A Cautionary Tale For Cryptocurrency In Travel
In 2014, Expedia decided to accept payments for hotels using bitcoin. Expedia was considered an excellent example of the benefits of using cryptocurrency in the mainstream for a long time. Unfortunately, the story did not have a happy ending. During the summer of 2018, Expedia stopped accepting bitcoin. Now that this has been said, there were good reasons Expedia originally made the decision to accept bitcoin. There were also reasons the company eventually made the decision to stop accepting cryptocurrency. This involves some interesting aspects regarding the blockchain community. The most interesting details of the Expedia story not only have a direct correlation to the general industry of travel, but encompass the whole of the entire blockchain community. This is because travel has the same issues as the other segments. There is a lot of information necessary to understand the story.
The Reasons Expedia Decided to Start Accepting Bitcoin
The Global Vice President of Expedia is Michael Gulmann. He made an important statement in 2014 to the press. He began by acknowledging the unique position of the company. He felt they were placed in a position enabling them to solve the booking and travel planning for both their partners and customers. He believed this could be accomplished by adopting the newest payment technologies. The idea behind the plan was for a capitalization by Expedia using alternate payment methods. This made sense because a lot of Expedia customers had already made requests for the company to accept bitcoin as a type of payment. This was when the company aligned themselves with Coinbase so their hotel booking system would be able to integrate bitcoin payments as their payment processor.
The Reasons Expedia Decided to Stop Accepting Bitcoin
Chances are good there were numerous reasons why Expedia decided to stop accepting bitcoin. The most common belief is the action was taken because cryptocurrencies have an unstable nature. There are also many businesses who prefer fiat over cryptocurrency as well as the general lack of commercial adoption. Below is a detailed look at the reasons Expedia chose to stop accepting and using bitcoin.
The Unstable Nature of Cryptocurrencies
The inherent nature of cryptocurrencies is unstable. This is one of the reasons bitcoin was primarily treated by Expedia as an experiment. The company was reliant on Coinbase for the conversion of bitcoin to United States currency. Since the price of bitcoin was highly volatile, Coinbase deposited the funds into the company’s bank account. Moving ahead to 2018, Coinbase made the decision to suspend their merchant’s custodial services. What this accomplished was to make it a lot harder for Expedia to process bitcoin payments. This was when Expedia made the announcement they would no longer accept or use bitcoin. At approximately the same point in time, a report from Cointelegraph stated Expedia’s competitor CheapAir made the switch to BitPay through Coinbase for this reason.
The CEO of TravelOnline is Glenn Checkley. He stated the instability of bitcoin made it unsuitable for travel transactions. This opinion was reinforced because Expedia had already discontinued accepting bitcoin for payments the previous year. He felt the instability of bitcoin was consistently increasing. He did not believe this was going to change anytime in the near future. He said there are new payment options becoming available every day. All of these options involve a stable and well established currency. This showed the instability of cryptocurrency was not entirely due to the volatility of the pricing. The technological decisions made by companies such as Expedia, Coinbase and CheapAir also impact the volatility factor.
The Lack of Commercial Adoption
The Senior Economist for Chainalysis in 2018 was Kim Grauer. She stated when the price of cryptocurrency increased so fast last year, she believed it meant $1000 could be lost one day just by spending the currency. She also mentioned the transaction fees were so high it made paying for a smaller ticket item such as coffee using bitcoin extremely impractical. The current form of bitcoin is being perceived and used for a speculative investment. The majority of companies do not accept bitcoin to purchase or sell services and goods. Chainalysis conducted a survey and proved this was true. They demonstrated seventeen of the biggest cryptocurrency processing services for merchants have been experiencing a steady decline. The figure of $411 million dropped to just $60 million.
Cryptocurrencies such as ethereum and bitcoin were never meant to be used as a vehicle for investments. They were created as a type of digital currency with the potential to revolutionize the way services and goods were sold and purchased by consumers. The founder of ethereum is Vitalik Buterin. He made a statement on Twitter that became famous. He said he believed too much emphasis was being placed on ethereum and bitcoin. He felt making it easy and simple for consumers to visit the corner to purchase cryptocurrency cards for between $5 and $100 should be the focus. All of this means the current form of cryptocurrency is being used primarily as an investment as opposed to an actual digital currency. More and more people who view cryptocurrency as an investment are wondering why anyone would want to use either ethereum or bitcoin for a hotel or to book a flight.
