Bitcoin info

Nick Tomaino is currently on the business development team at Coinbase, and is also a first-year business school student at the Yale School of Management. Prior to that, he worked in venture capital, most recently for Softbank Capital.

It is becoming increasingly clear to the public that Bitcoin is compelling for merchants as a more efficient payment processing option.

But one question that is far from clear and will likely take longer to become apparent is: what are the consumer benefits to using the digital currency, outside of investment and speculation?

Most mainstream consumers view bitcoin as a volatile asset that has no true benefit for consumers looking to spend on goods and services. In Senator Joe Manchin’s letter to the Treasury Department, he wrote:

“Its deflationary trends ensure that only speculators such as so-called ‘Bitcoin miners’ will benefit from possessing the virtual currency.”

This is a dangerous misconception that is often voiced by newcomers to bitcoin. While bitcoin is currently volatile and there are clear risks associated with it, there are also major benefits to spending bitcoin that are likely to become apparent as consumers learn more about the digital currency: cost savings, privacy, and ease of use.

Cost savings

Cost savings may ultimately be the most compelling benefit for bitcoin consumers.

The cost savings on the merchant side are clear when you consider the interchange fees, assessment fees, chargeback fees and false declines that merchants currently incur by using existing payment methods.

Ultimately, these fees are passed on to consumers, evidenced by the $0.75 fee you may pay for a transaction under $10.

We’re already seeing large merchants pass the cost savings bitcoin brings on to consumers. Tiger Direct is currently offering $20 off all orders over $100. Fancy.com is currently offering a 25% off coupon on all bitcoin purchases until Sunday.

These promotions are short term, but we expect many large merchants to offer long term discounts on bitcoin purchases in the near future.