Bitcoin In Commerce — Loose Cannon. Will It Go Off Or Not?
According to the research of 17 large crypto merchant-processing services, after a record rise to $411 million in September last year, the turnover of bitcoin transactions steadily decreases. It reached the minimum in May 2018 — $60 million, which is almost 7 times less.
In June payment systems processed transactions worth $69 million, but it is still far from $270 million received a year ago. In particular, one of the deterrents in the popularization of bitcoin payments is the high transaction fee, as well as the underdevelopment of services.
Why doesn’t the most popular cryptocurrency become the world payment mean? Bitnewstoday.com polled experts from South Africa, USA, Netherland and other countries.
It’s necessary to note that the views of the world's cryptocurrency gurus on the future of Bitcoin vary significantly. Despite a fairly wide range of opinions, the most reasoned were the statements of skeptical commentators, those who doubt not only the future of bitcoin, but also the value of the research itself.
Chris Butler, CEO URAllowance (Las Vegas, USA):
Dmitri Belkov, Head of the Board of Cuprum Group and Managing Partner of PN1 Consulting (Moscow, Russia) also develops this idea:“If demand for bitcoin is rising, transaction fees are rising with it, and in the best days of last autumn, they reached $55 per transaction. But if people want to buy coffee or ice cream, the operation becomes tritely unprofitable.
Another key factor is speed. Bitcoin system is limited to 420 transactions per minute”.
And this can completely put an end to the mass nature of bitcoin payments, because if your payment is 158 648, then you will reach the queue only after 6 hours. It is unlikely that such a system is suitable for fast payments.
At the same time, Dmitri Belkov noted three more important stop-factors of the bitcoin development as a means of payment:
“The future of digital money is connected with other currencies. And even the usage of bitcoin as a tool for various types of illegal payments will not be able to provide it with growth and to make it a global payment instrument. Moreover, the world of illegal payments is developing also and launching other platforms. The problem of Bitcoin as a payment instrument lies in itself.
Secondly, the amount of Bitcoins. It is finite and limited to 21 million. When the world decides to shift the role of the main payment instrument to Bitcoin it will become popular, its price will rapidly rise and it will become more profitable to stick to the strategy “buy and hold” instead of “buy and sell” strategy because “tomorrow it will be more expensive and valuable”. So, it will not be interesting to buy for Bitcoin ice cream, a dress or even a car because tomorrow it turns out that you paid several times more expensive. This makes people more interested in bitcoin as a tool of a speculative investment than as a tool of exchange.
In addition, we should not forget about the speculative owners. Very few people control a large percentage of all bitcoins in the world. This gives them leverage to manipulate prices, which does not allow bitcoin to be a real currency”.
In course of our survey, there were even experts who believe that this study can not be taken seriously for a number of reasons.
Daniel Schwartzkopff, Founder & CEO, Invictus Capital. Co-Founder, DataProphet (San Francisco, USA):
“The time frames investigated is not nearly long enough to identify clear trends as it does not encompass an entire market cycle. Many countries naturally have a spike in high-value online purchases around the end of year holiday season.
Bitcoin serves a role as a store of value and not just a pure transaction intermediary. The spike in December could be attributed to multiple factors such as novelty or the taking of profits after rapid appreciation in value and recent declines from those all-time highs are not indicative of any underlying change to the fundamentals”.
Rishad Ahmed, CEO and Founder of Incentives SA, CEO of Khamissa Capital Fintech Advisory (Cape Town Area, South Africa):
“This article has a negative attitude to cryptocurrency. Of course, the fees will be higher before we gain mass adoption. There are ways of providing stability to crypto by using asset-backed tokens like gold or the dollar. In such counties as Iran and Zimbabwe bitcoin provides far greater stability than the local currencies”.
Despite the logic and reasoning of the previous arguments, we received very optimistic statements about the fate of bitcoin. For example, Grey Jabesi, Entrepreneur and CVO of HERC.one (Cape Town Area, South Africa) when explaining the reasons of the unpopularity of Bitcoin as payment mean at the moment, still considers it a perspective currency:
“Yes, Bitcoin transaction fees can be expensive for small purchases but since it’s bits, not paper, it is continuously being improved and that problem is more likely to be solved soon. That’s already a priority for most developers in the blockchain space.
In most part of Africa, we have poor payment services and Bitcoin is a perfect solution. The problem people have is liquidity, they want to be able to exchange their Bitcoin with fiat currency to be able to continue with their business. However, that is changing as well, companies like Golix.com, Binance, Luno are expanding into other African countries rapidly”.
Morten Christensen, CEO AirdropAlert (Rotterdam Area, Netherlands) also considers Bitcoin a currency of the future:
“I've used Bitcoin as a payment method since 2013. However, with mainstream media mostly publishing articles on the price surges and declines of crypto, the common user sees it as a speculative investment opportunity. A volatile currency is not fit for daily payments. If you bought Bitcoin at $20,000, you are unlikely to spend it at $6,000. My hope is that once prices stabilize for a longer period, the masses will realize the convenience of using crypto as a payment method”.
To sum up, we can say that many experts call similar reasons of Bitcoin’s unpopularity in commerce — the transactions processing speed, unstable currency price, direct dependence of the transaction fee on the value of the bitcoin itself, as well as unstable liquidity.
However, speaking about Bitcoin’s perspectives in the future commerce it’s practically impossible to draw any conclusion because the experts are too radically at odds.
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