Bitcoin is the first example of a peer to peer money and is not controlled by any central authority.
Bitcoin’s future, and its future value, will be determined by how people around the world accept and use it. Arguably, at present, Bitcoin has become a form of ‘digital gold’ through which investors have stored their money. In the near future, should merchants around the world accept Bitcoin as tender for goods or services, we may be able to see the cryptocurrency become a more active means of exchange similar to how a fiat currency operates.
What was Bitcoin designed for?
As outlined in the Satoshi Nakamoto white paper, Bitcoin was designed to be a decentralized peer-to-peer payments network. While the debate as to whether Bitcoin should first be a store of value or a means of transaction is a fuelling factor behind the Bitcoin Core and Bitcoin Cash feud, the Bitcoin network was intended to act as a monetary system that relied on cryptography and pseudonymity as its core pillars.
Ultimately, the use of any monetary system involves what is called retail acceptance – where persons or businesses accept a currency as tender for goods or services rendered. Should the Bitcoin network prove successful in its endeavor to connect users around the world in a decentralized monetary system, a clear marker of adoption would be the willingness of retailers, merchants, and industries to accept Bitcoin as payment.
Why would anyone accept Bitcoin?
Accepting Bitcoin has proven beneficial for several business ventures around the world for many reasons. Bitcoin enthusiasts – and supportive businesses alike – have noted that the Bitcoin network offers a speedy and efficient monetary system that can handle international transactions in minutes, and is not necessarily subject to regulation, oversight, or tax implications.
Blockchain technology ensures that transactions issued in Bitcoin are verified through cryptography and are inherently immutable – meaning that retailers accepting Bitcoin enjoy surety that transactions cannot be fraudulent.
While several businesses have succeeded in generating profits through holding Bitcoin as a speculative investment, others have witnessed a surge in popularity or media coverage for their willingness to accept digital currency as tender.
Bitcoin, however, has not been universally or seamlessly adopted as a payment standard. Retailers have been reluctant to accept Bitcoin as tender for several reasons. Chief among them, retailers have cited that Bitcoin’s volatile and fluctuating prices make the cryptocurrency undesirable as a payment standard given the fact that, as an asset, it may not hold its value once a transaction has been completed.
Further, the relative cost of Bitcoin transactions – which see stringent fees during periods of extreme network congestion – has been detrimental in the cryptocurrency’s use as tender for smaller ‘micropayments’. Lastly, Bitcoin’s increasing value has meant that investors may be more likely to ‘hold’ the digital currency as a speculative investment rather than use it to facilitate payments.
Who accepts Bitcoin?
Bitcoin unfortunately found an early home with denizens of the ‘dark web’ (portions of the internet not indexed by search engines) and was rapidly adopted as a payment mechanism thanks to its pseudonymity – meaning that, at the time, international regulators nor government agencies were able to trace monetary transfers between parties when conducting purchases of narcotics or illegal goods.
Bitcoin facilitated some of the transactions on a massive online black market called ‘The Silk Road’ prior to its shutdown by the United States Federal Bureau of Investigation.
Over time, however, criminal syndicates and black markets alike have largely shifted to using other means of transfer. Particularly, newer cryptocurrencies which offer near-total anonymity have proven popular amongst parties seeking to conduct transactions wherein oversight is undesirable.
Since those early days, Bitcoin has begun to find a home in both retail and between parties seeking an efficient and speedy means to facilitate transfers, meaning that many international firms and brands now accept the cryptocurrency as a form of payment.
While many individuals may presently accept Bitcoin as payment for their goods or services rendered, several leading internet companies have pioneered new payment standards which, for the first time, have brought cryptocurrency payments into the mainstream.
For example, Overstock.com – an online retailer – began accepting Bitcoin as a form of payment in 2014, and now allows customers to pay for goods in Ethereum, Litecoin, Dash, Monero, and Bitcoin Cash. Similarly, Newegg – an electronic retail giant – also accepts Bitcoin as a payment standard.
Microsoft became one of the first major technology companies to adopt Bitcoin, and enables consumers to use Bitcoin as a means to deposit funds into their Microsoft account, from where they can purchase games, movies, and apps on the company’s platforms.
Expedia – one of the world’s largest online travel booking agencies – also accepts Bitcoin. The service now enables consumers to pay for their hotel bookings in cryptocurrency.
Other major retailers who accept Bitcoin:
- RE/MAX London
What can I buy with Bitcoin?
While several major retailers have led the charge in accepting Bitcoin as tender for general consumer goods, recent news has seen the cryptocurrency exchanged for high-profile assets, luxury goods, and unique experiences alike.
