Bitcoin isn’t killing it in retail, even for porn

The figures show very clearly that Bitcoin isn’t being used as a retail payment mechanism. Will it ever be? I wouldn’t think so, but that doesn’t mean that cryptocurrency will never be used in retail.

There was a post I saw the other day, I apologise for forgetting who wrote it, arguing that because US merchants have to pay such high fees for taking payment cards, Bitcoin will find traction with that community and grow, so that Bitcoins will be worth $5,000 each or something. I’ve seen this point made elsewhere: that merchants will tender-steer toward Bitcoin because it is better for them.

So it’s a very merchant-friendly solution, whereas credit cards are a consumer-friendly solution

[From Who Will Benefit From Digital Currency? Bitcoin Experiment Gives A Glimpse]

Obviously, I’m a consumer, so I prefer a consumer-friendly solution and I’ll carry on using cards. As, it appears, will everyone else who is a consumer (i.e., pretty much everyone). I can find no evidence at all that Bitcoin is being used as an alternative to cards in retail and it is not at all obvious that the news of full Stripe integration will make any difference, because Bitcoin is barely used at the merchants who already accept it.

Though the number of merchants accepting the cryptocurrency—including big names like Microsoft, Expedia, and Overstock.com—grew fourfold to 100,000 last year, it appears there has been very little if any increase in retail purchases using Bitcoin.

[From Mainstream Use of Bitcoin May Be Plateauing at a Low Level | MIT Technology Review]

But, you might argue, there are places where you want to engage in trade activity that is beneficial to the economy of the nation but may not want to be reminded of it on statement at the end of the month. Porn, for example. Oh dear. Even there, the use of Bitcoin is slipping. Yet although Bitcoin accounts for only 5% of the sales at porn.com today, compared with 10% a year ago, the boss says he’s very happy with the decision to accept it because of other benefits.

Chief among these benefits, he continued, may be the increase in commerce the website sees when its name is mentioned in bitcoin news articles.

[From Bitcoin Payments Still Power 5% of Porn.com Sales]

So, exactly as I wrote here before, and as we have consistently advised clients, merchants accepting Bitcoin is about marketing not moolah. As I confidently predicted some time ago…

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

[From Bitcoin in the New Forest]

Frankly, it’s hardly surprising that Bitcoin is having a hard time as a retail payment instrument because that’s not what it was designed for. Someone else might come along and invent a new cryptocurrency that is more suited to the needs of retail commerce tomorrow, and good luck to them. I expect this might be the sort of thing that will be discussed in the terrific “deep dive” session on cryptocurrency at Consult Hyperion’s 18th annual Tomorrow’s Transactions Forum, which will be held in London on 18th-19th March. The session includes presentations from Vitalik Buterin of Ethereum and Preston Byrne od Eris Industries and panel on the business of cryptocurrency (moderated by Izabella Kaminski of the FT) with Tom Robinson (Elliptic), Richard Brown (IBM), Douwe Lycklama (Innopay) and Maurice Cleaves (CEO of the Payments Council). You’d be mad to miss it.

Thanks to the incredible generosity of our sponsors (Worldpay, Visa Europe, Vocalink, NCR Alaric and Olswang) to tickets are virtually free at £550 + VAT. The Forum is limited to 100 delegates as always, so run (don’t walk) over to http://payprocess.chyp.com/ to secure your place right away. And yes, I will take Bitcoin if you don’t want your spouse to see it on a credit card statement at the end of the month.