Retailers Turn Their Backs On Booming Bitcoin: Trade Magazine

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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.

Faucette said:

"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.

Pricing out
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.

Fenton notes:

"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.

[OROBTC]

...

Merchant acceptance of Bitcoin is the "other thing" that has to happen before BTC becomes big.  We of course need more interest from the public, and we need more merchants to accept it.

One thing that would certainly help is if they arrive at a sensible agreement re BTC's scaling problems.  They solve that, and the public (and merchants) will likely be more interested in taking a look.

Falcon Private Bank (of Switzerland) has just announced that they will offer BTC to their customers, a nice little plus today.

IMO, the next few weeks are important to get things done right.

[gentlemand]

Merchant acceptance has always been a side show and will be for a long time to come. It'll be the last thing to properly fall into place. I do appreciate the possibility of spending it directly but most Bitcoin users are hoarding or trading.

[The_Dark_Knight]

...

Merchant acceptance of Bitcoin is the "other thing" that has to happen before BTC becomes big.  We of course need more interest from the public, and we need more merchants to accept it.

One thing that would certainly help is if they arrive at a sensible agreement re BTC's scaling problems.  They solve that, and the public (and merchants) will likely be more interested in taking a look.

Falcon Private Bank (of Switzerland) has just announced that they will offer BTC to their customers, a nice little plus today.

IMO, the next few weeks are important to get things done right.

I personally think it is the other way around, once people have bitcoin and are willing to use it, then merchants will accept bitcoin for the simple reason they do not want to be left out of the action, think of this in the same way as credit cards, at first no one accepted them and now is very rare to find a store that does not accept credit cards.

[Schuyler]

...

Merchant acceptance of Bitcoin is the "other thing" that has to happen before BTC becomes big.  We of course need more interest from the public, and we need more merchants to accept it.

One thing that would certainly help is if they arrive at a sensible agreement re BTC's scaling problems.  They solve that, and the public (and merchants) will likely be more interested in taking a look.

Falcon Private Bank (of Switzerland) has just announced that they will offer BTC to their customers, a nice little plus today.

IMO, the next few weeks are important to get things done right.

I personally think it is the other way around, once people have bitcoin and are willing to use it, then merchants will accept bitcoin for the simple reason they do not want to be left out of the action, think of this in the same way as credit cards, at first no one accepted them and now is very rare to find a store that does not accept credit cards.

But as stated in the article, merchants doesn't feel the pressure to accept payment via bitcoin because it's function as a currency is being overshadowed by its appreciating value. So people tend to just hold and and let their money grow instead of looking for ways on how and where to spend their bitcoins.

[franky1]

...

Merchant acceptance of Bitcoin is the "other thing" that has to happen before BTC becomes big.  We of course need more interest from the public, and we need more merchants to accept it.

One thing that would certainly help is if they arrive at a sensible agreement re BTC's scaling problems.  They solve that, and the public (and merchants) will likely be more interested in taking a look.

Falcon Private Bank (of Switzerland) has just announced that they will offer BTC to their customers, a nice little plus today.

IMO, the next few weeks are important to get things done right.

I personally think it is the other way around, once people have bitcoin and are willing to use it, then merchants will accept bitcoin for the simple reason they do not want to be left out of the action, think of this in the same way as credit cards, at first no one accepted them and now is very rare to find a store that does not accept credit cards.

But as stated in the article, merchants doesn't feel the pressure to accept payment via bitcoin because it's function as a currency is being overshadowed by its appreciating value. So people tend to just hold and and let their money grow instead of looking for ways on how and where to spend their bitcoins.

well the tx fee war (not bitcoin price) is the real killer.

[ebliever]

Some of the underlying scaling debate involves the question of Bitcoins ultimate role. Will it be a store of value, or a replacement for cash?

It probably cannot be both. Optimizing the protocol for one function will tend to undermine it for the other function at too many points of conflict. Given that Bitcoin is developing thus far as a store of value, with increasing but volatile value, that doesn't make it very effective as a cash replacement. It is probably better to let other coins play that role. Particularly since a cash replacement will have a high velocity if it is used as such, which will drive down the value of the coin.

