9 Things Indie Authors Need to Know About Bitcoin
At the end of 2013, I predicted that Bitcoin would really "hit the mainstream" in 2014 and that even non-geeks would start be aware of and understand that increasingly-popular crypto-currency. Just a few weeks into 2014, I heard my first ever reference to Bitcoin on the consumer-oriented news radio station that I listen to in the car. (Don't laugh, those of you who remember me and my loud music... my car stereo is weak, to put it mildly.) It's still a "Wild West" sort of thing, but if you're an indie author there are some things you should understand about Bitcoin so you can take advantage of it — or keep your distance, as you see fit. This blog post will highlight nine things you should know.
1. The barriers to entry are extremely low. Put in a little time to understand how it works, set up a wallet, and you're ready to start receiving Bitcoin payments for your books. There is no bank application, no credit check, no cost to use software and services for wallet management, and no processing fees to receive payments directly. (Transaction fees are paid by senders. If you use a service to handle selling your work and then sending you payments, they might add their own service fee.)
2. The learning curve is not extremely low — but much of it is optional. If you can follow some best-practices instructions and at least understand how to mitigate your risks, you don't need to deeply understand the cryptography underpinnings of Bitcoin.
3. Bad people try to do bad things. This applies in the Bitcoin economy just like everywhere else, and there are things you can do to help protect yourself. If you accept cash, it might be counterfeit (but you can test it). If you accept a check, it might bounce (but you can assess NSF fees). If you accept credit cards, you face chargebacks. If you accept Bitcoin, the payer can try to "double spend" the money, such as by buying your book and then using the same funds to buy something else or just transfer it to another wallet. The way to protect yourself against double-spends is to ensure that the payment you receive has enough "confirmations" before you deliver the product.
4. Theft happens, but you can take measures to protect yourself from theft. Just as you would keep cash in a secure location, you will want to keep your Bitcoin secret keys (used to spend or transfer the money you receive) as secure as possible. The less you have at risk, the less important security is. It may be irritating to lose a dollar or two in a security breach, but losing thousands will be more than irritating.
5. Despite the current lack of government involvement and oversight, your earnings are still income. Depending on where you live, hiding that income from tax authorities may be a criminal offense.
6. The number of people ready and able to pay for your books with Bitcoin is still small — but rapidly growing.
7. The speed of transactions is relatively fast. You can go from selling a book to buying something with your profits with very little delay. Just remember to allow time for confirmations.
8. Everything about Bitcoin should be considered volatile and experimental. That includes the exchange rate with other currencies, online exchanges, laws, and so forth. If you want stability and do not want to re-learn and re-adapt, Bitcoin may not be for you yet.
9. All transactions are public (not anonymous) and irreversible. Before you spend any Bitcoin funds, make sure you're sending them to the correct address and that you trust the recipient.
I recommend giving my intro to Bitcoin a thorough read, as well as the "things to know" page (not specific to authors) on bitcoin.org. Then, set up a wallet on Blockchain.info or install Electrum. Once you have a wallet, you'll have one or more addresses at which you can receive money. They look like this:
199o3nDvUAhBY1u7VKSpnWwbEq9fwaSHhY Do not use just one address for all incoming payments, as you will not be able to verify that a buyer has paid. (It's OK to do for general donations, though. The one shown here is my donations address for my Web site tip jar.)
I don't think Bitcoin will become common for ebook sales this year, but I do think the number of indie authors accepting Bitcoin payments for their work will rise sharply.
I already have one book you can buy with Bitcoin. (Edit: I've taken my books off sites that accept Bitcoin for now, but only to simplify what I'm doing with my publishing. I'm still open to the idea in the future.) How about you?