Will the adoption of Bitcoin by large retailers have an impact on the transaction volume?
The range of products that can be bought with Bitcoin has grown significantly since the beginning of 2014 as more and more large online retailers have followed their customers’ demands to start accepting Bitcoin payments.
In the early days of 2014, Overstock started accepting bitcoins as a form of payment. After the Chinese central bank prohibited financial institutions from processing Bitcoin transactions, it came in as good and refreshing news for the cryptocurrency. A few days later, TigerDirect announced that it started accepting Bitcoin as a method of payment on its desktop and mobile websites. It claimed to be the first major US electronics retailer and largest company to do so. On June 11, Expedia began accepting bitcoins for hotel bookings and it now declares that Bitcoin sales have exceeded the estimates.
The largest company to accept Bitcoin payments so far is DISH TV, which’s revenue in 2013 reached almost 14 billion USD and has over 14 million subscribers. Newegg, a giant online retailer made an announcement on July 1 that it started accepting BTC. It is certainly one of the favorite online stores when it comes to building custom mining rigs and could help Bitcoin become a mainstream payment option. "Adopting Bitcoin as a payment method is another way we’re responding to our customers’ diverse needs," said Soren Mills, Chief Marketing Officer for Newegg North America. The online flower delivery service 1-800 Flowers started July with an announcement that it will integrate the Bitcoin payment option throughout all of their family companies.
The adoption of Bitcoin as a mean of payment for goods and services by a growing number of large retailers is a great sign and consequence of the hard work that is being done by the Bitcoin community. The whole community is doing its best promoting the reliability, credibility, usability and security of Bitcoin as a payment option.
Not only does the adoption of Bitcoin by Overstock, Newegg, TigerDirect and other major players attract mainstream media attention but it also makes Bitcoin spending more attractive. In order to increase the adoption of Bitcoin, its function as a payment method has to overcome the shadow of speculation.
Some great examples of community driven initiatives to get people to spend their BTC is Bspend.com. Bspend provides the community with the largest database of products that can be bought with bitcoins. It maps Bitcoin oriented stores and retailers like Overstock, DinoDirect and Tigerdirect and make it easy to search through goods sold for bitcoins.
And if Bspend is sort of like the Bitcoin Amazon, Cryptothrift is more of an auction website like Ebay that also allows its users to buy and sell goods and services for digital currency as well. There is also the newcomer spendabit.co, which is a search engine that’s useful for finding pretty much everything that can be purchased with BTC. Another "one-stop-shop" type site is bitgazetteer.com which lists Bitcoin-firendly stores, offers, and even ATMs.
There is still a long way to reach the spread Bitcoin merits to have. People that have never used it before must become familiar with it and gain trust in the new technology. Consumers now use and trust payment processors such as PayPal that were in a similar position just a few years ago.
Nevertheless, Bitcoin payment processors have proven to be credible partners for large online stores. When using Bitcoin payment processors such as BitPay or Coinbase, for example, stores don’t have any volatility risks connected with their sales as the payment amount is automatically converted into fiat. The fees applied to Bitcoin payments together with the settlement time are very low compared to traditional means of payment (for more on how to start accepting BTC, go here).
Only about 21 million will ever be created and due to its deflationary nature, we can surmise that a lot of people will view Bitcoins as an investment and hold on to them. Volatility affects transaction volume as well. People that possess BTC tend to keep them when the price is more or less stable. But when the price is on the move, peoples’ emotions such as fear and panic can often cloud their thinking causing many to buy high or sell low.
But price volatility may soon be a non-issue as more and more giant retailers begin accepting Bitcoin payments and supporting the ideology. We are already seeing less price volatility due to wider acceptance, increasing market cap, greater trust in P2P networks, and, of course, merchant adoption relative to the same periods of just a year ago. Earlier this year, the Washington Post suggested that given these trends, the BTC price is expected to stabilize in the future.
Moreover, volatility should recede even further as the market matures and when businesses begin to trust the network enough to hold the coins rather than convert them instantly via a processor.
Therefore, as Bitcoin gains mainstream acceptance, the real question might soon be not whether retail can help Bitcoin but whether Bitcoin can help retail.