Written by Derek Andonian
There has been a lot of speculation about when the Bitcoin “Killer App” might be found. That is, what will we be able to do with Bitcoin that we won’t be able to live without once it catches on? Many have said that Bitcoin has struggled to gain mainstream acceptance because it doesn’t fill a great need or serve a new purpose that a lot of people care greatly about.
After giving this some thought, I have a feeling the real issue here is we haven’t fully wrapped our collective heads around Bitcoin yet. It’s a significant paradigm shift and we’re trying to fit it into the world that we know- so we don’t see the new scenarios that it already makes possible. I had a recent experience that I saw as an example of this.
Not long ago I went with someone to a Target store. While we were there, I used some Bitcoin in my Airbitz wallet to show him the new Fold gift card feature that has been integrated into the wallet. This makes it possible to (indirectly) spend Bitcoin at Target by using it to buy a virtual gift card, then having the cashier scan the phone screen at the register. Doing this allowed me to buy a bottle of Diet Pepsi with Bitcoin, at a slight discount.
My companion was intrigued, but he said it seemed like a lot to go through to make an everyday purchase. Admittedly, in cases like this he could be right- If all I do is buy Bitcoin myself so that I can experience the novelty of buying things in a new way, there isn’t much of a benefit to using it. But in other cases it could be the catalyst for a real breakthrough.
What sets Bitcoin apart the most from other payment methods is its openness. Bitcoin can be used globally, and is able to be sent anywhere in the world as easily as an e-mail. It is the same no matter what part of the world it ends up in, and can be used in any country as long as it’s accepted there.
This can open a lot of new doors that weren’t accessible before, especially for small businesses and individuals who work on a freelance basis- because by transacting in Bitcoin they now have access to a global customer base that they wouldn’t have been able to work with before, unless they went through an expensive intermediary.
This is something I’ve pondered quite a bit myself. I’ve done freelance website and graphic design work in the past, and to me it’s quite fascinating that if someone in England or Australia wanted to pay someone to build a website, I could do it for them if we transacted in Bitcoin. Of course there could be a lot to consider if this sort of thing is done on a regular basis at a more serious level, but to me it’s exciting, because it helps to give the smaller players a better chance against bigger companies.
A scenario like this could play out just as quickly and easily as a job where everyone is local if the conditions were favorable. The payment for something like this could be received immediately, and spent right away if there was a store nearby that accepted Bitcoin, or a workaround was available. If a transaction like the Diet Pepsi purchase I described earlier came minutes after someone was paid for an international website gig like the one I just hypothesized about, that would be quite impressive, wouldn’t it?
Of course, what is even more revolutionary than my Target purchase- when it’s available- is paying with Bitcoin directly to the merchant. There are lots of advantages to doing this, even if both parties are in the same area. Accepting Bitcoin is great for merchants, because the fees involved are much lower than they would be for a debit or credit card payment- and for small purchases these savings can be passed on to the customer, which gives them an incentive to use it in certain situations.
Card payments often have a fee of about 3% taken out, to help pay for things like payment processing and fraud prevention. This is why merchants like convenience stores and gas stations who sell small items will often have a “minimum purchase price” for card payments, with a fee added on if a customer goes below this price. But Bitcoin is far more secure than a card payment, and there’s no middle man needed to complete the transaction- so there’s no fee that has to be added on for small amounts. This allows a customer who pays with Bitcoin to make a small purchase electronically without being penalized. Bitcoin is often referred to as “digital cash”, and in situations like this the similarities really are striking.
On the internet this phenomenon is even more pronounced, and allows for exciting new possibilities. The idea of using Bitcoin “micropayments” as a way to show support for musicians or other content creators, or just to give someone something more than a “like” has gotten a lot of attention.
It’s probably unlikely that one scenario like these by itself is going to take the world by storm- because not everyone can benefit from them all the time. But if you stand back and look at the big picture, Bitcoin really does allow for some great new possibilities.
Derek Andonian is the Content Manager at Coinstructive. He is also the creator and administrator of ontheblockchain.net