Bitcoin’s 10x Products
In two recent posts from Greylock Partner’s Sarah Tavel, she argues that successful businesses don’t just create a product that is 10x better than what exists. They create a 10x better product that is also cheaper. Uber is the quintessential example here — not only is it a better experience than a taxi, it’s also half the cost. She argues the mistake many companies make is focusing on a 10x better product that ends up being the same cost or more expensive, and that this ends up not working.
This got me thinking about bitcoin. The real issue with bitcoin isn’t that it’s not cheaper than alternatives — it is cheaper. The issue is that the end products built around bitcoin aren’t 10x better than what already exists. In fact much of the time products built around bitcoin are only half as good as Visa/Mastercard/ACH/wires.
Bitcoin e-commerce transactions are a great example of this. Receiving payments in bitcoin saves 2–3% for merchants and eliminates fraud and false declines (this remains true even if the merchant instantly cashes out to dollars via Coinbase/Bitpay). It is definitely cheaper than alternatives. However, is it a 10x better product for consumers? Absolutely not. Between pay-with-Paypal, credit card 1% kickbacks, airline miles, and slick UX provided by companies like Stripe, the bitcoin checkout process feels clunky by comparison, and definitely doesn’t offer a 10x experience — if anything it’s more like a 1/2 experience.
Bitcoin has cost-saving advantages built into it — cheaper, faster, un-censorable, and global payments. But it doesn’t yet have a critical mass of 10x products.