The future of Bitcoin will depend on, among other factors, the use in retail as an accepted regular payment method by leading retailers. There are three factors that can affect the take up of Bitcoin by retailers, volatility, speed of transaction and cost.
There will never be any more than 21 million Bitcoins globally. This sets a precedent for an established stable price. However, currently the volatility of Bitcoin is still, ‘finding itself’ as far as price or value is concerned and the current fluctuation makes it difficult for any retailer to set a price for their goods or services in Bitcoin. The price of Bitcoin has been fluctuating sometimes up to 30 percent. As Amazon, for example, work on a percentage, selling a book for 20 dollars therefore would find it untenable if they only get 14 or 16 dollars for the book one day and 24 dollars the next day. Apart from the unpredictability, it would also involve complex financial dexterity to maintain records and work out costs and profit margins. The cost of doing business that way would be impracticable. For retail, who operate on small margins and small transactions the volatility will need to stabilise out to within 2 to 5 percent at the maximum.
Speed of Transaction
Speed of transaction is a critical point and here is where Bitcoin has had past issues. With the advent of Segwit, the speed of a Bitcoin transaction has sped up satisfactory and no doubt further improvements will be forthcoming, especially with improved hardware looming up over the coming months. Sometimes confirmations can be slow or there can be a queue. Basically when there are many people sending Bitcoin from one wallet to another this can cause a massive increase in the block size on the blockchain. Once a block reaches its maximum size of 1MB the rest sit in an unconfirmed state, rather like a queue waiting to be serviced until that current block is mined. But there is a solution called Speedybit. Speedybit is a system that accelerates transactions. It works by providing a confirmation guarantee on all premium ($9.99) accelerations if the transaction has 150+ sat/B in fees and on all advanced ($4.99) accelerations if the transaction has 300+ sat/B in fees. Useful if you have low-fee transactions that have been unconfirmed for hours? The Speedybit accelerator works by rebroadcasting bitcoin transactions back to the blockchain. The premium acceleration rebroadcasts transactions automatically at optimal off peak times giving a much higher chance at confirmation. Rather like jumping the queue. As in any system, one needs to do one’s due diligence before using any system.
At one point it was ‘costing’ up to 30 dollars in value to make a Bitcoin transaction. Thankfully those days are over and although the cost for tiny increments of bitcoin, such as a satoshi (a one millionth of a Bitcoin) for example, are still prohibitive, the cost being more than the value of the transaction still) it is moving in the right direction. Some of the alt coins, such as Bitcoin cash, Ethereum and the like attract a much smaller cost per transaction and such coins as Stellar and Electroneum were originally designed for small transactions. Bitcoin however is highly practical for the bigger ticket items. Real Estate and cars (yes even Lambos) are successfully being sold using Bitcoin and it is foreseeable that even businesss may be bought and sold with Bitcoin in the not too distant future.
Having said all that the large retailers are interested in Bitcoin and the advantages it carries such as non-reversible transactions and Amazon Technologies, an Amazon subsidiary, has been filing patents relating to Bitcoin and has secured some domains including amazonbitcoin.com according to Whosis. Also Starbucks among others have expressed interest in using Bitcoin as soon as the currency has stabilised.
Another interesting way of using Bitcoin is with crypto-credit cards. Some of these are currently available such as Monaco, a Swiss company, TenX from Singapore and savedriod from Frankfurt in Germany. They are still somewhat cumbersome in that the user has to convert the amount on the bill to fiat currency before they can pay. It is likely that once the large retailers start accepting Bitcoin and altcoins as payment this problem will go away and Bitcoin will enter the retail market and become fully mainstream as a currency.
This article is for information purposes only and is not to be construed as financial information for any purposes such as investment or speculation and it is the responsibility of the reader to perform proper due diligence before acting upon any of the information provided. We recommend that you consult with a licensed, qualified investment advisor before making any investment decisions.