Is Bitcoin the Payment Game Changer or the Next Shiny Object?

Feb 17, 2014 2:49 PM  By

Is Bitcoin about to change the way we pay for goods and services on the Internet? Or is Bitcoin just another alternative payment method that comes in like a lion and goes out like a lamb?

To quote its website, Bitcoin is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. There are no transaction fees – they don’t even have a physical existence. A Bitcoin is to paper money as an email is to an old-fashioned letter.

If you’re a merchant, Bitcoin can protect you from fraud, and no PCI compliance is necessary.

With word spreading as fast as malware about the major holiday-season security breaches at Target, Neiman Marcus and Michaels Stores, alternative payment methods have a chance to grow in popularity.

And because there’s plenty of potential Bitcoin buzz, merchants who accept it can gain additional exposure.

In January, ecommerce merchants Overstock.com and TigerDirect announced they would accept Bitcoin. On its first day accepting it, Overstock.com received $130,000 in orders paid in the cryptocurrency.

But a nationwide survey conducted for TheStreet by shows that consumers do not understand Bitcoin, and have little interest in owning it. As a whole, consumers are unfamiliar and uncomfortable with the idea of owning Bitcoin.

But there is some promise for the cryptocurrency: 32% of 18-24 year-olds said they would consider using an alternative form of currency like Bitcoin, vs. just 11% of those over the age of 65.

While Bitcoin may be ideal for mobile payments, it’s not going to gain mainstream acceptance unless merchants and consumers know that it’s all about.

Service providers such as BitPay and Coinbase must prove to merchants and mainstream media that Bitcoin is a safe way to make an online payment. Overstock.com and TigerDirect and other early adopters need to educate their customers about the benefits of paying with Bitcoin.

And if the day comes that retailers begin to accept Bitcoin in the bricks-and-mortar environment, service providers must incentivize store sales people for being brand ambassadors for the cryptocurrency.