Bitcoin as a Solution to E-Commerce Pain
Introduction Bitcoin as a Solution to E-Commerce Pain
Bitcoin is a decentralized virtual currency whose valuation and use has grown dramatically since its inception in January 2009.
Some thinkers view bitcoin as a viable alternative to sovereign currencies; however, e-commerce was the original use case for bitcoin in Satoshi Nakamoto’s epic paper in 2009 on the proposed ‘Peer to Peer’ cash system.
Unfortunately, a lack of authoritative articles exist on the precise benefits of bitcoin vis-a-vis payment methods involving credit cards for purchase of goods and services on the Internet.
In this paper, we address in practical terms the precise advantages of using bitcoin as a payment method for Customer Not Present (CNP) transactions made over the Internet.
E-commerce Payments (‘e-payments’)
E-payments are digital payments for goods and services that are made over the Internet on online merchant websites. E-commerce serves multiple vertical lines of business for physical and digital goods. Dominant verticals in shipped physical goods purchased over e-commerce channels by retailers are books, apparel, and electronics. Examples of digital goods purchased over the Internet are music, streaming media, and e-books.
Some key drivers for e-commerce are: residential broadband penetration; access to consumer payment instruments suitable for online commerce; and distribution and delivery channels for physical goods.
The worldwide e-commerce market has grown by 20 percent year after year for the last several years. Global B2C Ecommerce Sales are projected to hit USD1.5 Trillion in 2014, driven by growth in emerging markets.
The more mature e-commerce markets such as the United States, the UK, and Germany, where citizens enjoy a strong purchasing power and widespread access to broadband Internet, see about 10 to 15 percent of online share to total retail trade, whereas less mature e-commerce markets such as Poland see only about 3.8 percent of online retail volume to total volume. However, many regions such as Poland are witnessing a tremendous rate of growth in e-commerce. Poland, for example, has a population of 38.5 million, out of which 26.2 million are Internet users and 12.6 million are online shoppers.
Payment methods used by consumers for online purchases vary considerably by region, depending upon their availability and consumer attitudes. They expose a unique set of advantages and risks for online commerce. They can be broken down as follows:
This post was published at Bitcoin Magazine on NOVEMBER 13, 2014.