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Bitcoin, it’s the future of online payment don’t you know. 

After the initial rush of media intrigue and early adopter excitement, what happened next for the digital currency from the future? 

Many of our own blog-posts deal with various issues related to bitcoin – trust and regulation, alternatives and relevance to the consumer but what about adoption? 

How widespread has the uptake for bitcoin been for online (or even offline) retail?  

Newegg

In a major boon for the currency, US electronics company Newegg has just announced it’s to start accepting bitcoin on its ecommerce site.

If you’re new to the company, Newegg is a North American retailer of computer hardware and other electronic goods. It currently has 25m registered users. If you’re new to bitcoin, it’s a currency, not a platform as such like PayPal for instance, so an API is needed to actually carry out the transactions. In this particular instance, BitPay is the payment platform of choice.

At the moment, the bitcoin option hasn’t appeared on Newegg’s order screen as of yet, however here’s a brief walk-through on how it works.

But what about the biggest player in the western ecommerce world?

Amazon

According to an April interview in Re/code with Amazon payments head Tom Taylor, Amazon has quashed any idea that it would be accepting bitcoin as a method payment.

Taylor has stated “we’re not hearing from customers that it’s right for them and don’t have any plans within Amazon to engage bitcoin”. Although this may also be related to the fact that Amazon already has its own payment platform and virtual currency in the works.

Who actually does accept bitcoins?

A delve into the internet has brought up a few big players and a few surprises.

Reports reveal that travel site Expedia has begun accepting bitcoin for hotel bookings only, as a trial run. Publishing platform WordPress is also accepting bitcoin in its store. UK takeaway company Takeaway.com accepts bit coin on behalf of its 7,500 restaurants.

If you ever find yourself in Cambridge on a bright sunny afternoon, there are a couple of cracking real-ale pubs that accept the currency. The Devonshire Arms and The Haymakers also accept the virtual currency.

How many bitcoins do you have in your pocket right now?

There’s a study by BitScan from February on how many people really own bitcoins. If you’ve been following the bitcoin news intently you may be surprised at the findings.

As of February 2014, only around 31m transactions have taken place in bitcoin’s history. Through some fairly complicated logic (perhaps read the linked article for the workings which takes into account founder Satoshi Nakamoto’s own personal bitcoin fortune) it’s been assessed that an absolute maximum of around 500,000 own bitcoins at the time.

In this case you can see another reason why Amazon may be playing it safe. It’s not just areas of trust and stability that are driving concerns but also the fact that not enough people even own or use the currency.

Christopher Ratcliff

Published 3 July, 2014 by Christopher Ratcliff

Christopher Ratcliff is the editor of Methods Unsound. He was the Deputy Editor of Econsultancy. You can follow him on Twitter or connect via Google+ and LinkedIn

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Comments (4)

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Jack

There's a catch22 with retailers looking at volume of total transactions with BitCoin and deciding not to support BC payments:

- People are not spending BC in high volumes, so it's not worth accepting BC on our platform.

- The volume of transactions are low because there are not enough places to legitimately spend BC.

This leads to people having to find work-around:

- Cash out my BC into USD or GPB for a purchase, and make the purchase with the "real" money (I used to do this, then immediately buy-back the same number of BC when the value was sub-$100, because chances were you were going to turn a profit on those coins anyway. Eg I bought 1 coin @$3. Sold coin @ $100. Use that to make a $70 purchase. Buy back my BC @$100 (or 0.7BC for $70, pocketing the $30). Watch that BC become worth >$300 in the coming months.

- Finding retailers that sell giftcard and accept BC. (eg. Buy a £50 Amazon giftcard with BC, then shop on Amazon with the Giftcard).

- Use BitCoin ATMs to get tangible cash out.

Based on the above, retailers such as Amazon will have no idea how many of their purchasers are actually using BC, as they'll just see GiftCards in their payment method reports.

By adopting BC payment early, you tap into a savvy and eager market that don't currently have a lot of options of where to spend their BC. Personally, I'm sitting on some 30BC - at current market price of circa $600p/BC that's $18,000 of money that I'm ready to spend that I have to jump through hoops to use. If you give me the option to buy on your site with BC, I'm likely coming to you first, long before I visit your competitor.

Also, retailers that start accepting BC payments can cut down on their bank charges for Credit/Debit card payments. In industries with tight margins, the difference between a charge of 2% per sale, and 0% per sale can be dramatic.

At SXSWi this year, I was able to withdraw cash, pay for taxis, and buy lunch all with BC. Without having to pay bank fees for overseas transactions, or commission at a Bureau De Change. This pretty much dictated where I ate, where I travelled, and what I bought over that week - as my first choice was always going to be the convenience and cost-effectiveness of paying with BC.

No - it's not perfect. And the rapid price increases over the last few years has lead to a culture of hording and trading like stocks. But other crypto-currencies like DogeCoin that are much lower value, more accessible to the newbie, and seem more stable price wise, are being traded and used in smaller transactions at a huge rate (comparably).

There is an audience out there ready to spend their crypto-coins, and retailers are missing a trick by shutting them out completely.

almost 2 years ago

Neale Gilhooley

Neale Gilhooley, MD at Evolution Design

Its never easy to use a currency when 1 unit = £372. Its the simple arithmetic of a cup of coffee.

Nor when one of the webs biggest currency exchanges has this on its site in red. Notice: Bitcoin is not legal tender in any country and is not recognized as an official currency by any regulatory authority. XE does not endorse nor express an opinion as to whether or not Bitcoin is an official or legitimate currency.

btw way I live in Scotland and am quite sure we will be keeping the UK £ sterling by virtue of choosing democratically to remain in the UK.

almost 2 years ago

Avatar-blank-50x50

Antti Ukkonen

"Its never easy to use a currency when 1 unit = £372. Its the simple arithmetic of a cup of coffee"

The problem is people think a crypto currency in terms of traditional currency which creates logical dead ends like this.

One unit of bitcoin is Satoshi: 0.00000001 BTC.

Crypto currency scales where traditional currency doesen't. Many exchanges are already using mBtc.

almost 2 years ago

Avatar-blank-50x50

Jack

Antti is spot on: You don't display prices across the site in BC - that means nothing to anybody and creates ugly, non-rounded pricepoints.

You display in local currency, allow the user to checkout in BC as a payment method and take payment at current marketplace price (eg, place an order for £50? Pay 0.2BC in checkout).

Then you immediately sell the BitCoin at that rate once the blockchain updates - so you, as a retailler, bank cash not BitCoin.

Also, the legal status of BC has actually been clarified. A series of cases through the courts over the next few months will further clarify the stance:
http://en.wikipedia.org/wiki/Legality_of_Bitcoins_by_country

almost 2 years ago

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