It’s really easy to get so caught up in the price-volatility-roller-coaster-ride of Bitcoin that people overlook one of its other main strengths: low to zero transaction fees. Indeed, there are countless people looking into Bitcoin as an investment opportunity and as a store of value. I agree that those are two great reasons to get into Bitcoin, but they are just two of the emerging cryptocurrency network’s strengths. There is one other big reason that gets overlooked in the current market and media melee.
That most overlooked reason is the fact that fees for transacting funds with Bitcoin are next to nothing. This strength is especially apparent when compared to the price gouging monopolistic middleman practices of PayPal, Visa, Master Card and Western Union. When doing your next online or retailer transaction; if you add up what merchants pay in fees and what you pay in fees, you start to see that there are distinct advantages (for the banks) in “owning” the network. And we all know how the banks love to capitalize on “owning the network”.
With Bitcoin and other cryptos, no “one person or organization” owns the network. It is truly decentralized and distributed. That means that decisions regarding transaction fees are also decentralized and therefore non-monopolistic.
To illustrate ridiculous transaction fees, I have a very personal and recent case in point: I sold a couple of pieces of music gear last week and was arm wrestled into using PayPal in both cases. One transaction was local using Craigslist and the other transaction was national using Ebay.
The Craigslist transaction was for $250. I was really only planning on accepting cash, but the buyer conveniently “didn’t have any on him”. He spontaneously suggested using Paypal for it’s “ease and convenience” and I reluctantly agreed not wanting to lose the deal for fear of appearing inflexible. We did the transaction and boom the funds went from his bank to my Paypal account. He, of course, was pleased at the “ease” and “rapidity” of the transaction. I, on the other hand was not, especially when I saw that a $250 transaction carried a fee of $7.55, so my actual deposit was $242.45. Booo PayPal!!
The second transaction was for a guitar I sold on Ebay to a guy up in New Jersey which, with shipping turned out to be $1055.13. The transaction fee/commission was $41.46 AND I had to pay an additional $50.10 to Ebay for shipping costs. Booo again!!
Alternatively, if I were to have made those transactions in Bitcoin, my transaction fees would have been a few pennies at most! THIS is why I think Bitcoin and other cryptos are going to kill all the aforementioned transactional methodologies like PayPal (not without a fight from the blood sucking too big to fail, too big to jail megabanks of course). Ease of use and close to zero transaction fees will win in the very near future.
I am not alone in this thinking:
Here’s what Jon Rushman, an economist and professor at Warwick Business School says: “The brilliance behind the technical design of Bitcoin is the fact that the mechanism for payment is a distributed network. No one owns it. It doesn’t run in a data center owned by PayPal or Mastercard or Visa.” – cnn.com
Now, once you’ve semi-settled on using Bitcoin for transactions, the first question people usually ask about doing transaction in Bitcoin is: “what about the market price volatility”. That’s a fair question to be sure. The remedy for that is to immediately convert those Bitcoins into USD or whatever your base fiat currency is, so as not to experience any of whatever the market volatility happens to be during the transaction time. So, really Bitcoin market price volatility is a non-issue and there are more and more businesses turning to Bitcoin precisely for it’s transactional strength.
In fact, here’s a real-world example of a university that is capitalizing on Bitcoin’s transactional prowess to accommodate tuition-paying students from around the world. In the following clip, Max Keiser interviews Dr. Christos Vlachos, CFO of the University of Nicosia in Cyprus, which is now accepting bitcoin as tuition payment. He explains how the volatility in the price won’t matter to the university. The interview starts at 12:37.
All this being said, I think it’s important to continue to keep an open mind about Bitcoin and the emerging cryptos as a means for the common man to escape the usury employed in the current monetary system (especially as there is an emerging rift in the libertarian/gold/silver/commodities community as to the validity, relevance and security of Bitcoin).
Just imagine the next Ebay or Amazon that has as it’s transactional platform, a near zer0-cost vehicle like Bitcoin (or mixture of cryptocurrencies). Emerging systems that have all the security and redundancies built in to protect the consumer while at the same time eliminating usurious transactional fees I think is the new wave of commerce in the emerging marketplace. I can get excited about keeping more of my own money even if it’s mere fiat dollars at a time.
In other words, do you want to stop getting hammered with transaction fees? Start insisting the businesses you transact with use Bitcoin and other cryptocurrencies.
Let me know your thoughts…