One of the founding principles behind Bitcoin – and by proxy, all cryptocurrencies that followed – was to replace fiat currency and the banking system that fiat relies on. The dream lives on, and e-commerce is the space where it’s happening fastest.
E-commerce is like the natural habitat of Bitcoin. It’s the easiest space in which to make transactions with Bitcoin and where most retailers currently accept payments in cryptocurrency. Retailers are constantly on the search for ways to minimize the transaction fees they pay. While retailers can pass those fees onto customers, most eat the costs to keep prices down and business up.
As Bitcoin takes up more and more oxygen in the e-commerce, you’re going to want to buy Bitcoin and start investing in the digital currency of the future.
How Cryptocurrency Could Remake E-Commerce in Developing Countries
E-commerce is growing rapidly in developed economies, but it’s been struggling to make headways in developing countries. The biggest obstacle facing the growth of e-commerce and m-commerce in those parts of the world isn’t internet or mobile infrastructure, but a chronic underbanking problem. There are currently two billion people worldwide without a bank account or access to financial institutions. About 20% of the unbanked population living in India, and 12% in China, both countries that are rapidly developing, while developing nations like Egypt, Iran, Pakistan, Madagascar, and many other countries feature populations where only about 15% of people have a bank account.
Cryptocurrency could fill the gap for people who need nothing more than an internet connection – and often already have it, despite the lack of a bank account. They could download a wallet and use cryptocurrency as a means of payment and storing wealth, bypassing the banking system altogether.
With no banks, they would be free of banking fees (which can be onerous on people even in developed countries), transaction fees, and frozen bank accounts. Cryptocurrency also a protection against counterfeit and fraud.
Why Cryptocurrency Will Takeover E-Commerce in Developed Countries
In developed countries, the biggest obstacle to Bitcoin becoming a bigger player in e-commerce has been price instability. Bitcoin, Bitcoin Lite, Ethereum, and LiteCoin have all made big strides in reducing transaction times and, most importantly, fees. Retailers pay massive fees to credit card companies for accepting this form of payment, and if they can encourage customers to switch to a method of payment with lower fees, they could benefit the most. Credit card companies can charge anywhere from $2.50 to $3.00 on a $100 purchase – that’s as high as 3% being taken out of retailers’ bottom lines.
Retailers have the motivation to make the switch to cryptocurrency, but they need to see stability first before they can make the jump. As cryptocurrency matures and prices stabilize, expect to see retailers doing everything they can to encourage customers to switch to lower-fee transaction methods such as Bitcoin.
E-commerce will likely be the first space where Bitcoin makes a significant dent in the dominance of financial institutions. Watch for retailers to start making the switch as prices stabilize or as cryptocurrency gains traction in developing countries.