Yesterday PayWithMoon announced that you could now shop at Amazon using Bitcoin. This is pretty much the ultimate goal of any cryptocurrency and deserves more investigation.
I have long been convinced of Bitcoin’s claim to be the premier store of value but I have always been skeptical of its use as a means of transaction. Bitcoin coin has 10 min average block confirmation time and that is too long to useful in retail transactions.
This problem is well understood and there are several approaches to solving it, one of which is the Lightning Network. The technology is complicated but the idea is simple; the two parties agree the payment using Bitcoin’s smart contract functionality and the deal is recorded off-chain. The deal is then broadcast to the network and recorded in the next block.
There are wrinkles and “what-ifs” and dispute resolution issues etc but it is all good enough if you just want to buy a DVD of the Jungle Book for the kids or a cup of coffee at Starbucks.
Litecoin and Dash’s unique selling points include having a short block time which makes them suitable for retail transactions. If the Lighting approach works, it is possible that they will become irrelevant before they reach mass adoption.
PayWithMoon is three smart guys with a few hundred thousand dollars. They achieved their goal of paying for Amazon goods with Bitcoin by integrating with the existing payment processor industry. They collect the Bitcoin and pay Amazon for the goods using the Visa or Mastercard network. Crypto-libertarians would argue that they have sold out to Big Finance because the user is seeing no benefit from crypto technology.
There is no shortage of payment providers. CRYPTOSTAR.MONEY lists 50 bitcoin payment processors who can help businesses accept crypto some of these are multi-billion turnover businesses and others new start-ups.
If you are a cryptocurrency investor with a long horizon – say 5 years, then this matters. Litecoin and Dash are ranked 5th and 13th by market cap and in the long term their value will be determined by their utility. If no-one is using them they won’t have any utility and little value.
PayWithMoon may also have demonstrated the future of crypto in the West. Not a revolutionary technology that overturns Big Finance but a tool that is embraced, extended and extinguished.