Bitcoin (BTC) has been around for almost a decade and despite its widespread adoption, very few merchants are accepting the currency. The first known purchase using Bitcoin was back in 2010 when a developer offered to pay for two pizzas using BTC. May 22nd was the day. A total of 10,000 BTC were sent to the pizza guy. At the time, BTC traded at less than $0.10 USD, a total of $700 for both pizzas. The current BTC value is about $80 million USD. A successful trade to say the least.
Acts like these have seen the overall adoption of BTC as a form of payment to merchants increase exponentially. However, some of these shops and retail stores cite the lack of customers, expensive transaction fees and volatility being the most persistent problems facing Bitcoin as a payment system according to one Medium post.
These among other reasons have stifled the overall adoption of Bitcoin in paying for goods and services.
Bitcoin problems affecting merchants
Merchants have a case to dismiss the BTC fairytale told as its system is both slow and expensive. Bitcoin was first proposed as a mechanism to make transactions faster and through a trustless peer-to-peer connection. The network has an average transaction speed of 5-7 TPS which is relatively slow for blockchains. With the cost of transaction rising to 0.6% per transaction in times of high volume trading, the platform can sometimes be more expensive than the current payment systems.
Merchants may find the expensive and slow nature of BTC transactions to be a hindrance in their business. It was reported back in January that some transactions took up to 3 days to be confirmed as the network was overcrowded.
Advantages of using BTC as a payment system
- Bitcoin has the largest customer base
Bitcoin (BTC) is currently the largest coin in adoption, market capitalization and media attention. This makes it the most suitable for merchants to use as a payment system. The coin currently has a total market dominance of around 40% showing the overall impact and overall adoption of the coin. Smaller altcoins struggle to overpower BTC in this regard as merchants cannot find customers using other altcoins. For the merchants using cryptocurrencies at the moment, BTC payments are accepted in over 80% of these stores.
- Bitcoin affects altcoins
Merchants are increasingly looking to transform the payment systems by introducing cryptocurrency payments as the millennials are heavily interested by the subject. The options range among over 1600 cryptocurrencies at the moment with each preaching a problem they aim to solve. As Bitcoin already has speed and cost problems on its site, having it as the main payment system will not be sustainable with more people using the system.
However, Bitcoin can still be used as a store of value for the merchants. Customers pay using altcoins such as Dash, convert to BTC and store them as BTC effectively controls the market’s prices. Other altcoins offer higher risk than BTC with their price highly correlated to the beta of BTC.
BTC offers the best option for merchants to use at the moment as the other cryptocurrencies gain base. The problems facing BTC are solutions to the current payment system problems. Considering that a bank payment may take up to 5 days for the transaction to be verified, BTC average time of about 30 min per transaction is faster. It will however be best to use BTC as a store of value as other faster and cheaper blockchains come to being.
Bitcoin (BTC) is currently trading at $7,743.59 USD, representing 1.5% increase in the last 24 hours. The market cap is at $132,197,019,762 USD further cementing its top position on Coinmarketcap. BTC is expected to hit the $10,000 USD mark by the end of 2018.