Dedicated Servers/Bitcoin? Good Combination or No?

bitcoin and dedicated serversAt issue in the web hosting industry is whether to accept Bitcoin as a method of payment to services, especially dedicated servers.

I recently posed this question on a number of web hosting forums and the replies were all over the board, but surprisingly, quite a few dedicated server providers do accept Bitcoin as a valid method of payment.

My first impression when I started these threads was that Bitcoin invites fraud and spam, since it’s used extensively in ransomware demands. Then after a few weeks worth of comments pro and con, I came across an article entitled, “What is Cryptocurrency: Everything You Need To Know [Ultimate Guide].” If you’re in the slightest bit interested in understanding what BitCoin is all about, I highly encourage you to read their article.

BitcoinWhat I read over and over from providers that opposed using BitCoin was that with clients using credit cards or PayPal, they could verify identity, but not with BitCoin. With credit cards they could be flagged as spammers or cybercriminals which would prevent them from using the same card to order services again tomorrow or next week. Conversely, with BitCoin those same safeguards are not in place.

The counter to that was that providers could still perform verification by other means, and if any orders were determined to be fraudulent, refunds wouldn’t be possible. Many of the providers who do accept BitCoin stated that they actually encounter fewer issues with BitCoin than they do with credit cards.

Taking this a step further, clients paying with BitCoin who are suspended for spamming or DDoS can’t initiate chargebacks, but on the flip side, spammers don’t normally initiate chargebacks because they simply don’t care about the cost of that dedicated server. Why not? Their objective or goal is to send out spam from clean IP addresses whereby they’ll earn back much more if executed successfully. That’s a win for the spammer and a BIG loss for the provider.

A good number of providers that accept Bitcoin use BitPay combined with MaxMind, and report that MaxMind actually kicks up more of a fuss over credit card users. Others simply use BitPay and manually verify every order.

Some providers claim that since there’s no way to charge back BitCoin orders, most orders turn out to be legitimate. As a safeguard, they manually perform some sort of verification.

A lot of this boils down to choices. What are the negatives versus positives of accepting BitCoin. For many providers who do not, their explanation is that they primarily deal with business users, who typically don’t use BitCoin anyway. In their minds, there are negatives, but no real positives.

Bitcoin currencyTaking this one step further, many providers still see prospects requesting BitCoin as one-time users and not as long time clients. Countering that argument were providers saying they’ve had loyal BitCoin users for over two years.

Is the trend toward BitCoin becoming a standard? I highly doubt this even though it is rising in popularity. Why do I doubt this? Numbers don’t lie. BitCoin transactions pale in comparison to credit card transactions, by the hundreds of thousands to the hundreds of millions.

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Steve

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