Bitcoin: Future of Mobile Payments?
Oh Bitcoin, you are certainly a volatile mistress. The promise is that in the near future, we all will be able to use our smartphones to buy anything. This isn’t the first time we’ve heard this utopian vision, but with Bitcoin, could it finally be true?
Now, I’m an avid fan of this new crypto-currency and I even own Bitcoin (BTC). But just the other day I realized I had actually never bought anything with it. What’s the point of a virtual currency if it can’t be used? Fortunately, more merchants are accepting bitcoin every day. And why wouldn’t they? The transaction fees are a LOT cheaper than credit card fees.
Enter Overstock and Tiger Direct. These are currently the two largest retailers in the world that accept Bitcoin. Overstock specializes in “home” type items, while Tiger Direct is a giant consumer electronics chain. Before this year, you had to buy gift cards to purchase things from large retailers, so this was a thunder clap for the fledgling currency.
Is it “there yet” ?
Anyway, this is all very nice, but now that major retailers are starting to get in on the action, exactly how does this work for an actual person? What is the user experience like? Is it “there yet” for the average user? These are all important questions, and I decided it was time to answer this for myself.
To find out what we needed for our home, I consulted my live-in expert on all things domestic (also called a spouse). She informed me that she would like a new crock pot. This definitely seemed like something you should be able to purchase with Bitcoin. She selected a suitable model from the Overstock.com website, and the experiment was on.
I went to the Overstock.com website, and located the item. I put in my cart as usual. Good so far. Hit the checkout button. Great. Next I entered in my account info and my billing/shipping address. All business as usual so far. The next thing to fill in was the payment information, and Bitcoin (BTC) is displayed right along with credit cards and coupon codes every other payment method type. It’s not hard to find, which is a relief. The harder that Bitcoin is to use, the more difficult adoption and eventual success will be.
When you select the BTC part of the form, it pops open 3 different options:
Pay with Coinbase
This makes a lot of sense, since Overstock partnered with them for the transaction processing. Of course, since this is a Coinbase-to-Coinbase transaction, this doesn’t feel very “out in the wild.” Hence, this is the least cool option.
Get me Bitcoins!
This is basically an offer to set you up with a Coinbase account. They’re not the only wallet in town, but they are one of the most popular.
Send using a Bitcoin Address
This is the “cool” option. You can use this with any Bitcoin wallet at all. There are basically two common ways to represent Bitcoin addresses. One is a long string of bytes (a BTC Address Mailbox); the other is a QC Code. Both types of addresses were shown as well as the amount requested.
Now, it’s possible to cut-and-paste the address, but that doesn’t seem like very much fun. I wanted to use my cell phone like I would if I were making a purchase in a store.
When you’re presented with a BTC Address in QC Code format, nearly every mobile wallet app will let you scan it. Overstock displays both types of addresses, as well as the amount requested. Next, I loaded up my wallet app on my Android cell phone. (Sorry iPhone users!) Virtually every mobile wallet has a scanner function for this, so I pointed at the code and waited…
In about two seconds after positioning the device, it recognized the code. It even read in the amount and filled it in its form for me. Basically, all I had to do was say ‘Okay’, and the coin was sent. After another few seconds, I received email conformation from Overstock that the order was complete and would soon be shipped. Nice! That was easy. A few days later, our bounty arrived.
It seems to me the technology works great, and has several advantages over credit card or even cash transactions. Unlike a credit card transaction, you verify the amount before any charges go through. You never have to touch the same money. The downside is that to spend the money, you need an internet connection. (Actually, only the receiver needs an internet connection.) And you know what else? It was really fun.
Of course, caveat emptor, crypto-currencies are still young and many experts are not convinced of their true utility, but you don’t have to convert all your money into Bitcoin just to try out what could be the future of mobile payments. (At least for Android, since Apple is throwing cold water on all Bitcoin apps.)
Next up, we’ll see if Tiger Direct can match the same experience . . .