I’ve heard before that merchant adoption on it’s own will not fuel consumer adoption of Bitcoin.
I tend to agree. Why would someone go out of their way to acquire Bitcoin at a cost only to purchase something when they could have much more easily used their credit/debit cards for free?
But I’ve been making it a point to shop around using Bitcoin lately and the discounts offered by merchants are significant.
Significant enough for me to first buy Bitcoin from coinbase regardless of price only to then do my shopping with those Bitcoin for the discount. Gyft and eGifter offer 3% back and for other individual companies such as Whollyhemp.com I’ve gotten as high as 10% off just for using Bitcoin. Even the The Jay-Z and Beyonce concert in Chicago is offering 25% off if bought with Bitcoin (limited). And just today Newegg has announced 10% off for items bought with Bitcoin.
As a consumer, if at checkout if I see a “buy with Bitcoin for 3%, 5%, 10% discount” option, well that is very enticing. If Bitcoin becomes almost seamless to acquire, maybe just a click of a button or an extra step at check out, things will definitely heat up in the market.
In this case consumers are using Bitcoin for it’s payment system not as a store of value. Bitcoin the payment system is so much more efficient than the antiquated payment systems we’re accustomed to that those efficiencies translate into cost savings. Merchants can then pass down those cost savings to customers in the form of discounts.
This will lead to new consumer demand and provide an influx of liquidity for the market. With Bitcoin being scarce, the result will be higher Bitcoin prices. It’s important to note that despite higher prices consumers will still acquire Bitcoin with their native currency at any price to achieve the discount. When this occurs, the sheer mass of people entering the Bitcoin economy will translate into a prolonged period of Bitcoin price appreciation.
This wont take long to happen. We’re about to see an avalanche of merchant adoption. There are already prominent online retailers accepting Bitcoin that include Overstock.com, Newegg.com, Expedia.com and just recently The CEO of Japanese e-commerce giant Rakuten, Hiroshi Mikitani, has announced that his company will probably accept bitcoin “sooner or later”. I suspect that most merchants will be on board with offering Bitcoin discounts as it will put them at a competitive advantage over others who don’t accept Bitcoin or who don’t pass on the cost savings to consumers.
There is still a technological hurdle to conquer for widespread mainstream usage of Bitcoin. However with consumer prices getting ever higher because of inflation people are desperate to save a buck. It’s my experience that people quickly figure out how to use technology if there is a financial incentive to do so. If the discounts offered by Merchants are significant enough, there will be wide spread adoption sooner rather than later.
tl;dr: Merchant discounts will fuel consumer demand for Bitcoin at any price just to achieve discount, putting upward pressure on price sending Bitcoin to the Moon.