Cryptocurrencies_16. What are the risks involved in accepting bitcoin

Lesson 16: What are the risks involved in accepting
bitcoin

You should consider the possible risk that fraudsters could send counterfeit invoices
to your customers, and entice them to make a payment to a Bitcoin address they
control, instead of you. While that isn't likely in general - it depends on how well a
fraudster could find out who your customers are in the first place - it would certainly
be an unpleasant situation if it ever happened. One way you could control that is,
whenever possible, never let people try to type Bitcoin addresses off payment stubs -
instead, force people to get the full Bitcoin address from your website via secure
SSL. But, still print most of the address on the payment stub (perhaps with four or
five characters starred out), so that the customer's need for a paper trail can be
satisfied, so they can prove they paid if there is ever a dispute. Merchants can also
use the IP address geolocation to understand the close proximity of users. There is
automated solutions such as FraudLabs Pro that automates the screening of Bitcoin
transactions to determine risk level.

A sales contract might be used to ensure that specific terms are met to lessen the
chances of a misunderstanding. For instance, the party sending payment is
responsible for paying any transaction fee that might be necessary. A contract might
specify that a transaction fee must be paid and what amount, so as to prevent the
situation where the transaction is considered a low priority transaction and thus isn't
confirmed quickly.

When a business accepts bitcoins for payment, there generally is the need to
convert them to the currencies used for paying suppliers, employees and
shareholders. Some merchants set prices based on the current market rate at the
time the price quote is presented to the customer

Bitcoin Prices lists the exchange rate for many currencies on multiple exchanges.

When prices are determined using an automated process, the current market rate
can be based on either a current price or on a weighted average basis.

When bitcoin funds for purchases are received, some merchants instantly exchange
those proceeds into the preferred currency used. Hedging for each transaction can
nearly entirely eliminate exchange rate risk that the business is exposed to when
accepting bitcoins for payment.