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I think the idea that Bitcoin will replace payments cards in retail transactions because it is cheaper or more convenient is unrealistic.

Now, most of us only know the name of the English seaside town of Swanage in Dorset because it is first mentioned in the Anglo-Saxon Chronicle, and indeed celebrated throughout Wessex and the wider world, as being the site of King Alfred’s famous naval victory over a Danish invasion fleet in 877 CE (as seen in this picture in the British Parliament). And to this day, it continues to make history.

Nestled beside the small ads noticeboard in the crowded shop window of Swanage News is a small sticker that reads “Bitcoin accepted here”.

[From BBC News – Retailers look to Bitcoin as currency for life’s basics]

One of my colleagues noticed a similar sign in a nearby New Forest hamlet and driven inside the establishment by curiosity asked the shopkeeper how long he had been accepting the virtual currency. About six months, he was told. And how many transactions had been made in that time? None, he was told.

photo 1-2

I have to say that I didn’t realise that Lyndhurst was quite the centre of the virtual currency revolution! My colleague tells me that

A second shop in Lyndhurst has started accepting Bitcoins! If you don’t count charity shops; coffee shops & ice cream parlours there aren’t very many shops in Lyndhurst so a pretty high percentage of the high street (I’m guessing 5%) is taking Bitcoin!

I doubt these have seen any transactions either, but the shopkeepers don’t care, because it all about marketing, not about transactions.

Dell: Bitcoin Aligns Our Brand With Innovation

[From Dell: Bitcoin Aligns Our Brand With Innovation]

To me, this clearly indicates that Dell see Bitcoin acceptance as marketing, which is what I would expect. I would never use Bitcoin instead of their credit card for ordering something like a PC unless heavily incentivised to do so by a merchant of impeccable good standing and renowned customer service. What if it doesn’t show up? What if it doesn’t work? And if you are going to argue that merchants will want Bitcoin because it is cheaper, I am unconvinced. Apples and oranges. If Bitcoin is going to deliver the same benefits to me that a credit card does, it’s going to have to work a lot harder. Yes, credit cards can be a pain when you have to type crap into a a mobile phone screen, but Bitcoin isn’t their competition, nemesis or doom.

I have complete faith in the various ecosystems to ensure a fair price is paid for something as intrinsically complex as bitcoin. There is no evidence to suggest that price would be cheaper.

[From Bitcoin merchant costs–no evidence to suggest they would be cheaper | The Bankwatch]

Yep. +1, as the kids say. Moving the money is the easy part of a payment. Visa and MasterCard have a gazillion pages of rules about chargebacks and dispute resolution for a reason, not for fun. If Bitcoin is going to be a serious alternative to the incumbents it’s is going to have to evolve a similar kind of ecosystem.

By the way. I dropped off my son and his girlfriend at the train station yesterday. I was thirsty, so I nipped into Marks & Sparks for one of their delicious sparkling water drinks. When I was there I remembered we needed some milk, so I picked that up too. I paid by tapping the contactless Amazon MasterCard that I have in pocket glued to the back of my iPhone (it’s the peoples’ NFC), which took like a microsecond. How is Bitcoin going to be more convenient than that?

1 comment

  1. @gendal called it – the short term benefit for Merchant’s is free press.

    Longer term, a technology like Bitcoin is more of a SWIFT competitor than Visa. International money movement is still outrageously expensive for and with banks involved. Even Western Union is a rip off.

    The Telco’s faced serious MVNO and legislative pressure in recent years on this front. With an increasingly migrant workforce I sense this pressure will increase on banks… consensus ledgers like Ripple or Stellar could be a smart move…

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