Recently I wrote a news piece that reported that Uber had begun accepting Bitcoin payments.
Although I gave myself enough room to later back away from the statement, sure to clarify that I hadn’t confirmed this with Uber themselves yet, there is still a certain guilt that comes with being wrong about something. The whole community was misinformed by either a liar, someone having fun, or an Uber support agent. Whichever the case, sitting on the story and following up with Uber first would have been the way to go.
As it turns out, Uber is not accepting Bitcoin payments any time soon. Which is too bad, since the technologies would seem to go hand in hand. Until you consider their business model, which could easily incur more than the user had pre-paid. With Bitcoin, the price could jump in a 20-minute car ride, and the user would lose value that way. Not that that is the reason Uber is not accepting Bitcoin, as surely with their size, they’d be able to figure a way to make it work for everybody. After all, the way currency works is that one party accepts value and the other offers it. Bitcoin isn’t worth anything to Uber if they don’t accept its value, and it appears that so far they don’t.
Which is within their rights, this piece is not an attack on them. This piece is rather to clarify that it doesn’t matter if Uber accepts Bitcoin or not. Not at this stage. The publicity wouldn’t be much if they did. More than likely, their adoption wouldn’t benefit anyone besides them. Yes, Uber can certainly benefit from Bitcoin. But just because they did, that doesn’t mean a lot of people would begin buying Bitcoin to use on Uber. Even if Uber offered a permanent discount, there is a significant learning curve to acquiring Bitcoin. Then there is significant effort. All of these would be neutralized, perhaps if the actual cost of using Uber were that much higher with fiat money. But the fact is, it isn’t.
What Would It Really Mean, Anyway?
So, what would be gained in an Uber Bitcoin relationship? For the most part, Bitcoiners would now be able to take advantage of the company’s services. The chances are that when Uber begins accepting cryptocurrencies, there will be a serious profit incentive for them to do so. As it stands, they’re already a highly specialized business that garners profits from many corners of their innovation. Simply adding another payment option, which may lower cost to them, does not necessarily mean there will be enough profit to expend the effort.
As has been noted elsewhere, there is a path that many merchants’ relationships with Bitcoin follows. They start by supporting it, and the community responds favorably by spending some of their bitcoins there. Then several months go by, and there are no sales processed with Bitcoin. Now, this does not mean it has cost them more to accept Bitcoin, but it does mean that there is little incentive.
In summary, there is little benefit to most merchants who accept Bitcoin, except very large retail stores that wind up seeing significant sales because they sell a wide enough range of products. If merchants accept Bitcoin, it’s because they believe a significant number of their customers are going to use it, as can be expected with sites like Newegg.
There is not enough incentive for the user of these services to then acquire Bitcoin for the sole purpose of using them. While this may happen on occasion, there is very little evangelism happening at the register. If the customer believes they would have significantly saved money by going with a different payment option, they may look into it. But let’s be honest, even then it’s more likely just a fleeting thought. Thus, it would not do much to move the price, even if many large retailers were to begin accepting Bitcoin. It would take such a massive movement, combined with discounts and other incentives for the newcomers to acquire Bitcoin, that this kind of positive movement can almost be written off as impossible.
It’s great when merchants do accept Bitcoin, but it would be best if that were always because it was a good decision for them to make, not because the community had pressured them into it. It’s great when people use Bitcoin to shop. But at this stage in Bitcoin’s history, it wouldn’t be unfair to say it makes no difference whether Uber accepts Bitcoin, Paypal, or baseball cards. The price of Bitcoin won’t move much regardless of what they do, nor will the spread of information about it. So it’s probably best to concern ourselves with more pressing issues, like how Bitcoin will work by the time they do decide to accept it.
Images from Pixabay and Uber.