The Fiat Conversion
Expedia began accepting bitcoin as nothing more than an experiment. This meant they had to make the commitment to convert bitcoins to fiat. What this actually achieved was the company became willing to take bitcoin as a type of payment. Ultimately, Expedia preferred United States dollars to bitcoin. In regards to the story of Expedia, their desired payment method was never bitcoin. This cryptocurrency was used as a means of providing their customers with an additional service. This also enabled Expedia to compete with many of the other companies in their industry such as CheapAir. There are currently a wide variety of companies accepting cryptocurrency as a type of payment. Many people are wondering if these companies really do prefer bitcoin or would rather accept fiat.
The Final Remarks
Considering the final results, Expedia making the decision to stop accepting bitcoin as a type of payment is actually unfortunate. The decision shook up the entire crypto community. Some of the people using Expedia made threats to use Reddit to boycott their services. Frontier Mining employs Kyle Herron as the Chief Growth Officer. He made a comment that due to tools such as BitPay, every large company viewing cryptocurrency in this way would remain a mystery. He said both cryptocurrencies and blockchain technology have the potential to fill the incredibly large gap present in the travel market. It is important not to forget cryptocurrencies were created to be used as a type of payment. Instead, they are most commonly used as an investment.
This mindset has to change or a lot of the biggest companies like Expedia are going to stop accepting cryptocurrency as a payment option for their customers. This is the reason the story of Expedia must be viewed as a cautionary tale for the entire blockchain community. Some people believe cryptocurrencies including bitcoin were meant to be an investment for holding or trading. Other people believe they are nothing more than a type of digital currency meant for purchasing services and goods. Currently, cryptocurrency is attempting to be both. The problem is the massive gap between the two.
The Biggest Bitcoin Merchant
Expedia has become well known as one of the biggest merchants to agree to accept bitcoin payments since 2014. Market Exclusive spoke to one of the spokespersons for Expedia prior to reporting the company intended to stop accepting bitcoin for both bookings and flights. The spokesperson stated consideration was being given to adding new payment options. Expedia had to issue a public apology for the inconvenience caused to their customers for failing to provide their users with prior warning before making this change. According to the reports and speculation, Expedia encountered numerous issues while using the bitcoin payment option. This included the dissatisfaction of the users regarding the payment method time out. Some of these individuals who had already made a payment using cryptocurrency were notified they were required to use their credit cards for payment. The refund process for any orders that were cancelled was hectic.
The Reasons Expedia Decided to Stop Using the Coinbase Exchange
Some of the followers of the Expedia community made speculations as to why Expedia stopped accepting bitcoin payments. This may have been due to the new trading tool Coinbase introduced to the bitcoin payment processors that changed their custodial merchant service. Coinbase never gave any reasons for making this change so quickly. Some of the customers of the company are convinced the change resulted from the high service fees Coinbase leveraged. Prior to these changes, Expedia had been using the exchange platform from Coinbase for four years, ever since they first began accepting bitcoin as an option for payment. At this time, the market cap for the cryptocurrency was a lot lower. Coinbase initiated the payment option for bitcoin. Expedia customers were directed through the website option to the website for the Coinbase Exchange.
CheapAir is one of the other online travel agencies who switched to BitPay and discontinued their use of the Coinbase exchange platform. This occurred after the changes Coinbase made to their custodial solutions policy. CheapAir believed initiating digital currency payments using a dependable payment processor was critical for the company. CheapAir additionally stated they would accept digital payments for bitcoin cash, bitcoin, litecoin and dash. The difference is, the payments will be initiated through the BitPay Exchange. Coinbase was left to believe their exchange services would continue to be used by their merchants. The company is hoping the volatility reflected in the current cryptocurrency will not discourage businesses from using their exchange platform. The Expedia community members made it clear on Reddit they believe the travel agency should use other payment options as an alternative. Cryptocurrency is used to pay the salaries of the some of the community IT workers. For these individuals, using bitcoin as payment for Expedia flights was extremely convenient.