Bitcoin’s uptake with popular and leading online retailers has been slow, but since its rapid surge in value and interest recently, it has regressed. Fewer, rather than more, retailers are accepting Bitcoin as a form of payment.
Last year five retailers in the world’s top 500 biggest online stores were accepting Bitcoin according to the publication Internet Retailer, now, however, it has emerged that the figure is down to just three.
Where is the growth?
It is a perplexing discrepancy in the growth of Bitcoin to its acceptance by online merchants, as noted by Morgan Stanley payments analyst James Faucette. He believes that Bitcoin's growth in value is actually a contributing factor to its decline as a functional currency.
"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."
Thus, the fact that people are far happier to hold onto their Bitcoins as an asset rather than a functioning currency means that there is little pressure on retailers to adopt it as another form of payment.
Slow and expensive
On top of this Bitcoin is facing a number of issues that are making it difficult to use in the context of everyday shopping. The scaling debate continues to rage as it became evident that Bitcoin stuttered when too many transactions were pushed through its Blockchain.
Slower, more costly, transactions are issues that would be hurting the retailer far more than the customer. Transaction prices hovering around $5 will have a huge impact on the retailer who has to bear the expenses.
When these fees hit such high levels, they essentially cut out a huge portion of the retail market as it becomes nonsensical to use Bitcoin for smaller, less expensive transactions.
Atlantic Financial founder and a board member at the Bitcoin Foundation Bruce Fenton said in an interview that things like sandwiches and coffees are not viable markets for Bitcoin to operate in because the fee can be more than the cost of the item.
"There’s a problem with the fees being so high - it does price out certain things. There are some micro transaction use cases - 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."
Still some success stories
It is not all doom and gloom in the world of retail and Bitcoin though. In Japan, the adoption into brick and mortar stores is on the rise. Recruitment Lifestyle, a retail giant, has implemented a Point of Sale app that is Bitcoin-ready for 260,000 of its stores. Even its popular electronics market place, Akihabara, is on a huge Bitcoin adoption drive.
In the United States, champion of Bitcoin in retail, Overstock.com has said that since it started accepting the digital currency in 2014, it has seen triple the transactions coming through its online doors.