Business Implications

Increasing ease-of-use and accessibility of cheaper and quicker international remittance Bitcoin usefulness can add to the value proposition companies have to offer. It is putting this capability into the hands of their customers which companies could concentrate on. A strong correlation can be seen between PEOU and PU confirming a pathway which the interviewed service companies are currently exploiting.

A split can be speculated in the ability of goods versus service providers (those that increase PEOU in international remittance) to affect intent of use. Service providers are the companies who have the ability to increase PEOU through development of tools and applications while goods merchants have to wait and rely on the adoption of these tools in order to benefit from the low transaction costs of Bitcoin. At the same time, the free transaction costs of Bitcoin implies that any service tool taking commission by enabling an easy transaction would somewhat defeat the point of using Bitcoin in principle in the first place. Thus service providers must find another avenue of revenue through their widely distributed applications and collected transaction logs (advertising or big-data information consulting respectively are options) while goods merchants have the freedom to make profits.

Possible Bitcoin Partnership model

Figure 13: Possible Bitcoin Partnerships

In these early stages of digital currency development the author believes that a possible solution can evolve in business partnerships consisting of an application developing company and a group of goods merchants. This configuration will benefit both parties as the lack of commission from the Bitcoin transaction could be claimed from the merchant by the developer for facilitating the original transaction. This action is similar to the current business practice colloquially known as a “referral fee”.

Possible Flow of Money in Bitcoin Partnerships

Figure 14: Possible Flow of Money in Bitcoin Partnerships

Critical Notes on the Business Implications

The researcher postulates a chicken-and-egg paradox arising as goods providers are first to see the profits from Bitcoin use yet they await the development and adoption of easy-to-use tools from service providers. Concurrently, service providers will not see a benefit in developing said tools unless a large collection of merchants offer a collectively enticing product offering to customers.

Further, the introduction of a partnership with “referral fee” set-up linking the enabling services of the application provider and vendor can draw comparisons with the debit card payment system currently in most high street stores drawing a conclusion that while Bitcoin is innovative the business models and techniques applied to it are not.

Also, problems can be postulated from the establishment of partnerships. As the competition of application developers battle to service more and more customers and merchants an ironic centralisation pattern is realised with users and sellers coagulating around the most successful and easy-to-use applications. Although this does not necessarily indicate the emulation of current government fiscal policies it does somewhat nullify the decentralisation principle of Bitcoin.

As identified in data there is a barrier to using Bitcoin which is the PEOU. If this is alleviated by an application and concurrently said applications are competing for customers are then applications are acting as centralisation inducers on top of a decentralised technology. If this is taken a step further it may be argued that Bitcoin is not a decentralised currency due to the intrinsic difficultly of use that blocks its proliferation. According to research Bitcoin is a system which is challenging to use thus companies have capitalised in passing on Bitcoin capabilities in an easy-to-use package to the general public. Again drawing similarities to the current merchant banking system, when customers find coins heavy and cumbersome, the chip and PIN smartcard solution made quick electronic payment easy and now contactless smartcards are a new tool  to further increase PEOU.

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