Bitcoin’s benefits to consumers.

It is a widely held belief that bitcoin benefits the merchant but that consumers don’t get any benefits from using bitcoin. This if false. My hope here is to create an article that can be pasted in response to posts/tweets/blogs/questions that perpetuate the misconception about bitcoins advantages for consumers.

First of all, there are obvious benefits to entice merchants to accept bitcoin:

  • No chargeback risk
  • No credit card fees
  • Instant payment
  • Reach international customers easily
  • Micropayments
  • etc.

I won’t explain these benefits because they are analogous to the benefits of cash, plus the benefits of the internet. Combined. It’s a “no-brainer” that merchants want these benefits.

There are also many great benefits to consumers for buying with bitcoin. I’ll list some and then explain them in order.

  • Discounts
  • No surcharges or merchant fees
  • Privacy
  • Lower risk of identity theft
  • Splitting the bill
  • International
  • Easy to use

Did you know that you can get discounts for paying with Cash? This applies to digital cash as well. Next time you’re at a gas station ask about a discount for paying with cash. Ask a taxi driver persistently and they’ll give you a discount for cash as well. 3% or 4% is not uncommon because merchants will gladly pass along the savings to their customers. Here’s a benefit: Many online merchants will give you discounts and credits for shopping with bitcoin.

Have you ever calculated your tip at a restaurant so that it ends with .00 cents? Then when you checked your credit card statement it was magically no longer ended in zeros? That restaurant added a charge to your payment after the fact! This is called a surcharge, or a merchant fee, and it is 100% legal in 40 US states (and is contractually OK as long as a merchant applies it to all their customers equally). Local merchants in 4 out of 5 states can (and frequently do) charge you the consumer extra for using a credit card. Here’s a benefit: You will not get surcharged when paying with bitcoin.

A father once called Target, and yelled at their representatives, because Target had sent his young daughter advertisements for pregnancy and motherhood products. What kind of sick individuals would send that to a young girl. He later called Target again to apologize because he found out that his daughter was in fact pregnant. Turns out that Target knew his daughter was pregnant before her dad did because her online buying patterns were found to match those of other pregnant women. Now, that’s just creepy! Here’s a benefit: if you shop with bitcoin, semi-anonymously, then some computer algorithm will not be able to data-mine disturbing personal details about your life.

If you shopped at Home Depot, Jimmy John’s, Target, or certain hospitals, in early 2014 then you should check your credit card for bogus charges. These companies had massive data breaches resulting in millions of credit card details being leaked. Now their customers’ payment details are for sale online. But, if you pay with bitcoin then your information cannot be used by anybody else. No mystery charges on your monthly statement. Granted, bitcoin can be stolen just like cash can be stolen from your pocket, but bitcoin cannot be used in identity theft after a data breach at a merchant. Here’s a benefit: Shop with bitcoin and don’t worry about identity theft.

Venmo is a popular way to split bills when a large group goes out to a restaurant. One person pays the bill then everybody clicks send in venmo. It’s free for the guy/gal who is being paid back to receive the money. But if you are paying your friend back, venmo charges 3%. If your venmo account is connected to a credit card then the credit card takes 3% plus $0.20. So if you owe your friend $13 then you’re paying a full $1 for the convenience to send money to their facebook account on your phone using Venmo + a credit card. The same convenience exists with bitcoin but you pay 0% for it. You can send bitcoin to your friends social media account using onename.io, or by tapping your phone against their phone, or by scanning a barcode, or any number of fun and easy ways. And it doesn’t cost a dime. Here’s a benefit: split the bill, pay your friends back, and don’t overpay.

SWIFT sucks! It’s a network of banks that facilitate sending money across borders. Each bank in the network can charge a fee for sending and receiving, $40 for each is not uncommon. The only fees that you know about are the fee charged by the bank sending it and the fee charged by the bank receiving it, and the multiple-percentage spread on their currency conversion. Every other middlemans charges are a mystery that you won’t know the charge until the order is done. There are exceptions, like Citi global transfer, but generally sending money abroad is a very very expensive endeavor. AND IT TAKES SEVERAL DAYS! And you can’t send on weekends! This makes it very difficult for consumers to buy things internationally. For example, gambling sites will often not accept credit cards and thus you have to transfer money into their bank accounts. Who pays those fees? You the consumer of course. Here’s a benefit: No mystery fees because Bitcoin is free to send oversees, and often the spread to convert it to a local currency is 1% or less.

The final benefit is ease of use. Coinbase has a new feature for online purchase. Simply select bitcoin in the shopping cart and their popup asks which bitcoin wallet you want to pay with. Click OK and you’re done. You don’t have to enter credit card details (and lengthy personal information) into yet another website. No, here’s a benefit: buying with bitcoin can be faster and easier than paying with a credit card.

