exchanged by a digitally connected community rather than a nation state. Anyone can be part of the community. You store the bitcoins in a secure electronic wallet and you can trade them on sites such as Etoro, Paxful or Gdax.There are only around 12 million currently in circulation. It will be possible for the community to create a further 9 million but after that no more will be created unless the currency protocols change {ref}. Recently, the value of bitcoins are risen sharply.

Much of the rise in the value of cyber currency has been down to wealthy (and even not-so-wealthy) Chinese individuals keen to get their assets out of China. I had expected the growth curve to head South when the Chinese Government outlawed this new form of currency {Ref}. The main reason why this has had next to no impact on pushing down bitcoin value results from all the VPN leaks in the great firewall of China {ref}. When there are big sums of money involved, it seems that state control of digital borders doesn’t seem to be much of an impediment. Part of the challenge faced by national Governments is that, in a connected world, it’s not just that people can transfer money directly, they can also use bitcoins for trading purposes, i.e. ecommerce.PayPal started accepting bitcoin payments back in May 2017. Braintree is operating a private Bitcoin beta via coinbase {ref} - but only in the US. Several companies are dabbling with accepting bitcoins directly but the hyperinflation surrounding the currency means that few are taking the plunge. Uber is just one example {ref}. In Germany, the Government has accepted Bitcoins by declaring them a ‘unit of account’ {ref} while Barclays was the first UK bank to (sort of) accept them as legal currency {ref}.The issue is that for a standard ecommerce business to accept bitcoins means that you end up with a two speed business. One is a highly predictable ecommerce business. It operates (usually) on low margins where high growth is invariably down to the ability to engage with new markets, conversion optimisation, cost efficiencies or just good old-fashioned productivity. The other business involves currency speculation and is moving at light speed and in wholly unpredictable ways. For example, an ecommerce company might purchase products at a wholesale price, add a margin and sell them on to customers. Some large ecommerce businesses operate with single digit margins. The ecommerce business might have to work for months to generate a profit that might then be lost in minutes through bitcoin currency speculation.The culture within ecommerce businesses is largely based around detailed analytics coupled with cautious, low-risk and data-driven decisions. If with ecommerce you had bought or sold the goods using bitcoins then the size of the currency fluctuation might completely dwarf the margin resulting from the ecommerce trade. To the ecommerce culture, bitcoins are an anathema, like playing dice with the devil.If you choose to accept bitcoins through ecommerce as payment for goods that have been purchased using traditional currency then you need to accept that you have two businesses rather than one. One business is based around highly predictable low-margin trade, the other is a high-risk currency speculation business. The two I see as opposites and, until bitcoin currency stabilises, incompatible. For that reason, for the present, I would not be recommending adding bitcoin payments to a normal ecommerce site.On a personal note, I need to declare an interest. In 2013 I was offered a wallet of bitcoins for less than $100 each. I turned the offer down and have regretted it ever since. My judgement at the time could only be based on an understanding of the technology which, of course, had nothing to do with their bonkers escalation in value. Is it worth buying them now given they have risen x10 within the year? Then as now, I really don’t have a clue.