Pizza and bitcoin — a famous example. How do we incentivise business to use bitcoin?

In May 2010 someone bought two large pizzas for 10,000 bitcoin.

This is a famous story that has done the rounds every time the popular digital currency has a bullish period. What I often wonder is whether bitcoin has the ability to push beyond being a store of value and become a transactional currency in its own right. There are 3 main items that I consider relevant
to the discussion. The first is whether there is significant incentive for the retail market to adopt bitcoin. The second is whether bitcoin can even be considered a transactional currency and the third is the behaviour of competitors reacting to digital currency.

During the ‘adoption’ phase of bitcoin the major incentive for a large contingent of retailers has been the novelty factor of digital currency. Businesses are attracting cryptocurrency fans and capturing the imagination of the general public at the same time. As time goes on, this effect will wear off. Another incentive is the minimal fees compared to other solutions in the market. The issue is most retailers have to run dual payment systems to service both fiat (that include legacy fees) and cryptocurrency. So as the novelty factor wears off business will need to lean more heavily on the cost savings of using digital currency.

This leads nicely into the second consideration relevant to whether business will continue its uptake of cryptocurrency as an option. That is whether the general public consider bitcoin as a store of value or a transactional currency. Due to the historically lucrative trading background of cryptocurrency, most
people consider their bitcoin as an investment first. In general, people are loath to part with their bitcoin to purchase everyday goods. Now this could change going forward, but currently the majority of the market and supplementary markets are geared around the ‘trading’ of bitcoin.

“My argument in favour of bitcoin as a transactional currency is the ever expanding reach of globalised trade”

My argument in favour of bitcoin as a transactional currency is the ever expanding reach of globalised trade. Business that is multinational can more easily setup a single payment method to service all of its customers. However I also believe that bitcoin (and relevant supplemental services) requires more
incremental development to reach the stage where it is setup to be a suitable transactional currency.

The often overlooked thorn in the side of cryptocurrency adoption is the significant resources and technological research behind existing payment services such as Visa. At present these existing payment processors are adequately servicing business and have been improving their service
delivery year on year. In order for cryptocurrency to compete, ease of use needs to be improved to drive adoption. If this can be solved I believe the fees will speak for themselves and digital currency will become the choice of globalised business.

If only the crypto community had a slice of those 10,000 bitcoins to help drive adoption, we would be in a much more advanced position today.