We are on the cusp of a new world where e-commerce becomes b-commerce: Bitcoin commerce. It’s a world where grocery stores and other merchants accept Bitcoin Cash for instant, secure, low-fee and global transactions.
Bitcoin Cash is a newer variant of Bitcoin, which restores the cryptocurrency’s true vision. The original Bitcoin concept was giving people the ability to instantly and cheaply send money directly to anyone in the world, without intermediary banks, payment processors or other third parties.
But the ‘legacy’ Bitcoin Core chain remains confined to small blocks of only 1MB; that capacity only processes on average three, and at maximum seven, transactions per second. By comparison, the global Visa network averages 2,000 transactions, and peaks at 56,000 transactions, per second.
In August 2017, proponents of the original vision forked off on to the new Bitcoin Cash (BCH) chain, committed to bigger blocks and a scaled network. The BCH chain can process transactions faster and for lower fees.
For merchants, BCH offers lower transaction fees than today’s payment card systems, which charge 2%-3% per transaction (plus base or monthly costs). Technically, BCH is free to accept if stores have a Bitcoin wallet. Merchants will likely use payment solutions such as BitPay or Coinbase Commerce, which charge approximately 1%.
Because BCH is a global cryptocurrency, foreign exchange costs will be minimised, too. For merchants operating across multiple jurisdictions, BCH enables efficient, fast transfer of funds across borders.
Another benefit is speed. With instant confirmations using BCH, merchants can receive a customer’s payments without needing to wait days for credit card transactions to clear. Once a transaction is confirmed on the blockchain, it is immutable, reducing risk of fraud and chargebacks. This speed also makes it easier and faster to pay suppliers and vendors.
Moreover, the long-term upside is significant. As BCH becomes used more widely, its monetary value should grow. Merchants who hold it will benefit from hopeful significant appreciation in BCH value. At the same time, BCH wallets need to become more user-friendly. Merchant PoS systems need BCH integration, to enable consumers to easily pay with mobile devices using a QR code or NFC technology. Sensible, clear government regulation can build more trust in cryptocurrency. In 2017, Japan led the way by recognising Bitcoin as a legal form of tender, triggering a rapid wave of merchant adoption.
With these and other developments, Bitcoin Cash will support a new world of b-commerce.
Jimmy Nguyen is CEO of nChain Group