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Is Bitcoin Acceptance by Retailers Really Decreasing?

Is Bitcoin Acceptance by Retailers Really Decreasing?

Is Bitcoin Acceptance by Retailers Really Decreasing?

​In a report, Morgan Stanley payments analyst James Faucette noted that bitcoin is only accepted by three of the 500 online merchants tracked by the e-commerce news and analytics publication Internet Retailer.

Various publications including the South China Morning Post reported that the acceptance of bitcoin by online merchants is decreasing, acknowledging the report of Morgan Stanley analyst James Faucette.

Bitcoin owners are reluctant to use the cryptocurrency given its rate of appreciation, more evidence that bitcoin is more asset than currency. Way easier to trade speculatively than convince new merchants to accept the cryptocurrency,” said Faucette.

Bruce Fenton, a member of the Bitcoin Foundation, explained that an increasing number of online merchants have become reluctant toward accepting and integrating bitcoin due to the high fees. However, anyone that has been following bitcoin and its technical intricacies are well aware that bitcoin fees decreased significantly over the past few weeks.

In fact, Blockchain, the second largest bitcoin wallet platform behind Coinbase, disallows users from attaching fees higher than 90 satoshis per byte, which usually amount to around a $0.5 transaction fee. The transaction fee of bitcoin decreased as the bitcoin mempool cleared, the holding area for unconfirmed transactions.

Reasons why the size of the bitcoin mempool suddenly dropped within a relatively short period of time remain unclear. Some analysts have emphasized that spam attacks by political groups within the bitcoin community have clogged the bitcoin network.

Still, Fenton stated:

“There’s a problem with the fees being so high, it does price out certain things. There are some micro transaction uses cases, a cup of coffee is the big analogy everybody uses, that are being sort of priced out just because bitcoin is going up so much.”

Over the past few months, more merchants have accepted bitcoin than the past few years. Some 260,000 merchants in Japan have started to accept bitcoin as a legitimate payment method through the Point of Sale service provider AirRegi and Germany’s largest food delivery platform have started to accept bitcoin from millions of users.

Japan’s largest electronics retailer Bic Camera have also started to accept bitcoin in all of its locations as bitcoin became exempted from consumption tax.

It is difficult for large-scale online merchants to integrate bitcoin as that would require an overhaul of their payment systems. Hence, it may take years for the vast majority of the 500 online merchants to integrate bitcoin. But, realistically, it does not seem to be fair to measure the growth of bitcoin with the rate of online merchants that accept bitcoin.

Online merchants that have been accepting bitcoin have seen exponential increase in the number of bitcoin transactions. In May, Overstock.com board member Jonathan Johnson revealed that the number of bitcoin transactions tripled since the company integrated bitcoin as a payment method in 2014. Johnson noted that Overstock.com brings in $5 million in sales through bitcoin on a yearly basis.

Author : Joseph Young

Joseph Young is a finance and tech journalist based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.

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