Bitcoin commerce is broken.
--
Despite many major brands now accepting bitcoin, mainstream users haven’t arrived in droves as expected. And while the industry has made progress, there is still friction related to spending bitcoins. This is highlighted in the documentary film “Life on Bitcoin” which I had the pleasure of viewing last week. It progresses through the 100 day journey of a couple living entirely on bitcoin. Beccy and Austin flew halfway around the world and survived a cross country road trip simply by convincing merchants to accept bitcoin for food, shelter, and gas.
Unlike the early days of the internet, most consumers haven’t been thrilled to see yet another payment option. And despite the appearance of a “Buy with Bitcoin” button, even the most hardcore bitcoin enthusiasts chose their credit card over cryptocurrency. It’s hard to compete with the credit card companies and banks who’ve spent decades creating elaborate incentive structures.
Bitcoin commerce needs to make economic sense for everyone involved in a transaction. It’s only a matter of time before we see large retailers, such as Expedia or Overstock, exit Bitcoin. They have already cited low usage. And since spending cryptocurrency is harder than a saved credit card, higher shopping cart abandonment rates won’t justify the savings on interchange fees.
However, at Purse, we have proved that consumer incentives do work. We provide a discount of 20% at Amazon and as it turns out, consumers are willing to jump through all kind of hoops for discounts, including learning how to use Bitcoin. But this shouldn’t be a surprise. For decades, coupon hunters searched through junk mail, clipped coupons, and participated in complex rewards systems like airline miles. In comparison, buying Bitcoin from Coinbase and spending it on Purse seems ridiculously easy.
So far, Purse only works at the world’s largest retailer. We brought liquidity to the $15B Amazon gift card market and helped convert unused gift cards into huge discounts for shoppers. Over the past year, our users saved more than $500k just for spending bitcoin and soon, we’ll be introducing solutions will allow consumers to spend bitcoins at any merchant with a discount, and a whole lot more.
Unlike existing merchant processors, we will not rely on traditional banks, and we won’t restrict trade. Instead, we will provide transparent consumer protection, escrowing every transaction through smart contracts. Merchants will enjoy an industry first “no approval” process, real-time settlement, and full control of their own funds.
As we begin to roll out beta access, we are looking to talk to businesses deemed high risk by credit card processors, as well as businesses with complex payment requirements. Bitcoin only makes sense for businesses that have difficulty with current card processing systems, and we are excited about opening the doors to new businesses.
If you haven’t saved by spending bitcoins, you should sign up here to receive free bitcoins.
Update: Free bitcoins for signing up with the link above expired.
Thanks to Scott Li and Thomas Hunt for reading drafts of this.