Several musicians such as Bjork and 50 Cent have garnered acclaim for their decision to accept cryptocurrency as tender, while Richard Branson’s Virgin Galactic further accepts Bitcoin from intrepid extra-terrestrial explorers.
While the trope of Bitcoin millionaires purchasing Lamborghinis may be overplayed, several automotive dealers have moved to accept Bitcoin as tender for vehicles. Notably, while off-the-wall concepts such as Australia’s all-terrain Tomcar can be bought using digital currency, business ventures such as BitPremier have emerged which specifically sell high-end cars in exchange for Bitcoin.
Real estate, too, has become a port-of-call for Bitcoin. Billionaire investors baroness Michelle Mone and Douglas Barrowman reached the headlines last year after the duo successfully sold 50 luxury apartments in Dubai in exchange for Bitcoin last year, as part of their sale strategy for the Aston Plaza and Residences.
Can I make donations in Bitcoin?
Several leading non-profits and charitable businesses have accepted Bitcoin as a means of donation – leveraging the cryptocurrency’s increasing value, ease of transfer, and – at times – its pseudonymity to raise funds for various causes around the world.
Several leading internet initiatives have signaled their willingness to accept Bitcoin. Wikipedia, the world’s foremost digital encyclopedia, accepts Bitcoin as a donation.
Similarly, The Internet Archive – a non-profit aimed at preserving portions of the internet for posterity – accepts Bitcoin, Litecoin, and Bitcoin Cash.
The Pirate Bay – an online index of open-source or pirated digital content of entertainment media and software – also accepts Bitcoin, in addition to Litecoin and Monero.
How else are cryptocurrencies being used in retail?
While Bitcoin may prove a leading light in terms of adoption and value, various retailers and initiatives have turned to blockchain technology to establish new ventures and payment schemes that leverage cryptocurrencies in a variety of interesting ways.
Rakuten’s loyalty program
Japanese online retail giant Rakuten recently revealed its plans to redevelop its ‘Super Points’ loyalty program. Dubbed ‘Rakuten Coin’, the project would be based on blockchain technology.
Company president Mikitani described Rakuten Coin as a “borderless currency”, elaborating that “basically, our concept is to recreate the network of retailers and merchants. We do not want to disconnect [them from their customers] but function as a catalyst. That is our philosophy, how to empower society not just provide more convenience”.
Daimler AG’s rewards initiative
German car manufacturing conglomerate Daimler AG has proceeded to launch its own blockchain-based digital currency dubbed Mobicoin.
As a rewards program, the project arrives as a bid to reward drivers for eco-friendly driving habits, and has kicked off in a new testing phase in which some 500 drivers will be rewarded for eco-friendly driving practices with the new cryptocurrency.
MobiCoin enables the transmission of telemetric details from vehicles to Daimler, wherein eco-friendly driving habits are analyzed and accordingly converted into the eponymous cryptocurrency. MobiCoin is set to reward drivers who travel at low speeds and practice gentle cornering, braking, and acceleration.
Drivers will be able to find their MobiCoins in an exclusive mobile app, and will be able to leverage their totals with VIP tickets for events such as the MercedesCup Final or Fashion Week in Berlin.
Amazon’s data dashboard
While Amazon hasn’t signaled its willingness to accept cryptocurrencies as tender for goods, the internet giant has recently been granted a patent which will allow users to receive cryptocurrency transactions data in an online marketplace.
Chiefly, the service would enable developers to “build real-time dashboards, capture exceptions and generate alerts, drive recommendations, and make other real-time business or operational decisions”.
How can we expect to use cryptocurrencies in the future?
The debut of cryptocurrencies such as Bitcoin on the international market-space may enable a revolution in retail acceptance and marketing that could fundamentally change the ways in which people accrue income and pay for goods.
The use of blockchain and smart contracts technology may enable a frictionless payment environment in the future, where customers may be able to easily pay for goods by simply walking into a store, pick up an item of their choice, and leave – and instead of waiting in a check-out, the use of surveillance technology coupled with cryptocurrency wallets might enable the ‘automatic’ processing of payments.
The equation might well work in reverse, and enable consumers to ‘rent’ their goods or owned services to accrue an income. The use of cryptocurrencies may even one day lead to the development of true passive income, or even the distribution of a universal basic income.
For now, however, the major stumbling block cryptocurrencies will need to cross is two-fold; the first will involve scalability, wherein cryptocurrency networks will need to be able to process thousands of transactions at once in order to facilitate global demand.
The second will be that of adoption, where retailers and services around the world will need to be convinced to accept cryptocurrency as a form of tender. Fortunately, it may not be long before this happens.