(Image courtesy of bitcoins.idealogue.io)
It is good to know that more and more businesses have started accepting bitcoin. However, while it is encouraging to see this, the number of people using the popular cryptocurrency to make purchases has not been encouraging. Why is this so?
Few years back, it was difficult to convince many merchants to accept Bitcoin. These days, however, an increasing number of merchants have started accepting the cryptocurrency for payments, with global total put at around 7,000 by Bitcoin news service NewsBTC. There are many payment processors to give merchants peace of mind when accepting bitcoin payments.
The improvement in merchants’ readiness to adopt bitcoin has not led to significant use of the cryptocurrency for purchases, however. The number of transactions involving the use of the digital currency has not been really encouraging.
Why low usage for purchases?
The phenomenon of low number of transactions involving the use of bitcoin makes one to wonder what could be the problem. There is no single problem, however, but a combination of challenges that lead to low usage of bitcoin for purchases. Initially, the main problem confronting the average man was how to make sense of the highly technical terms that were commonly used in the bitcoin community. As the cryptocurrency becomes more popular, its use for money laundering and criminal practices contributed to douse the interest of many people. There was also the problem of wild volatility.
While it is true that there are numerous merchants that accept bitcoin, a closer look reveals that the distribution of these merchants is uneven. NewsBTC reports that Western countries such as the US, the UK, Canada, Germany and Netherlands have the greatest number of merchants that accepts bitcoin, compared to countries in other parts of the globe like Asia or Eurasia. Coinmap indicates a high merchant concentration in the North America and the Euro zone.
Another issue is that merchants operating in places outside North America and Europe do not have access to top local exchanges that would enable them convert bitcoins used for purchases into fiat currencies. This lowers interest in accepting the cryptocurrency for transactions among these merchants. It has been observed that the main purpose to which bitcoin is put in these areas is remittance as a result of low fees and fast processing.
One of the bitcoin benefits are low fees. However, this advantage virtually accrues to the merchants only, which probably explains why a good number of them are willing to adopt the digital currency for purchase payment processing. The customer does not benefit from these low fees as they are still required to pay the equivalent of fiat money in bitcoins. With no incentive whatsoever, a customer does not feel encouraged to pay with bitcoin, preferring instead to keep their funds for further use or to benefit from possible appreciation in value. This is the main problem that leads to few people taking advantage of increased adoption of the cryptocurrency by merchants.
There needs to be incentives for buyers to pay with bitcoin. It also helps to have exchanges with services extended to countries outside North America and the Euro zone to promote adoption.