Launched in 2009, Bitcoin quickly became one of the most famous cryptocurrencies on the market. Within five years its value exponentially increased and many now consider it a legitimate currency. It is based on a complex system few outside of niche tech circles understand, which makes it difficult for laymen to have faith in its value and longevity.
Essentially, you can think of Bitcoins as files in a digital wallet. Bitcoins can be sent to others or used to make purchases, and regardless, all of these transactions are automatically recorded in a public log. This log is used to verify ownership; however users are anonymous unless they disclose their identification number.
Why Aren’t More People Using Bitcoin?
Although cryptocurrency is relatively easy to use, many are still put off by its complex design and approach with overt caution. Safety is one of the primary concerns new users have when they are first introduced to Bitcoin. Like all things digital, it is theoretically possible to ‘hack’ Bitcoin. However, it is difficult to the point of being virtually impossible.
Blockchain, the system of encryption that secures Bitcoin, may take billions or even trillions of years to crack. This also goes beyond Bitcoin, there are hefty incentives to crack the encryption models used throughout the internet, but hackers have yet to discover a way to do it. If you can trust the internet with your sensitive data, there is no reason to distrust Bitcoin.
A far more pressing concern when it comes to Bitcoin is its lack of stability. Bitcoin is notorious for sudden, dramatic changes in value. For example, in 2017 its value went up by over 1800%, then dropped by 50% in February 2018. Over the course of its run, it has a tendency towards rising, but investors are capricious and may start unloading at any moment given unfavorable news.
Investing in Bitcoin also entails a fair amount of risk, as investors are often unable to unload large sums of Bitcoin at a single time. For those holding a lot of Bitcoin, it is unclear if they will be able to liquidate their Bitcoin into fiat currency without disrupting the market, if they are able to at all.
What Does All of This Mean for E-Commerce?
On paper, it’s easy to see why Bitcoin, and cryptocurrency in general, suits e-commerce so well. Bitcoin isn’t weighed down by banking bureaucracy or conversions; this means transactions are often immediate and incur only limited fees.
The privacy and anonymity offered by Bitcoin also serves to bring in new customers because users don’t have to worry about keeping sensitive purchases a secret. Cryptocurrencies are also generally safer than alternatives like credit cards.
These attributes improve both the customer’s and seller’s experience, however sellers may be keen to know that Bitcoin transactions are irreversible, so they never have to worry about chargebacks. Big brands are already adopting Bitcoin into their regular payment systems, such as Microsoft, Expedia, and AT&T.
Despite all of these perks, there are too many disadvantages to make Bitcoin a feasible method of payment for most e-commerce stores. Its volatility makes it difficult to retain Bitcoin for extended periods of time, meaning sellers would have to unload their Bitcoin regularly. It simply isn’t manageable or practical right now, especially for small businesses. However, it is undeniable that the potential is there and in the coming years, it may very well revolutionize e-commerce as we know it.