The last couple of days have been good ones for Bitcoin, the digital currency that has grown in popularity in the last year. Which is good because last month saw the seizure of $28.5 million of bitcoins during the Silk Road shutdown. Plenty of people questioned the rise and ethics of bitcoin.
This week is a whole different story. The Senate conducted hearings on the legality and legitimacy of bitcoin, and in response, trading surged.
As Timothy Lee of the Washington Post said, “This Senate hearing is a Bitcoin lovefest.”
What does that mean for the average person?
Maybe nothing yet. But, last month saw the launch of BitDazzle, a marketplace for physical consumer goods that is the first of its kind to accept Bitcoin.
The site is the brainchild of Cashie Commerce, a company that helps users turn their sites into online stores, and Coinbase, a leading Bitcoin digital wallet. The companies are partnering to create an Etsy-like platform for small businesses trying sell products online, with the key differentiator being the acceptance of bitcoin.
I asked Cashie Commerce CEO Hieu Biu if it was really just a marketing scheme, and he insisted that it’s more than that. While the acceptance of bitcoin does help with marketing–especially this month–there is real benefit to merchants to accept bitcoin.
By nature, the cryptocurrency has a smaller transaction fee than credit cards: 2% as opposed to 7-9%. On Bitdazzle, Coinbase is waiving all transaction fees for the first $1 million a merchant brings in.
2% of $1 million is $20,000, right back in the pockets of smaller merchants across the country. That kind of money makes a real difference to small businesses.
I still have a hard time imagining using bitcoin for real, physical goods. The numbers and crypto-ness and all around digital nature trips me up, and I know I’m not alone.
“Don’t get too hung up on how it works,” Bui told me. “Just think of it as another form of payment.”
Coinbase is working to make it that easy. Similar to a PayPal account, you hook up Coinbase to your bank account. From there you can purchase bitcoins and spend them in the online marketplace.
Currently, somewhere around 90% of the transactions are done with bitcoin, a high early adoption ratio. For those customers on the fence about bitcoin, many merchants are offering discounts to buyers paying with the currency.
This isn’t the first bitcoin marketplace. Coingig and Bitcoinstore are both up and running, though they trend more towards electronics and gift cards and other goods that attract early adopters. And, of course, there was the less-savory Silk Road. How exactly is BitDazzle going to make the fairly large jump to the soccer mom market?
“Our goal is to be the kind of place my wife would tell her friends about,” Bui said. “We are working hard to keep it safe and secure.”
All merchants are screened and vetted before they are allowed to sell, and Bui assured me the first sign of illegal or unsavory activity will get a merchant booted from the site.
So, will Bitcoin become mainstream?
Despite the recent buzz, I think it’ll still be awhile before we can call it “mainstream,” but maybe not as long as you’d expect. Bui likens the current Bitcoin experience to the early days of PayPal: not always understandable, not always easy to use, but disruptive and gaining steam.
Before long my kids could be asking for Bitcoins instead of raiding the couch cushions for the old-fashioned metal kind.