1 on 1: Bitcoin payment processing and merchants

https://twitter.com/kanzure/status/1043476967918592003

V: Hello and welcome to this amazing conference. It's a good conference, come on. It's great because you can ask them about UASF and they know what you're talking about. I have some guests with me today. We're going to be talkin gabout merchant processing and talk about regular bitcoin adoption too. The first question I have for Alena is, ... there was a big effort in the early days of bitcoin to onboard merchants and get them on and people thought this was how bitcoin was going to win. There was a big effort to do this in the beginning; do you ever see the whole space being about bringing bitcoin to merchants?

AV: I definitely see merchant adoption coming back. The sentiment around bitcoin is changing towards positive. We used to be the weirdos out there. Today, you see a lot of big companies not just contemplating starting with bitcoin but actually doing it. Just recently, I met Square, which has adopted bitcoin. The problem of all this merchant adoption hype for adoption is we're going backwards. We think merchants will jump on accepting bitcoin and then people will buy bitcoin to pay with bitcoin. That's not going to work. We need to solve for people having bitcoin first, that's the first step. I think that's pretty doable through big channel partnerships with companies such as Square that have a huge vast network of merchants right there. They have the integration, they can use those merchants as proxy to sell bitcoin to their clients. You would come to a cafe, and next to your cafe you would also purchase $50 of bitcoin right there and right into your Square Cash app. I think this is the path forward to mass adoption and actually working with crypto. Get people to own and earn bitcoin and not just hodl, and eventually I don't know where that's going on but I do see that coming.

V: So if we get Amazon using bitcoin, then the whole world won't be using bitcoin. So that's not the focus and that's not the main focus of getting merchants on bitcoin. We need to get regular people on bitcoin. Do we need to get regular people before merchant processors?

SK: Merchants are relatively reasonable. Bitpay and Coinbase did a good job of signing up some huge brands. But what we saw was tha the bitcoiners that were available did not drive significant volumes for them, so when things went rough with congestion and all that, then some of them decided it's not worth maintaining the integration. I think merchants are pragmatic. If you come to them and say look we have this many people eager to buy stuff from you, then the merchants will agree. To get that, we need more people with coins to spend, and the people who buy bitcoins on an exchange are not buying bitcoin to buy stuff online. You don't buy something online to later buy something else online, so we need to create people that have coins to spend. This can either happen by hodlers becoming rich when the coins go up in value... or if people work for BTC earnings just where people have steady ways of earning their own coins. We should try and spend the same effort to create payers that will pay people with bitcoin. We can buy flights with bitcoin, but I want airbnb to be paying out in bitcoin to people who rent out their apartments. I want uber paying their drivers in BTC. I want taskrabbit and fiverr to be paying people with bitcoin. When we have that world, we will see a lot of people with BTC to spend. We will see circulation and pressure to resolve technical stuff.

V: So we need to build the economy before we worry about merchants, so merchants will come last.

AV: It can work bidirectionally. When you as a merchant motivate your customers to pay in BTC because you save at least 5% or more on the difference when you accept credit cards and chargebacks and so on... several people in the backoffice working on chargebacks and fraud from credit cards, you can evaluate the benefits for your business it could still work even with the volatility. Then you could work on closing the entire circle- people owning or earning bitcoin, services providers accepting BTC. But what I think we did a terrible job at earlier, we as bitcoiners, is at teaching people and explaining. I went personally on every occassion I could pay with BTC, I did, and I was just an enthusiast. I went to several places wanting to pay with BTC and the girl at the counter said yeah I heard we accept BTC and I don't know how and the boss is not here. Think about the real life of those merchants- they are not bitcoiners, they shouldn't have to care how this works, and they just need an entire package they can use for their restaurant or some pre-designed things that you put on your table to let your customers know that you accept bitcoin and here's a bitcoin loyalty program where you give some points or convert to bitcoin or cashback stuff. You can play around the merchant incentives a lot and have these incentives to circle back.

