Bitcoin’s progression as a digital currency appears to be foundering as adoption by major retailers as a payment method is decreasing despite its recent rise in popularity and value.
One Step Forward – Two Steps Back
With record-breaking price surges and mainstream interest in digital currencies at an all time high, one would think that retailers would be lining up to accept Bitcoin as a payment method. It is no wonder, then, that it comes as a shock to many that the exact opposite seems to be happening. Retailers are more skeptical than ever about letting customers shop with Bitcoin.
In a report released on Wednesday by Morgan Stanley payments analyst James Faucette, it was revealed that Bitcoin is accepted by just three of the top 500 online retailers in the world. That figure is down from last year’s report in which there were five retailers that accepted the digital currency.
Retailers are Only Part of the Problem
While it might be convenient to blame retailers for Bitcoin’s sluggish rate of mainstream adoption, the finger should not be solely pointed in their direction. Bitcoin users are also playing a direct role in slowing its growth as a currency.
According to Faucette:
Bitcoin owners are reluctant to use the cryptocurrency given its rate of appreciation, more evidence that bitcoin is more asset than currency. […] Way easier to trade speculatively than convince new merchants to accept the cryptocurrency.
Many of the newcomers who are buying digital currencies such as Bitcoin are doing so in order to hold on to them, with the hopes of seeing more astronomical gains in the near future. As a result, although there is a much bigger marketplace of Bitcoin users, they are not necessarily active spenders of the currency.
Bitcoin Growing Pains
Other factors that could have retailers withholding their acceptance of digital currency are the scaling challenges that are facing Bitcoin. Issues like slow transaction times and increased transaction fees are problems that will affect the retailer far more than the customer. The inconvenience of longer waiting times and transaction fees nearing $5 is hugely off-putting, especially in the case of smaller value purchases.
In an interview with Bloomberg, Atlantic Financial founder and Bitcoin Foundation board member Bruce Fenton explained:
There’s a problem with the fees being so high, it does price out certain things. […] There are some micro transaction uses cases, like a cup of coffee is the big analogy everybody uses, that are being sort of priced out just because bitcoin is going up so much.
Looking Up and Looking Ahead
Despite the setbacks in the acceptance of Bitcoin as a currency, there are success stories. In Japan, consumer electronics retailer Bic Camera has begun accepting Bitcoin at some of its camera shops while retail giant Recruit Lifestyle recently introduced a Point of Sale system that is Bitcoin-ready already available at over 260,000 retail stores and eateries across the country.
Overstock.com, a large online retailer that is championing Bitcoin, said in May that the number of Bitcoin transactions has tripled since they started accepting digital currency back in 2014. Furthermore, those transactions account for as much as $5 million per year for the online retailer according to Overstock.com Inc. board member Jonathan Johnson.
Have you bought anything online from major retailers? Would you be willing to part with Bitcoin as easily as if it were cash? Let us know in the comments below.
Images courtesy of Pixabay, Max Pixels