Although merchant adoption and price seem to be the only aspects of Bitcoin that the mainstream press wants to talk about these days, these attributes of the peer-to-peer digital cash system are more of a distraction than anything else in these early days of development. People who understand bitcoin and believe in it obviously have a reason to hold some in a hardware wallet or other form of secure storage, but what is going to bring this technology to the general public? This problem has been one of the main topics of conversation among investors in the Bitcoin ecosystem over the past few months, and Blockchain Capital Managing Partner Brock Pierce recently shared some of his thoughts on the matter at the BitPanel Meetup in San Mateo, California.
Consumers Don’t Understand Bitcoin
The panel discussion at this particular BitPanel Meetup was titled $1 Billion Invested in Bitcoin: What Have We Learned?, and one of the key points Brock Pierce pointed out during the early portion of the conversation had to do with consumers’ inability to understand why they should be using Bitcoin in the first place:
“It’s just one of those things where it takes time to understand it, and once you get it, you got it. When you’re trying to market a product to consumers that’s this difficult to sell — I mean, the customer acquisition cost is pretty high.”
Sell the Consumer on the App, Not the Underlying Protocol
Because Bitcoin is a technology that can take quite a long time to grasp, it makes sense for entrepreneurs to focus on novel use cases where Bitcoin is enabling some new opportunity for consumers that was not possible before the cryptocurrency was invented by Satoshi Nakamoto. Brock Pierce made this point while commenting on the inability for some Bitcoin startups to attract users:
“I think the easier [route] is to go offer an existing product or service and make it better, faster, [and] cheaper, or provide something compelling in terms of a big discount, something like Purse. These are the sorts of things that are motivators that get people to get up off their asses and participate.”
Purse is an example of a platform where consumers are willing to take the time to learn how to use Bitcoin because they want to save 20 percent or more on their Amazon purchases. Andrew Lee, the CEO of Purse, recently discussed this point in an interview with Inside Bitcoins.
Pierce also discussed the concept of simply removing any mention of Bitcoin from the consumer’s view. As long as the app or service makes something cheaper, faster, or better for the consumer, there is no need for them to learn about Bitcoin or worry about understanding blockchain technology. Pierce discussed this point in detail during the BitPanel Meetup:
“[Also], the things where [Bitcoin] is buried where — you know, we love a company we just invested in called Abra where they’re using Bitcoin, but they’re not telling that to the consumers because a consumer just needs to get money from here to the Philippines. They don’t care how it gets there; they just want to know that it’s going to get there, it’s going to get there faster, it’s going to get there cheaper, and that they’re dealing with a reliable or credible service.”
To Pierce’s point, Abra was able to win Launch Festival 2015 without mentioning Bitcoin once during their presentation.
Direct Adoption of Bitcoin Will Take a Long Time
It’s clear that there is long road ahead before everyone is making all of their daily purchases via Bitcoin. Although Pierce originally believed serious consumer adoption of bitcoin could take place much more rapidly, he told the BitPanel Meetup audience that he has altered his time horizon:
“I think [apps that hide Bitcoin from the consumer] are where the majority of the adoption is going to occur over the next 12-24 months. I think direct consumer adoption is going to take a lot longer than I thought, you know, two years ago when prices were rising and markets were roaring. It’s going to take time, and this is a five to twenty year [process].”
At the end of the day, there isn’t an easily understandable reason for the average person to convert a portion of their fiat savings into bitcoin and search around for places to spend that bitcoin right now. At this point in time, a Bitcoin application must either hide the fact that Bitcoin is used or be so compelling that the user is willing to take the time to learn how to use it. One would be wise to watch for more of these types of applications to pop up over the next couple of years as more entrepreneurs continue to make this realization.
Brock Pierce will be featured on a panel related to Bitcoin investments at the upcoming Inside Bitcoins Conference in San Diego. He was also be a judge for the startup competition on the following day.
Kyle Torpey is a freelance journalist who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, RT’s Keiser Report, and many other media outlets. You can follow @kyletorpey on Twitter.