Bitcoin: Is the new digital currency a good fit for e-commerce?
CEO, Spreadshirt Inc.
Bitcoin, the new digital currency, is often referred to as a cryptocurrency and is hailed as a solution for global payment transactions in some circles. It does work as a peer-to-peer distribution system and is currently used by some businesses for trading.
[EDITOR'S NOTE: The Bitcoin system was created in 2009, and its founders have not been publicly identified. However, they say that the design of the system will prevent more than 21 million Bitcoins from being created, which should prevent anyone from creating large quantities of the digital currency and thus devaluing each Bitcoin. Bitcoins can be purchased for conventional currency on a number of online exchanges, and they are accepted for payment on some web sites. Their value fluctuates based on supply and demand. Bitcoin enables anonymous payments, which makes them attractive for certain kinds of purchases, but also raises fears among law enforcement agencies about their potential use for money laundering and the purchase of illegal goods.]
As the CEO of an e-commerce company who has been involved with the internet since the ‘80s, my opinion about Bitcoin is that we just aren’t ready for it yet, and may never be. This may dismay some of the proponents of Bitcoin, but let’s break down how it is being sold as an easy solution for an e-commerce business that currently accept several currencies.
The more important question is: How is Bitcoin really a relevant concept for the average online customer? Currently at Spreadshirt, we’re not getting any consumer-led demand for this currency. In fact, to date, not even one of our thousands of customers or shop-partners has requested to pay or be paid in Bitcoin. When you already have widely accepted and recognized currencies, why would you want to confuse things and demand another kind of payment? Our motto is always “keep the experience simple and fast for the consumer.”
As a British executive, I reluctantly admit to some bias against any currency without a picture of the Queen as real money. However, my childhood view has been liberalized after residing in America and in the Eurozone. Kidding aside, I still seriously question whether Bitcoin makes ANY sense for consumers. They already have multiple payment options like credit cards, direct payment and other methods that work just fine. Most notably, these options cost the consumer nothing. If the consumer can’t come up with a compelling reason to adopt it, why would a retailer pursue it?
In the spirit of open-mindedness, I believe that all businesses must think ahead and future-proof all practices for continual success. So, as a mass-market retailer, here is my list of five reasons that the average consumer might consider using Bitcoin, and why they aren’t doing so yet:
1) Better security? Most online customers are not displeased with existing transaction security when using current methods of payment. Most are fairly tolerant to the current risks and are not averse to online shopping. The most concerned shoppers tend to shop with trusted brands to reduce the risk factor rather than switch payment methods.
2) Zero percent fraud? This is a retailer problem not a consumer one. Most credit cards offer fraud protection to consumers. The transactor and retailer cover the cost, so the consumer does not care. Retailers cannot force consumers to use payment to suit their needs. (I promise you that if I could reduce the 1% fraud on my business I would). The recent news stories highlight that as the digital currency becomes more popular, Bitcoin also becomes an attractive target for cybercriminals. If Bitcoins are taken, the consumer or retailer could just plain be out of luck.
3) Lower costs? There won’t be any lower costs passed on to the consumer since very few retailers offer lower costs to those who pay with something other than a credit card. (In fact, many retailers are not allowed to under current payment contracts.) Other than tickets for events or travel, it is rare to incur extra charges for credit cards, and most consumers have debit cards.
4) Less complexity? Hmmm. So a consumer has to get another currency from their everyday one and then try and work out the pricing? Well that’s not exactly likely to be easier or faster!
5) Ideology of "sticking it to the man.” The mass-market IS "the man" and wants to use what works for the man, or they just don’t care. Therefore, this mindset will always make it a minority issue.
Bitcoin, in essence, is a currency system that is largely designed for the tax-avoiding rich who are anti-establishment and need to send money to really difficult places.
If Bitcoin has no mass-market appeal, it will be of little use to e-commerce retailers and platforms. I am receptive to a debate on this topic; just show me a good argument for mass-market usage. Certainly, the Internet has proven that revolutionary new ideas do catch on despite naysayers. However, my job is to try and cover as many of our customers’ needs as possible, so if eventually enough people tell me they want to use Bitcoin, then Spreadshirt will adapt and find ways of taking Bitcoin payments.
Based in Leipzig, Germany, Spreadshirt is a web-only retailer of customizable T-shirt and sweatshirts. It is ranked No. 273 in the Internet Retailer Europe 500 and maintains a U.S. office in Boston.