[jekjekman]

well the tx fee war (not bitcoin price) is the real killer.

I agree with this tx's thing.

However if they think Bitcoin is an asset more than a currency then they are right in their own mind of thinking but what is happening right now in terms of the price of bitcoin is just normal, because there is no overnight success in here.

What do they want to happen that the bitcoin's price will continue grow nonstop. traders of this currency is thinking also on when to invest that is why this is happening and most of them are basing their judgment in the news mostly so if they are aware of what will soon happen they will hold and think first before they click it. What I think of this article writers and opinion naysayers that if their investment doesn't grow in their own prefer time they will write bad about something instead of thinking the right way to do greater things.

[NJB18]

"Bitcoin's growth in value is actually a contributing factor to its decline as a functional currency"

There is some truth in this. I think I am one of those people who only spend bitcoin if the necessity calls. Without such necessary call to spend my precious bitcoin, why would I? By just holding to it, we are already making some more money, so why spend them when it's value is definitely rising on the charts?

But of course this is not the only factor that stops people form spending their bitcoins.

[pooya87]

this sounds more like  another on of shitposts from "cryptoccoinnews" which is a known shit--news-post!
so far these retailers which i am sure the author of what OP copy pasted here have never seen or read about, have been accepting bitcoin with open arms. specially in countries that have regulated bitcoin and also removed taxes on bitcoin when you use it to buy stuff.
things surely became slower because of the 3-4 months of severe spam attack which caused the higher fees and also because of the scaling debate. but it is only SLOW never stopped!

[The Sceptical Chymist]

Merchant acceptance has always been a side show and will be for a long time to come. It'll be the last thing to properly fall into place. I do appreciate the possibility of spending it directly but most Bitcoin users are hoarding or trading.

And the other thing is that merchants don't want bitcoin, they want fiat--and I totally don't blame them.  While they may allow customers to pay with their bitcoin, they don't end up holding bitcoin themselves.   Think about that.   So why would you want to spend your valuable crypto when you can spend your inflationary fiat?  I do think wider acceptance is a good thing overall,  but only in a "popularity contest" sense.  I really don't care to spend my bitcoin.

[Lorilikes]

The truly money minded people out there will not turn their backs on any funds regardless of origin. Merchants who say no to Bitcoin say no to millions of spenders, and it's their loss.  Soon enough we will be scanning and paying for our coffees with btc especially after the fork once our fees are back to a decent size. .

[Sithara007]

The argument that Bitcoin users are not making payments in BTC because Bitcoin has appreciated in value doesn't make any sense. Because the payments need to be made, either in BTC or fiat. The user can convert a part of his fiat to Bitcoin, and use these coins exclusively for making payments.

[RoommateAgreement]

The argument that Bitcoin users are not making payments in BTC because Bitcoin has appreciated in value doesn't make any sense. Because the payments need to be made, either in BTC or fiat. The user can convert a part of his fiat to Bitcoin, and use these coins exclusively for making payments.

exactly this.
whenever i want to buy something and i am presented with 2 options of paying with something like credit card (high fees, no privacy, and taxes,...) and also bitcoin (low fees (currently extremely low because no spam), high privacy, no taxes,...) i will always choose the bitcoin option in a heartbeat.

not to mention that there are many options for buying retailers gift cards at very low prices and saving up on a lot of money!

[Yakamoto]

The argument that Bitcoin users are not making payments in BTC because Bitcoin has appreciated in value doesn't make any sense. Because the payments need to be made, either in BTC or fiat. The user can convert a part of his fiat to Bitcoin, and use these coins exclusively for making payments.

exactly this.
whenever i want to buy something and i am presented with 2 options of paying with something like credit card (high fees, no privacy, and taxes,...) and also bitcoin (low fees (currently extremely low because no spam), high privacy, no taxes,...) i will always choose the bitcoin option in a heartbeat.

not to mention that there are many options for buying retailers gift cards at very low prices and saving up on a lot of money!

