Bitcoin: the biggest disruption of the history?
Throughout history, humankind used several instruments to value and exchange goods and services. Bartering, currency minted in metal and paper money endorsed by gold or central banks have been and are some of them. But recently a disruptive payment system arose based in the growing technological and communication capabilities. We are talking about bitcoin.
We are not getting in deeper details about bitcoin as it’s not the purpose of this post, but basically a bitcoin is as a peer-to-peer payment system, where there is no intermediary thus users can transact directly. A public database records the transactions and the bitcoin is the unit of measure for the ledger recording . A huge computing mining generates bitcoins, as a way of rewarding the verification and recording payment processing. Users can also obtain bitcoins via exchange for other currencies, products and services.
Key questions about bitcoin and procurement
Despite all the security, financial and legal setbacks in relation with bitcoins, more and more enterprises and retailers are accepting them (100,000 according to February 2015 industry figures), based mainly on their trading advantages – like transaction fees lower than the credit card ones. Thus it’s rightly wonder from the procurement point of view if the organization can use bitcoins to pay the organization’s goods and services. These would be some questions that the company (basically the procurement, legal and finance units) could make it regarding that:
- Has the supplier authorization to receive payments in bitcoins? Is there any legislation regarding that in the country where supplier has its principal place of business?
- Which is the financial cost to obtain bitcoins – assuming that the company decides to use them and not have it yet ?
- Which is the payment due date? One-time payment or there are installments? Note that despite the fact that bitcoin value is somehow volatile, in the long run trends upwards.
- The payment will be local or international? If the latter it’s the case, there could be great savings associated.
- As the chargebacks are impossible due to bitcoin’s nature, how is the supplier credit policy? In-store? “Traditional money” refund?
- Has the supplier a product retention policy in place until receives the bitcoin payment confirmation? If so, how many time?
Putting it all together
The answers from the above questions form the basis from which the organization can analyze and decide if it is worthwhile the bitcoin usage. In conclusion, as a procurement professionals we should think about bitcoin as an another way to give value to the organization and in what extent can contribute to that goal.
Note – disclaimer: This post constitutes the doctrinaire / personal opinion of the author. Do not constitutes a legal, commercial, financial and / or any other professional advice.