The Bitcoin Cheque is the missing link between Bitcoins and mass adaption
Mass adoption of Bitcoin is truly a chicken and egg problem. Nobody spends Bitcoins because nobody accepts it, and nobody accepts it because nobody spends it. This problem has to be eliminated.
Unfortunately, we think it is still too cumbersome for non-technical user to buy anything with Bitcoins. For a first-time user, he will first have to purchase some coins, which in fact is prohibitively difficult. Next, at the actual site, the user must copy the send to address, enter the amount, and click send, click “payment made” or something similar in the site itself. Even the BIP-70 will make the payment process a bit easier, there are still very few reasons for people to actually want to starts using Bitcoins.
A problem to solve
Most newspapers has moved some of its business to Internet. And most of them are trying to make money in the old fashion, by selling ads and subscriptions. The ads require huge number of page views in order to earn enough to pay for the article. It is very limited how much an ad click is worth, and this will make the newspaper produce cheap and low-quality content read by the masses. Expensive and high-quality articles, maybe only of interest for a smaller group, will never be profitable by ads alone. Such articles seems to be something only written by bloggers, willing to work for next to nothing.
In order to make high quality content profitable, the reader has to contribute with some payments. The newspapers way to collect this payment is to sell expensive subscriptions. The subscriptions may not be that expensive, compared to tons of articles he gets for the price. For a daily reader, this may be an acceptable solution. However, most readers do not read all articles and most readers reads several newspapers. Subscribing to all of them would be too expensive. In fact, in the era of googling around searching for information, it may only be of interest to read one single article. Purchasing an expensive 3-month subscription to read a single page is not an economical option for most of us.
A better alternative is to offer single page-views and only require the reader to pay for what he actually reads. The price for a single page would be much lesser compared to a subscription of all pages. As a reader, I would not be reluctant to pay, let us say 10 cent for an article. In most cases, this will be more than what the newspapers earns by showing ads to me. For high-quality content, which I am eager to read, I could be willing to pay even a dollar or more, if the article gives me value in return.
However, here starts the obstacles; there is no good solutions to make this happen. Since credit/debit card fees makes a significant amount when making small purchases, such purchases simply is too expensive. Another barrier to make it happen is all the credit card information I would have to type inn each time I reach a new site. It’s just too much work, so I will just give up and google another site.
Thinking mass adaption
In the context of a web shop, we need a system where the merchant can thinks like this: “I need to make some profit by selling my goods, so I install this easy-to-use payment plugin into my web shop, which happens to use Bitcoins because of the low fee. Even nobody is using Bitcoins I don’t care about that, because it is not a problem for me nor my customers.” If a merchant can chose to make more profits by accepting Bitcoins in order to reducing the credit-card costs, he surely will take the Bitcoins. How can this be archived?
First, it must be of no hassle for both new and returning customers. First time a person wants to use Bitcoins, he may not have the Banking App installed nor have any Bitcoin Bank account. This very first time he clicks on a Bitcoin payment link, he must automatically get redirected to a Bitcoin Bank where he can register for an account and buy some Bitcoins. Second, the Banking App must be installed in the browser and automatically get configured to connect to his Bitcoin Bank account. It is absolute crucial that this process is as easy as possible. If it isn’t, this will fail for most people, and the merchant will not want to install the Bitcoin payment plugin in the first place.
When buying Bitcoins using credit/debit cards, most Bitcoin exchanges require some kind of identification. The identification may be a driver’s license or a passports or other identification papers, which must be posted and approved by the exchange. This approval process takes from hours to days. Waiting hours for an approval when I’m eager to read the article right now is simply unacceptable. I’m not sure why almost every exchanges require this identification, but I assume it is mostly about government regulations. Maybe it is possible to use the Facebook or Google account or other means for identification? Maybe the Bitcoin Cheque’s inbuilt money-back-guarantee feature can help the Bitcoin Banks to be able to charge credit-cards or other payment solutions without the need for identification? Credit-card users are already identified by the credit-card companies. I hope someone really can help here, as this may be the remaining and most difficult challenge that needs to be resolved to enable easy first-time registration.
The problem of waiting for hours for the first-time identification approval, will disappear in the exact moment when your local bank starts offering Bitcoin Cheques. Since you already have an account in your local bank, the identification approval process is not needed any more. Using a local bank also is of very little hassle, compared to signing up for an account in a bank you never have heard about. But until that happens, the initial Bitcoin Banks must provide easy registration.
After the Bitcoin Cheque and the Bitcoin Cheque Protocol has been defined, it is likely that existing Bitcoin exchanges and other start-up businesses will see the opportunities and start offering these payment services and make a profit out of it. The commercial banks, still not allowed to join the party, will soon smell the bait and want a share of this profit. As they now have the tools and incentives to propose government regulation of the Bitcoin trade, they will happily lobby the government to giving them access to the emerging market.