How Bitcoin’s Merchant Adoption Guides the Way to Consumer Adoption (Op-Ed)

From 2013 to 2015 we saw a significant rise in merchant adoption of Bitcoin. In this short time period, Bitcoin moved from being a purely speculative instrument to having actual commercial use, whether it’s flying with Expedia or Cheapair, buying domain names with Namecheap, getting goods delivered to your house through Overstock, or grabbing a coffee at a local cafe.

These changes drive us to ask: with a lack of consumer adoption, what was the driving force that brought about this sort of merchant adoption?

Before we answer this question, let’s first recall the three most distinguishable parts of Bitcoin: a transaction network, a programmable currency token, and a new store of value.

At its origins in 2009, someone wishing to use this technology had no option other than to use all three segments. If you wanted to use the transaction network of Bitcoin, you also had to handle the token with special programs, and take on the volatility risk that comes with a newly developed store of value. While this isn’t a problem for a small niche of enthusiasts, it doesn’t allow much to be done with this technology on a larger scale or solve entrenched problems that come with traditional finance. 

Companies like Bitpay and Coinbase were some of the first to tackle this inflexibility. With these services, a merchant could now choose to use Bitcoin as a transaction network without having to handle the currency token, or take on volatility risk. For a merchant, Bitcoin now has the flexibility for a vendor to pick and choose the segments it wants to use, and ignore the others it doesn’t. 

Now it’s 2015, and the strength of Bitcoin the transaction network is well proven among vendors. Yet for consumers, the ecosystem is not as flexible when compared to merchant services, and users are forced to use every aspect of Bitcoin when starting off, or none of them. This wouldn’t be a problem if the whole world used and operated on cryptocurrency, yet without this switch, using Bitcoin remains a niche. For people in developing countries, individuals without bank accounts, or those using it for remittances, Bitcoin still isn’t useful for solving the problems they are facing, and thus there is little incentive to use it.

Merchant adoption helped make Bitcoin more useful in the real world, but how can we learn from its success story to make Bitcoin more useful to consumers? 


Lessons from Merchant Adoption

One major step towards consumer adoption could be spurred by allowing consumers to use the Bitcoin transaction network without needing to handle the currency token or worry about its volatility. 

A popular initial critique of this view is, “but that’s not true, consumers don’t want an irreversible payment network because then they l