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Bitcoin was born In the digital world, but the real world will do it wonders
The more you think about Bitcoin, the more you wonder why adoption isn’t happening faster.
BY DAVID SEAMAN
Of course when analyzing what kind of volume the Bitcoin network might experience in the future—and how this might impact demand (and thus price)—we tend to focus on areas where Bitcoin would be used online.
Apps. Social media tipping. Crowdfunding. Porn.
These are all worth thinking about, but it’s offline applications that will take Bitcoin into the trillion dollar plus market cap. (Yes, really.) Consider the following businesses:
1) Gas stations
Most gas stations now offer a “credit card price” and a “cash price” to recoup their expenses when they process a card payment. Bitcoin is the natural middle ground between plastic and cash, and most consumers will always have some on them in the form of a wallet app. Existing POS systems could scale rapidly into gas stations and convenience stores—gaining rapid loyalty from the store owners and even some in-store promotion as a result. If only 5% of all gasoline in the United States is purchased with Bitcoin by 2016, we are talking about a market cap multiples higher than today’s.
2) Strip clubs
The cash, card dichotomy is a problem that affects the adult entertainment industry as well. Customers only carry so much cash in, which limits the club’s profitability, and most customers are averse to placing larger amounts on their credit card because they don’t want it appearing on their credit card statement. Enter Bitcoin. And strippers with POS tablets could potentially reap far higher tips, and customers would appreciate the convenience of not having to fish around for change every few minutes.
Night clubs, restaurants and bars have massive issues with credit card processors; it eats into their already razor thin profit margin, and there is significant chargeback risk, especially at high end night clubs. A guy in Vegas gets a VIP table for “his boys,” then sobers up in the morning and calls the credit card company to file a dispute. The club is potentially out all their money, and now has a paperwork nightmare. The irreversible nature of Bitcoin transactions and fast settlement times are ideal for night life.
4) Real estate
Closing on a property today involves conscripting a small army of paperwork mercenaries—the escrow attorney who holds the funds until the dotted line is signed, the notaries, the lawyers on both sides who represent buyer and seller, the realtors, and of course the banks. Bitcoin would provide needed relief from this complexity, and would significantly reduce the transaction fees and hold times real estate transactions are today still constrained by.
For much the same reason as real estate, Bitcoin acceptance benefits both dealerships (lower fees, faster settlement times, less fraud risk) and buyers (convenience, possible discounts versus the financed price).
And since Bitcoin is already the world’s most powerful financial processing network—with more than 256 times the power of the world’s 500 top supercomputers put together—large transactions made in the real world could be done with the level of certainty that had been previously reserved for only notarized contracts and bank-drawn cashier’s checks. If not even more certainty than before! After all, a bank account balance is your name on one institution’s ledger books. A Bitcoin transaction is that transaction, without the burden of identity, on hundreds of thousands of hard drives.
The more you think about Bitcoin, the more you wonder why this adoption isn’t happening even faster—although leading companies like Bitpay and Coinbase are doing their best to make acceptance a simple process for business owners.