Bitcoin has strong opportunities for mainstream businesses, but it’s hard to understand from listening to techies explain it. Here is what a company’s management needs to know about Bitcoin.

Bitcoin is a better way to do transactions. Forget about Bitcoin as an investment vehicle, or Bitcoin as a way to end the Federal Reserve. Its benefit to business comes from payments.

If your payments are occasional and in large amounts, don’t bother with Bitcoin. Let’s say that you’re Boeing. Once or twice a day someone sends you $100,000,000 for an airplane. Stick with your current practices.

However, say you run a coffee shop with an average ticket of six dollars, and nobody carries cash. You can collect an electronic payment with zero cost per transaction.

Say you’re a dentist who takes plastic. Occasionally someone disputes payment with his credit card issuer because his tooth is still hurting. Not only do you lose money, but you lose valuable time dealing with the dispute.

For all of these businesses, Bitcoin might help.

The inner workings are complicated, but here is a basic example. The coffee shop owner has a phone, iPad or computer with optical scanner. The customer gets her latte, places her cell phone (with the Bitcoin app working) in front of the shop’s scanner. Beep. Bitcoin passes from the customer to the shop owner. The customer pays a 3 cent fee (though the merchant might offer a discount to users.) The shop owner will probably accumulate Bitcoin through the day, then convert all of his Bitcoin into dollars at the close of business. He pays nothing to accept Bitcoin, and with the largest processors no fee to convert into dollars.

The customer probably had a relationship with an exchange company, in which she periodically reloaded her Bitcoin electronic wallet with dollars from her bank account.

At the dentist’s office, the customer learns that a Bitcoin transfer is irreversible. Once paid, the money stays paid. There’s no appeal to a bank or other higher authority. The dentist may decide to issue a refund, but it’s all up to him.

For the Internet merchant, life is simple. He sees that Bitcoin has hit his wallet and waits less than an hour for confirmation. Then he ships product to Nigeria. Not everyone in that country is a crook.

The merchant taking Bitcoin is not going to make headlines for customer data being hacked. The only information the merchant has are codes associated with each individual transaction. Those are unique and not reused, so they are useless if stolen. Target and Home Depot would have made fewer headlines if they had taken Bitcoin instead of plastic.

Anonymity can be achieved with Bitcoin, though the wallets and exchanges may leave evidence behind. I don’t shoot up enough heroin, see enough hookers, or contribute enough to terrorist groups to be knowledgeable on the subject. However, many legal activities may warrant secrecy. Perhaps I don’t want a record of seeing a mental health specialist or a bankruptcy lawyer. If you sell something that people might be embarrassed about, take Bitcoin. There are also plenty of us who dislike the idea of our government snooping on us.

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You can store that number on a piece of paper in a safe deposit box, or you can store it in an electronic wallet, which is what most people do. If your electronic wallet gets hacked, you lose your money. So good practice for businesses is to sweep Bitcoins into bank accounts regularly. Consumers should keep only small amounts of Bitcoin in phones and other devices which can be lost or hacked.

The value of Bitcoins also proved highly volatile. Some investors thought that as the currency was used for more and more transactions, it would be highly valuable. That’s no doubt true, but small changes in expectations of future value can have a huge impact, either up or down. Because of the exchange rate volatility, most businesses will want to exchange their Bitcoin for dollars (or Euros or Yen) regularly. A daily sweep makes sense.

The Internal Revenue Service says that Bitcoin is property, not money. That means when you sell Bitcoin, you may have a gain or loss, depending on your tax basis. This sounds like a paperwork nightmare, but exchange services can generate a report that you would use in a tax return. If you instantly convert Bitcoin received into dollars, you are unlikely to have a gain or loss. The IRS also notes that Bitcoin payments to employees and contractors should be reported in dollars using the appropriate exchange rate.

Bitcoin is not for everyone, but it offers legitimate value to many companies. The basic Bitcoin structure is not user-friendly, but many companies are setting up services—like wallets and exchanges—that make it easy. Keep in mind, however, that these services will be the weak link in the security chain. Choose wisely, and don’t keep too many Bitcoin in one basket.