The big thing about this that a lot of people seem to be forgetting is that Bitcoin is often purchased as a speculative investment by a majority of users, really. A lot goes on in exchanges and nearly $1B USD (if not more) passes through the exchanges on good days, and not a lot of that is moving outside of exchanges and through stores.

Keep in mind; most people do not work for Bitcoin, they buy it. Most of those who buy it buy it as a means of generating more money, in a fiat sense, through the market. Buying items with Bitcoin takes away from future profits. Hence, they won't buy anything.

It's not hard to understand.

[BitFinnese]

...

Merchant acceptance of Bitcoin is the "other thing" that has to happen before BTC becomes big.  We of course need more interest from the public, and we need more merchants to accept it.

One thing that would certainly help is if they arrive at a sensible agreement re BTC's scaling problems.  They solve that, and the public (and merchants) will likely be more interested in taking a look.

Falcon Private Bank (of Switzerland) has just announced that they will offer BTC to their customers, a nice little plus today.

IMO, the next few weeks are important to get things done right.

I personally think it is the other way around, once people have bitcoin and are willing to use it, then merchants will accept bitcoin for the simple reason they do not want to be left out of the action, think of this in the same way as credit cards, at first no one accepted them and now is very rare to find a store that does not accept credit cards.

But as stated in the article, merchants doesn't feel the pressure to accept payment via bitcoin because it's function as a currency is being overshadowed by its appreciating value. So people tend to just hold and and let their money grow instead of looking for ways on how and where to spend their bitcoins.

well the tx fee war (not bitcoin price) is the real killer.

I agree, the tx fee is the one pushing bitcoin down.  The price is ignorable if we are getting what we are paying for.  Meaning.. it is ok to buy bitcoin at higher price as long as its system is flawless but would you buy a stuff that is flawed?  Once this scaling and transaction fee problem is solved, people will flock in ignoring the increase in price because they know they are buying a quality "item" that will benefit them in the long run.

[Kakmakr]

What did they expect? Bitcoin has scaling issues to handle mainstream adoption and when something is suggested to fix it, it gets bombarded with counter suggestions and stall tactics to slow it's progress with updates. It also gets spammed to shit by some unknown entity to sabotage it's progress. < This is the cause for higher fees and slow transaction confirmations >

In the struggle for power and greed, the users suffer the most. ^grrrrrr^

[Wind_FURY]

Who cares, only a portion of Bitcoiners will use the currency to buy retail items from them anyway. The dark markets are another matter. If you are a drug addict and you want the safest way to buy drugs then you will NEED Bitcoin.

[The_Dark_Knight]

Some of the underlying scaling debate involves the question of Bitcoins ultimate role. Will it be a store of value, or a replacement for cash?

It probably cannot be both. Optimizing the protocol for one function will tend to undermine it for the other function at too many points of conflict. Given that Bitcoin is developing thus far as a store of value, with increasing but volatile value, that doesn't make it very effective as a cash replacement. It is probably better to let other coins play that role. Particularly since a cash replacement will have a high velocity if it is used as such, which will drive down the value of the coin.

The reason bitcoin does not move much has nothing to do with bitcoin itself, it has to do with economic principles, if you have a coin that has 100% silver and you have 10 other coins with 10% silver then you are going to spend the coins that have the lower content of silver first and the one that has 100% silver will be the last coin to be spent.

[CryptoBry]

This is just like saying that Bitcoin has became a victim of its own success. Per the article above, retailers are shying away from Bitcoin due to its appreciating value or in other word it is still about volatility issues. Now, we all know this whole thing but am wondering do we really need a hoard of retailers to come to Bitcoin just to be able to say that Bitcoin is very useful or whatever?

We can not force retailers and any business entities for that matter to come and accept Bitcoin in their business operations as things can take time. Maybe what we should do is always listen to these retailers and maybe they have some demands that need to be meet first before they would join the Bitcoin party.

Maybe there should be companies or business whose interest is to provide the correct infrastructure and system so that these retailers can join Bitcoin and their apprehensions solved.