Although there has been a lot of hype around Bitcoin and blockchain technology over the past few years, it’s still difficult for some people to see where the real use cases lie for these sorts of systems. One person who does not seem to have a problem understanding potential use cases for this technology is Purse CEO Andrew Lee.
Purse’s unique platform allows consumers to achieve large discounts on Amazon via their marketplace for matching Amazon gift card holders with prospective shoppers. Bitcoin acts as the value protocol that connects the two parties. In a recent interview with Inside Bitcoins, Lee explained how consumers are willing to go out of their way to learn about Bitcoin and use their platform because they want access to the large discounts made available to them.
Consumers Will Alter Their Behavior for Great Deals
Throughout Bitcoin’s history, its adoption has mainly been in areas where there was a desperate need for some sort of frictionless, permissionless form of digital cash. In the early days, Silk Road became Bitcoin’s main use case because it enabled censorship-resistant payments for the online drug marketplace. People were willing to learn about Bitcoin during this time because it was the only (or at least most useful) option for getting around normal ecommerce restrictions. According to Andrew Lee, a similar phenomena can take place with Bitcoin-powered discounts. He noted:
“Purse has the best deals on the internet, and we’re betting that people will learn to use Bitcoin just for our discounts.”
Lee also discussed some of the historic evidence of consumers going out of their way to find great deals:
“There’s strong evidence that people will alter their behavior for great deals. For decades, retailers have convinced customers to clip coupons, pre-purchase Groupons, and buy in bulk at Costco, all just to gain access to great deals.”
When compared with some of the actions consumers have taken to save money in the past, signing up for a Coinbase account and shopping on Purse doesn’t seem like such a big deal. Purse recently took the usability of their platform to the next level by launching their own marketplace that will allow merchants to sell their own goods alongside discounted Amazon products.
Explaining Bitcoin to Non-Technical People is Hard
Although everyone in finance seems to be excited about what blockchain technology could do for the world over the next few decades, Lee believes that Bitcoin adoption will depend on new use cases for the technology that do not simply replace what already exists in the legacy payment industry. He explained:
“We are inspired by blockchain technology and the impact it could have on society, but explaining the advantages of the blockchain to non-technical people can be difficult. Bitcoin adoption will depend on novel use cases and clever business models that leverage the technology’s unique capabilities.”
That last sentence in Lee’s statement has become a key topic of conversation among investors and venture capitalists over the past few months. Although Bitcoin may end up replacing many forms of online payments over the long term, some businesses should focus on what can get people to use Bitcoin right now. Purse has proven itself to be one such business by bringing mainstream users to the peer-to-peer digital cash system via Amazon discounts. Other companies that may fall under this category include Fold App and Abra.
Bitcoin is Not Ready to Compete with Credit Cards
Continuing on the point of creating novel use cases for Bitcoin, Lee also noted that the digital payment system is not yet ready to upend the credit card industry:
“We’re not sure Bitcoin is ready for a head to head battle with credit cards. Companies like Amazon and Uber don’t really have a problem that needs Bitcoin. It’s going to take unique business models to really make bitcoin succeed.”
In a blog post from earlier this year, Lee went as far as to say some Bitcoin merchants may end up dropping the cryptocurrency:
“Bitcoin commerce needs to make economic sense for everyone involved in a transaction. It’s only a matter of time before we see large retailers, such as Expedia or Overstock, exit Bitcoin. They have already cited low usage. And since spending cryptocurrency is harder than a saved credit card, higher shopping cart abandonment rates won’t justify the savings on interchange fees.”
Purse CEO Andrew Lee will be giving a presentation on why Bitcoin commerce is broken on the second day of the upcoming Inside Bitcoins Conference in Seoul. The conference runs from the 9th to the 11th of December.
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.