Bitcoin believers were hoping 2014 would be the year the cryptocurrency was going to become widely used but people seem far more happy to trade Bitcoin online than to spend it in shops. Billy Bambrough investigates the strides Bitcoin has made in e-commerce and on the highstreet
Theoretically it is easy for anyone to set up a Bitcoin wallet and take and make payments either as a business or as a private person. Compared to other forms of payments acceptance, other than cash, taking Bitcoin is very easy.
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This ease of use comes with its own problems though as retailers are left out in the cold in terms of technical support, customer awareness, and legal protection.
From the other side, a customer that chooses to use Bitcoin does so at considerably higher risk than someone using a traditional electronic payment.
Some brave companies have opted to accept Bitcoin though. The most notable of those so far is the US based Amazon alternative Overstock, which began accepting the digital currency after its eccentric CEO Patrick Bryne announced his support.
Bryne has pol it ical reasons for supporting B itcoin t hough: " I get an enormous pain in the ass when I think of our centralized financial system," he said. "I think the US has gotten under the thumb of Wall Street oligarchs. They’re enemies of the republic and Bitcoin represents a mass movement to get rid of the knuckleheads. There’s a huge political side to this that I endorse."
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By GlobalDataWhile it is a big win for Bitcoin to bring on board such a well known retailer Bryne’s reasons for using the alternative currency seem to be more to thwart the current financial incumbents than to make money for Overstock or save money for his customers.
Business has though, according to Bryne, kept up nicely: "There was a huge surge [in Bitcoin spending] the first day, with people showing support. It’s since dropped to $20k to $30k per day, but it’s gradually increasing from there. It’s going well."
Overstock began accepting Bitcoin on 9 January 2014 through a partnership with Coinbase, the popular Bitcoin exchange. Coinbase is a large reason why Bitcoin has been accepted by Overstock.
The Bitcoin payments provider makes it possible, and relatively painless, for companies to accept payment in Bitcoin that get immediately transferred to dol lars without losing any value in the on-going roller coaster that is the Bitcoin exchange rate.
The Stripe effect – Game changer?
The latest development for alternative currency is that e-commerce payments provider Stripe is to begin accepting the digital coins.
Stripe is known for poaching small business who use PayPal . St ripe’s co-founder John Collison describes the company as "a programming language for payments" that businesses can begin using with as little as one line of code.
Stripe’s new Bitcoin support is being rolled out slowly, and currently companies can only apply to join a closed beta test.
But one service is already using the Bitcoin functionality: Tarsnap, an encrypted backup service, was selected as the very first tester.
"Stripe’s support is crucial here," says Colin Percival, the founder of Tarsnap.
"I tell them I want to get paid X dollars in Bitcoins, and they tell me how many Bitcoins I should ask for and what address they should be sent to. Stripe then gives me the dollars I asked for (minus a small processing fee, of course)."
"This is the natural next step in the company’s plans to open up new markets for its users by allowing them to accept any currency or payment instrument their customers want to pay with," said a Stripe spokeswoman.
"Bitcoin fits in nicely with Stripe’s product plan in that we want to help people accept payments from customers however those customers want to pay. And so credit cards are a good first thing to roll out because they have such widespread penetration, but we don’t bill ourselves as a credit card processing company, we’re a payments company.
"So whether it’s Bitcoin, or whether it’s the various direct debit payment systems which are popular throughout Europe, or whether it’s M-pesa in Kenya, it totally makes sense, as more and more of our merchants are these borderless businesses selling to a global audience, to support what customers want to pay with."
While Bitcoin is still the very much tied to the internet there are signs it will be spilling onto the high street in coming years, although currently it remains a novelty and PR stunt for those offering it.
