It could be said that Bitcoin is in the midst of an explosion. At the time of writing, Bitcoin was nearer to reaching the $10,000 mark than ever before; Bitcoin’s market cap is over $166 billion, nearly twice that of Goldman Sachs ($89.2 billion).
Along with the recent announcement that the Chicago Mercantile Exchange will be offering Bitcoin futures trading options by the end of this year, it has also been speculated that the yearly boost in online retail sales around the holidays has been contributing to Bitcoin’s bullish run.
Hundreds of online retailers have adopted Bitcoin as a means-of-payment; even some brick-and-mortar shops have adopted the cryptocurrency. As the Bitcoin buzz grows, an increasing number of companies are eager to get in on the game.
Most recently, the South Korean underground Goto Mall (also knows as the Gangnam Terminal Underground Shopping Center) announced that all of its 620 stores will begin accepting Bitcoin payments in addition to the cash, credit, and Alipay payments that they already accept. The mall, which receives about 500,000 visitors every day, has also partnered with local exchange HTS Coin.
HTS Coin has developed a mobile app and a smart payment system that can be used at the mall; this is what makes the operation possible. While some of the mall’s retailers accepted BTC payments in the past, they “often lost their passwords and could not use the coins,” according to local publication Kyeonggi.
Mainstream Acceptance of Bitcoin Payments Began in 2014
To this day, Bitcoin continues to catch flack for its early association with online platforms for criminal activities and contraband materials, like the infamous Silk Road network, which was shut down in 2013. At the time, Bitcoin was the most anonymous way to pay for illicit services – or to pay for anything online, for that matter.
Overstock.com is known as the first legitimate online retailer to begin accepting Bitcoin payments rather early on. Overstock partnered with Coinbase to begin accepting payments in January of 2014, when Bitcoin was worth just over $800.
Later in 2014, online electronics retailer TigerDirect followed suit as the second online retailer to accept Bitcoin payments using BitPay. That year, it reported $1 million in BTC sales, although Bitcoin was largely considered to be a fringe movement at that point in time.
A series of other retailers and service providers hopped on the Bitcoin train in 2014. Dish Network and Expedia.com began accepting Bitcoin in large part due to customer request; Microsoft, Newegg, Zynga, Gyft, and others followed suit.
In September of this year, the Isle of Man-based Knox Group of Companies was the first to announce that it would be accepting Bitcoin payments in exchange for $325 million worth of commercial and residential real estate developments in Dubai. A growing number of independent people selling their homes have also reportedly been willing to accept Bitcoin payments.
Retailers aren’t the only ones hoping to fill their virtual pockets with BTC. Seemingly ahead of his time, Bellator champion Rory MacDonald has requested that the $500,000 payment for his next fight be paid in Bitcoin.
Ease-of-use has been a major hindrance to widespread Bitcoin adoption in the past. However, there are a growing number of apps and APIs that have been developed to make Bitcoin integration a more user-friendly process. Nowadays, it’s even possible to use Bitcoin to pay for Starbucks. While Foldapp allows customers using Bitcoin to pay for their frappucinos to get a 20% discount; the iPayYou app also supports Bitcoin Direct to Starbucks.
How Sustainable is the Bitcoin Ecosystem?
Bitcoin has long faced a scalability issue that it has been so far unable to solve. The network is only capable of confirming up to seven transactions per second; most of the time, that number is closer to three or four. As the cryptocurrency becomes more widely adopted for everyday use, the problem becomes a little more serious.
When the network is receiving a lot of traffic, it can take up to an hour (or more) for transactions to be processed; transaction fees also increase when the network is busier. Imagine using Bitcoin to pay for a $5 cup of coffee and having to wait for an hour for your payment to be processed. On top of that, the company that sold you the coffee may have to pay a $1-$5 fee. It’s not exactly practical.
There have been attempts within the Bitcoin community to update the Bitcoin protocol to increase the number of transactions that the network can process at once; so far, none has received enough community support to be successful.
Additionally, there are a few new cryptocurrencies that were designed with solutions to the Bitcoin network’s problems in mind. For example, the Dash network was built for scalability and easy, user-friendly integration as a means-of-payment; to date, it has racked up a few hundred online retailers.
Bitcoin Isn’t Going Anywhere Anytime Soon
Despite the scalability issue, however, many argue that the benefits of adopting Bitcoin outweigh the drawbacks. For one thing, Bitcoin is receiving a lot of publicity at the moment – in the crypto world, there is very nearly a direct correlation between the amount of positive press a coin is getting and growth in its value.
Bitcoin is much more easily transferable across borders (and currencies) than fiat money. For example, sending money from the United States to the eurozone using the traditional method involves a currency change, usually accompanied by a high fee from the bank or other service that is being used to send the money. If the same process was completed with Bitcoin, however, transferring money is as simple as sending the desired amount to the appropriate wallet address–no middleman involved, and the fee will likely be lower.
Additionally, the decentralized nature of Bitcoin provides a certain level of security that just isn’t possible with means-of-payment that rely on centralized servers. For example, customers who use Bitcoin to pay at a store are not at risk of having the personal information associated with their credit cards stolen.
It can also be argued that despite its volatility, Bitcoin is (in a way) more stable than any national currency ever will be. This is because it isn’t relying on the stability of any state economy to function or to retain value; its value comes from how often it is being used and how many people are using it. The more that it is used, the more stable (and more valuable) it becomes.
This morning, the Coinbase app was trending at #1 in the iTunes App Store. Bitcoin is soaring; the investor’s desire to get their hands on BTC combined with retailers’ opportunity to accept the cryptocurrency as a means-of-payment is a synergistic force that is just beginning to pump lifeblood into the Bitcoin ecosystem. While there may be trouble ahead with scalability in mind, it seems that the world is going long on Bitcoin.