Expectations and reality: economic benefits of Bitcoin

While most of the talk about Bitcoin in recent years has been about the fluctuation in its value, making fortunes for early adopters at its peak before falling back in price, there’s been a quiet revolution in  cryptocurrency use in everyday business sectors.

The retail sector has slowly begun to accept Bitcoin as an alternative to traditional currency payments. In Japan, for example, retailers have been allowed to accept Bitcoin for goods and services since a new law was passed in 2017. Even industry giants like Microsoft and travel company Expedia have seen the light to accept Bitcoin for some services. The singer Bjork also accepted the cryptocurrency from fans for her latest album.

These are small steps for the retail sector, however, with the use of Bitcoin yet to enter the mainstream. The Microsoft involvement is so customers can pay for Windows and Xbox products like games, movies and apps. Microsoft put a stop to the service for a time in 2018 when Bitcoin tanked and the volatility got bosses worries, but it soon put it back again. This tentative behaviour does reflect the fact that many big companies are dipping their toes in the water, unsure whether it’s going to be hot or cold.

One sector that relies on taking money any way it can is the charitable sector. Innovative charities have recognised there is little downside to accepting Bitcoin, once the necessary systems and knowledge are in place. Charities will not speculate with the cryptocurrency but instead, sell it and change it to cash on which it can spend on good causes.

In the United States, Sean’s Outpost, a provider of meals to homeless people in Florida, became one of the first to accept funding via Bitcoin. While accepting the number of individual donations will be low, the charity is sending out a message that it means to raise funds by whatever way is most convenient for its supporters. And, of course, it’s got some valuable publicity out of it, too, and charities thrive on that.

Never one to miss a trick when it comes to staying ahead of the competition, the gambling industry has embraced Bitcoin and its fellow cryptocurrencies. Many sportsbooks accept Bitcoin as their only means of deposit, while others take it alongside traditional payment methods. There are distinct benefits for the customer and the site of using Bitcoin, with transactions on the blockchain being private, mostly fast and carried out at a fraction of the cost.

This allows the betting sites, and you can include online casinos here, to offer better promotions to their customers. It’s not as though sports fans are unfamiliar with the world of crypto – the NBA teams Dallas Mavericks and Sacramento Kings already accept cryptocurrencies for merchandise and tickets.

One of the key uses is trading in Bitcoin. The very fact that the price of Bitcoin is volatile is what attracts the traders. That’s because traders can make money from the price of something falling whereas investors have to buy and hope the price goes up. Most leading trading platforms, which traditionally dealt in stocks, shares, commodities, bonds and regular currencies, now also trade in the price of cryptocurrencies like Bitcoin. You won’t be actually buying coins, but effectively trading on the price movement – if you think it will fall you go short if you think it will rise you go long. In this way, Bitcoin has helped the leading trading platforms even though no one is actually buying or selling it the physical product!

The key finding in all of this is that if you look hard enough, most business sectors have early adopters of the world of Bitcoin. But, unless you are knowledgeable about cryptocurrencies, therein lies the problem: you have to look hard.

For the mainstream business world, there is still a lot of cynicism about a currency that only exists in a virtual world and has such a volatile nature in price. Entering the market now offers little return unless you are targeting a niche audience offering only cryptocurrency services. What is clear is that Bitcoin isn’t going away, so its use in the wider economy will keep on growing – it’s just that it may take some time.