Bitcoin may never be the best retail payments mechanism, but that doesn’t matter, because retail payments aren’t really what it is all about.
Bitcoin doesn’t make sense as retail payment mechanism and I cannot see why anyone would use it in a shop. There, I’ve said it. The comments will be predictable (and I will, of course, in the tradition of free speech and open debate publish the ones that I like) but I stand by that position. When I say that sort of thing in a public forum, I am immediately confronted with the example of Overstock.com and the vast numbers of merchants accepting Bitcoin and the number of startups looking to make accepting Bitcoin even easier. But I have a suspicion that merchants accepting Bitoin is more about marketing than sales.
One of the reasons this is worth mentioning is because at the beginning of 2014 there was an estimated 20,000 – 30,000 merchants that accepted bitcoins for payment. By the end of the first quarter, approximately 60,000 merchants accepted bitcoins. Yet there has been very little corresponding on-chain growth.[From What Block Chain Analysis Tells Us About Bitcoin]
You see the point of this analysis. If you actually look what Bitcoins are being used for, it isn’t buying stuff. In Erin McCune’s excellent and highly-recommended write-up of Bitcoin 2014 in Amsterdam, she says that Bitpay is processing $1m per day for 30,000 merchants, which is about $30 per day per merchant, so maybe next quarter’s blockchain analysis will show an increase, but I can’t help feeling that it doesn’t really matter.
Accepting Bitcoin as a merchant is a great way to get publicity but may not result in any actual Bitcoin business… However, most Bitcoin-accepting merchants are instantly turning their Bitcoin into cash.[From 21 Things I Learned About Bitcoin Living On It A Second Time]
This is exactly what David Evans said in his piece about Bitcoin that attracted such an angry response from the Bitcoin community. I’ve just read his response to this and I have to say that I think he is right to say that “It hardly does the Bitcoin enterprise any good to create the false impression that bitcoin is becoming widely accepted by merchants”. As the article I quoted says, merchants that do accept Bitcoin are “instantly turning their Bitcoin into cash” and there’s nothing wrong with that. Well, “instantly” might be a bit of an exaggeration, but you get the point.
I wasn’t able to buy lunch at Buyer’s Best Friend because it took the Bitcoin network 67 minutes to confirm my $26/.0832 BTC payment[From 21 Things I Learned About Bitcoin Living On It A Second Time]
It’s not clear to me that Bitcoin was ever intended to be a retail payment mechanism, so it’s not surprising that it is less than optimal in such an environment. After all, credit cards were never designed to work on the Internet, which is why they are less than optimal there and people are investing considerable effort in developing digital wallets. My point is that we shouldn’t be surprised that Bitcoin is clunky buying noodles in a fast-food restaurant because that’s not what it is for.
Ramen Underground in Japantown has been accepting Bitcoin payments since early spring. They don’t accept Bitcoin at the restaurant’s busier downtown location, because there’s already a line and doing so would only slow things down.[From San Francisco’s QuickCoin – Bitcoin so simple, even Mom can use it | PandoDaily]
If the technology had been called Distributed Digital Asset Transfer or something else that didn’t involve the word “coin” I wonder if so many people would be trying to bring it to the point of sale? As far as I can see, if you talk to people who are serious about investing in Bitcoin, it because they see where the technology is taking us rather than because they want to speculate on Bitcoins or bring them to the Taco Bell counter.
It’s not the digital currency, but the underlying platform that will cause an enormous market disruption. Bitcoin is more than just another currency, it’s “an Internet” for registering and transferring property.[From Bitcoin: It’s the platform, not the currency, stupid! – The Next Web]
I quite agree, and I think we’ve been accurate in presenting essentially this assessment of Bitcoin to our clients from the first time it impinged on business consciousness. Erin is absolutely right to say that world of payments will face dramatic changes because of Bitcoin but it won’t be because people are using Bitcoin to buy pizza.