So to recap, some benefits to consumers include:

  • Discounts (when merchants pass the savings on to the customer)
  • No surcharges or merchant fees (even in the 40 US states where credit card surcharges are legal)
  • Privacy (No creepy algorithms analyze your life)
  • Lower risk of identity theft (nobody steals your details from a place where you bought something once).
  • Splitting the bill (faster, more fun, easier, and costs less)
  • International (No SWIFT fees)
  • Easy to use ( Can be easier and more hassle free than some common alternatives)

I’m sure there are more benefits to consumers buying with bitcoin. But these are the ones that came to mind immediately. I hope you have found this informative, and I look forward to you sharing it in situations where somebody asks whether there are benefits to consumers buying with bitcoin.

Bitcoin: stop looking at price. Start looking at savings

The price of bitcoin has been falling. But the amount of money I’ve been saving by using bitcoin is only going up. How is this? And how can you save money by ignoring the downward price of bitcoin.

Why is bitcoin’s price falling? Why will it continue to fall? People cite 3 reasons for the decline of bitcoin price:

  1. Most merchants who accept bitcoin are not holding bitcoin, they sell it instantly. This creates downwards pressure.
  2. Bitcoin miners have to pay electric bills in fiat. They sell bitcoin to cover their costs, introducing even more downwards pressure.
  3. The price of bitcoin should never have been as high as it is to begin with because a) Some bot at mtgox set the stage for a bubble b) there are no instruments for shorting bitcoin so the price is artificially high. In other words, this is a totally logical correction.

So why does bitcoin’s price not matter? It’s going down, so what? This only means that you will lose money if you hodl bitcoin. It does not mean that you will lose money if you use bitcoin for transactions. Let’s explore 2 things. 1) how to save money with bitcoin without being impacted by the price declines and 2) how this simple trick will help stabilize bitcoin in the long run.

First how to save with bitcoin in the down market:

When merchants accept bitcoin they are saving money over the cost of accepting credit cards (and from the real risk of chargebacks). Some merchants are passing those savings on to the customer. Such forward-looking merchants deserve be rewarded with our business. I can cite gyft, or overstock as an example because they both give you credits when you buy with bitcoin. There are many more. You can buy bitcoin just seconds before using it to buy at a discount. I use coinbase, I place an order and I get bitcoin within seconds, then I spend it within seconds. I hear that when Circle comes out it will allow the same process. So effectively, you can save a small percentage on your purchase if you click 2 buttons on coinbase or circle before clicking “buy” on an online purchase. This is the “killer app” of bitcoin: that 15 seconds of clicking could save you 3% on online purchases.

The killer app of bitcoin:

  1. Find an item you want to buy, from a merchang that offers a discount on bitcoin purchases.
  2. Go to coinbase, or circle, or other, buy the correct amount of bitcoin and instantly use that newly purchased bitcoin to buy from the merchant
  3. Profit!

It’s easy (once you set up instant-buy), it’s fast (15 seconds or so), it consistently saves you money, and it doesn’t matter what the price is and whether it’s going down.

Second, why it’s good:

Some high-risk technology angel investors see bitcoin as having huge potential. Risk-averse investors see bitcoin as too volatile (big upswings are just as risky as big downswings) and they do not see bitcoin moving any of the needles they care about… yet. Most investors are risk averse. Hedge funds are about managing risk; about getting as much opportunity with as little downside. The “needle” that they care about most is transaction volume. The good news is this: a higher transaction volume will smooth over the volatility. Yes, that’s right, the more transactions we all make with bitcoin the less aggressive the price swings will be. The lower the volatility the less of a turnoff bitcoin is to most investors. The higher the transaction volume the more attractive bitcoin becomes to investors. And what was I just talking about? About increasing transaction volume by buying more stuff with bitcoin through the “killer app of bitcoin”, e.g. get savings by buying with bitcoin that you just purchased seconds before.

Call to action

Do your part to support bitcoins future. Stop looking at the price. Stop hodling. Switch your spending to bitcoin and ignore the price because it’s irrelevant if you use instant-buy features on coinbase and circle. If you eat food (most of us do) then buy it with a bitcoin that you just bought seconds before. If you wear clothes (most of us do) then buy them with bitcoin that you bought seconds before. If you have friends (most of us do) buy their birthday/nameday/baby-shower/wedding/etc. gifts using bitcoin that you had bought seconds before. etc. etc.

Stop looking at the price of bitcoin. Start looking at the savings which bitcoin wil get you.

TL;DR

You can save money by buying with bitcoin. You can avoid the downward slide of bitcoin’s price using instant buy on coinbase and circle seconds before checking out from the merchant. Doing so increases the transaction volume of bitcoin which will smooth out volatility and make bitcoin more appealing to investors. So do your part, buy with bitcoin and stop looking at price.