SJ: The cashier who doesn't know... she probably never had a reason to learn, like a low frequency of requests to pay with bitcoin. There's always this talk about discounts as a motivator. I personally don't believe in discounts to motivate people to buy with bitcoin. We did some campaigns with discounts on bitrefill and it has not really been the motivating factor for getting people to use the service. It sounds like in the abstract as an interesting thing.. but you're going to go buy this thing.. is it the discount that motivates you, or is it that you are already buying it? The big factor is how much BTC do I have, how much fiat do I have. It has nothing to do with discounts.

AV: There are entire retail chains built on discounts. I think discounts work for a big part of the world. There are entire cultures around discounts. Clients and customers are really different from us. Some of them would never enter a discount store because they only go for high premium high quality stuff, and then there are people that only go for discount stores. It can play out depending on what kind of merchandise and products you're focusing on. There's no one plate for all, you have to think about your customers and how the entire circle closes.

V: We have seen some incentives work. There's not a whole lot of people that want to give up their BTC. We see some examples of merchants accepting bitcoin, but their cashiers don't know how to use that. You have to understand it, to know that you want it or need it. Seems that most of these merchants sell most of their BTC for dollars. This is what happened in 2013-2014, most of the merchants didn't even hold their BTC. We need to get people to use BTC and educate people about holding bitcoin. Maybe we can talk about some of the lessons we could learn from the "failed" merchant adoption of 2013-2014.

SJ: I don't think it failed.

V: What are the lessons learned and what could we do better?

AV: Go to coinmap.org and do the worldview and use the historical slider to see how merchants were popping up. There's about 13,000 merchants. That database is not the complete truth because there's no central registry. It might even be outdated but it's a nice way to look at what historically has been happening throughout the time. The lessons are, think about the user experience. The user experience is the absolute must. UX, UX, UX. I know for people who are developers and nerdy stuff, UX is another annoying thing that they have to deal with as project managers but that's the fact. Bitcoin should probably be working in the background and not even be obvious as part of the user experience. Just try to figure out simple "next" buttons on everything.

V: Coinmap is great, but what if there was a reverse site, where you could see which websites pay you in bitcoin. As a community, we've spun into this merchant adoption thing. I don't want to dro pit, but let's spin up payor adoption thing, and be annoying to local merchants not about them accepting bitcoin but paying out in bitcoin or paying tips in bitcoin. Let's find ways. It's also pragmatically for the survival of bitcoin as a currency it can't be entirely dependent on exchanges. Merchants are important but there's other things that we need to focus on.

AV: Bitcoin is a great employee incentive. It's much better than pensions.

V: Get your bonus paid in bitcoin.

AV: There's no accounting to worry about.. give your employees a trezor wallet, and pay his bonus in bitcoin. Eventually we will get to the point where we don't have to do fiat conversion. If you receive BTC, then you don't need a bank in the loop.

AV: Banks have been a huge problem for merchant adoption. The banks ask the merchants to not do any of this.

V: What are you guys doing to get more regular people using bitcoin?

SJ: We've been doing this on bitrefill. A big chunk of the world knows about bitcoin and they know it's money and they know it's foreign money, which in most countries means better than regular money. I think we already have people who are looking for ways to earn bitcoin because it lets them earn money online and create income. Again, that income may even be sold at a premium in their country. I think there's a lot to be done with the demand that we're already seeing. The question about how to create new demand is perhaps a more difficult question to answer.

AV: There are countries where the demand is natural like Venezuela and Argentina where their money is so crappy and the state is failed or failing. Bitcoin and crypto is then a safehaven for them. In the first world, in Western society, my feeling is that the mass media propaganda is really strong and has embedded a lot of myths and preconceptions into people's heads. I like to talk to nocoiners because that always shows me a reflection of the reality on the ground and to see what they think about bitcoin and whether they see this as shady business or not backed by anything and all these typical memes. We should work on that part as well, for people to have a good understanding of what bitcoin actually is, that it hasn't been offline, that it's more secure than banking, and give perspective on this and maybe they will start to get curious and go search online and get a wallet.

V: It's all about education, got to keep talking about it and don't tell them your name. We can take some time for questions now.