Bitcoin payments are accepted by many merchants online, including several web hosting providers

Bitcoin Payment and Web Hosting – Is Digital Currency an Opportunity?

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Bitcoins can be used to pay for a variety of goods and services online. Some of the first purchases made using the digital currency when it was established three years ago are believed to have been pizza and alpaca socks.

Since then, Bitcoins have evolved and now are used in many legal (and illegal) ways. Most recently, SwitchPoker launched Bitcoin-only poker tables, and WordPress began accepting Bitcoin payment for upgrades to customer blogs.

Created in 2009 by Satoshi Nakamoto, Bitcoins are a digital currency that are not issued by any government, bank or organization.

Bitcoins are a global currency that do not discriminate against citizenship or location, and because of this, Bitcoin payment has been adopted by many merchants for political reasons. For example, WordPress began accepting Bitcoin payments last month since it wanted to make its services as accessible as possible. Due to the subject matter they write about or where they live, many WordPress bloggers need to remain anonymous, and Bitcoins help them do this.

To use Bitcoins, users must acquire a Bitcoin wallet and one or more Bitcoin addresses. The addresses are used to receive Bitcoins.

“The (Bitcoin) network is programmed to increase the money supply in a slowly increasing geometric series until the total number of Bitcoins reaches an upper limit of about 21 million BTC’s. Bitcoins are awarded to Bitcoin ‘miners’ for solving increasingly difficult proof-of-work problems which confirm transactions and prevent double-spending,” according to academic paper Quantitative Analysis of the Full Bitcoin Transaction Graph by Dorit Ron and Adi Shamir.

As of October 2012, Bitcoins were worth a little over $12 each.

To get Bitcoins, there are a few options. For users just starting out, there are many sites that offer free Bitcoins for doing things like tweeting sponsored links, or playing games like BitCrate or BunnyRun. More experienced users can place buys and sells themselves on real-time trading Bitcoin exchanges and the price is set by the market. The exchange may take a small percent or charge a fee on withdrawals or deposits.

There are also fixed rate Bitcoin marketplaces where a vendor sets a price where people can buy and sell.

A number of hosting providers already accept Bitcoin payments. On Wednesday, GigaTux announced that it would accept Bitcoin payments for services running on its Linux hosting servers in the UK and Germany.

“Although not officially recognized by many organizations, Bitcoin is a fascinating experiment on global money transfer and GigaTux is proud to participate in this economy,” the hosting provider said in a statement.

Recently, UK web hosting provider CubicWebs began accepting Bitcoin payments as “an early Christmas gift” to its customers.

In an interview with the WHIR, CubicWebs CEO Michael Dance says that accepting Bitcoins is sort of an experiment as he is still learning about the digital currency.

“Not a lot of hosts use it so you’re opening yourself into a new market,” Dance says. “I liked the idea of it and anyone can use it just by using the Internet.”

By offering Bitcoins, Dance hopes CubicWebs can open itself up to a new customer base, and differentiate from other web hosts that may not accept Bitcoins.

While the number of hosting customers that want to pay using Bitcoins may be minimal, there is not a lot of risk for a hosting provider to offer it as an option, alongside traditional payments like PayPal.

Services like Paysius convert customer Bitcoin payments into USD, or merchants can opt to keep the Bitcoins. Paysius promises lower fees than conventional credit card, PayPal or bank transfer systems.

The funds are available immediately, and there is no chargeback risk or risk of payment reversal. Since integration with Paysius is non-exclusive, hosts can keep their current payment methods.

For web hosts that use WHMCS, there is a Paysius WHMCS Gateway available.

While Bitcoins are relatively easy to start accepting, there is a bit of risk involved for web hosts to be aware of.

“They have been hacked but everything is hackable isn’t it? Even PayPal has been taken down,” Dance says.

In March 2012, hackers stole more than $228,000 worth of Bitcoins after a breach to cloud services provider Linode. The hackers exploited eight customers’ digital wallets, where the private keys for spending received transactions are stored.

A few months later, Bitcoin exchange Bitfloor was hacked, and the thieves walked away with about $250,000 worth of Bitcoins.

While there are some risks involved with Bitcoins, and it is a fairly new currency, as Dance says, “you don’t know until you try.”

Talk back: Do you accept Bitcoin payments for your web hosting services? What are some of your concerns around accepting Bitcoin payment? Let us know in a comment.

 

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10 Comments

  1. Yeah we do accept bitcoin for all our hosting services

    Reply
  2. I offer BitCoin payment exclusively. No fiat currency. Just BitCoin (and LiteCoin now too actually). One problem with it, is the inability to automatically take recurring payments from customers. They all have to be invoiced separately each month, and I cross my fingers and hope they pay.

    Reply
  3. Accepting Bitcoin as a business offers benefits beyond online businesses and web hosting -- in fact, I would say there are even more benefits for offline companies, especially now. Bitcoin is sexy. It's hot. The media loves it; whether they're bashing it in the headlines or authoring articles for search traffic, it's being talking about. Simply by accepting Bitcoin a company can get loads of press and media attention. When it comes to accepting Bitcoin for your business there are literally ZERO reasons not to.

    Reply
  4. Thank you Nicole for interviewing me, It was a pleasure to talk to you.

    Reply
    • Nicole Henderson Post author

      Thanks for taking the time to speak with me Michael! I learned a lot.

      Reply
  5. Brett D.

    I would like to start paying for my hosting in candy canes for the month of December. Candy hearts in February. Lucky Charms in March. WHO WILL LET ME DO THIS TODAY?

    Reply
    • I've got an idea. Why don't you start your own vanity candy payment processor, just like BitPay and Paysius have done in the Bitcoin ecosystem, to connect the people (person?) who wants to pay in candy easily to all the vendors who want to accept national currencies. You can negotiate the transaction through a website, lock in the exchange rate for the merchant and accept all of the risk of candy-sellers not delivering, give the candy sellers your address to ship the candy to and give the merchant the USD (minus your fees) as soon as their client (candy seller) finalizes the order. Now, just calculate what your risk the buyers will default is, your expense on shipping etc, to figure out what fees to charge the merchant. Are you competitive with VISA or Paypal? Bitcoin sure as shit is. Now to pitch to the merchant, you've got to prove enough people want to sell enough vanity candy to give them an amount of volume worth paying attention to. Bitcoin trades at a unit price today of $13usd with a market cap over $134 million usd, and one of it's few remaining bottlenecks are that it's challenging to spend the bitcoins regardless of their durable trade value. That's a lot of trade just waiting to happen, and Bitpay et al are happy to turn every buyer's bitcoin into USD on any merchant's behalf right at the point of sale. Do you have that much demand to sell your sugar sticks? Because, in all honesty, if you've a dispersed population with 135 million worth of candy they want to broker at point of sale to merchants, you should be all means get in the middle of that demand and become a processor. Just sayin. :P

      Reply
  6. AndrCosmop

    It's ridiculously easy to accept bitcoin payments. Yesterday I received some cents from the other side of the planet and it took me literaly 3 seconds to access bitaddress.org and get a new Bitcoin address.

    Reply
  7. I believe it's more than an opportunity; soon it'll be a necessity as people are fed up with uncontrolled inflation and unstable exchange. Peer-to-peer transaction is the near future, and Wordpress hopefully opened the floodgates for more reputable businesses to accept Bit-coins.

    Reply