Bitcoin "Simply Not Viable" For Business

Blockchain developer Brian Winkers talks to us about why he thinks businesses should stay away from Bitcoin

Leah Zitter
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Brian Winkers has a credible history. The open-source developer and Bitcoin analyst started in 2012 for some now deceased friend called Brad Edwards, who asked for help in connecting some high level philosophical goals to Bitcoin. Two years later, Winkers collaborated with Edwards to launch blockchain money automation company that won frst place in the 2015 StartUp Chile! Competition.

Ever since then, Winkers has been working on his own crypto projects for grass-roots businesses and has helped small and medium-sized businesses get on or off the blockchain, as the case may be.

Actually in Winkers' case, he mostly encourage them to roll off it.

“Bitcoin, “ he explained to me, “is in its infancy, too slow. You have to wait by the counter, at least, an hour for the transaction to process. It’s simply not viable”

Data proves Winker corect.

Bitcoin is at full capacity, which makes payments slow to process. Merchants tend to complain about handling increased support calls with customers, who wonder why their Bitcoin payment is not going through. Alternative coins like Dash and Litecoin improve on Bitcoin by being faster more scalable, cheaper, anonymous and simple to use, but they still have Bitcoin’s core problems.

“Some time this year,” Winkers told me, “I started chatting with old and new contacts about how blockchains or cryptocurrencies fit into their business. I had discussions with a couple of businesses in the medical services industry and one in the travel industry. I told those businesses not to proceed with Bitcoin, but to focus on more conventional solutions.”

Bitcoin is probably not the best solution for your business, says Winkers
Bitcoin is probably not the best solution for your business, says Winkers

Bitcoin - as is all cryptocurrency - is volatile. How would you like to go to Starbucks one day, order your Caramel Brulée Latte for $10, next day find it at $20, and a week later down to $4? To buy something, anything, the price needs to remain constant!

Further, the Bitcoin community is riven with internal squabbles about the direction of its technology and future developments, which seems likely to affect its future. Merchants like to see a technology that is stable, healthy, reliable and low risk. What they’d find looking into Bitcoin would send them running for the hills.

Worst of all, Bitcoin is an asset more than a payment. Founder Satoshi Nakamoto intended Bitcoin as an “electronic coin”, but most users trade or hoard these tokens, rather than use them for purchase, hoping to hit the jackpot when Bitcoin soars. Until more consumers are willing to part with their Bitcoins, few retailers would consider accepting this kind of payment.

“I try to help them customize their business, figure out what they can do,” Winkers told me, “Most people who approach me are dazzled by Bitcoin. They don’t understand it... just want to get on the bandwagon. They often emerge with impractical, unfeasible ‘solutions’.“

For instance, Winkers continued:

“I consulted with one ICO, that will remain nameless, that was underway and looking for an advisor, but couldn't provide any useful information on their plan or how well it had been vetted or proven out. Some companies insist on Bitcoin, when another token may help them better meet their goals.”

Not all clients want Winkers' nay. To those who persist in their plans, Winkers tries to help them concretize their intentions. Who do you want to target? What do you want the blockchain for? What do you want to achieve?

“My job as a consultant,” Winkers emailed me, “isn't to convince anyone that they need a blockchain or cryptocoin. My job is to help them understand if it is right for them, and, if so, how to proceed in a way that will be succesful. If a blockchain is not right for them, I'm also well positioned to provide an ecommerce solution that is.”

How do clients feel when he dissuades them?

“Most clients tell me ‘Thank you. We’re glad you warned us. What you told us makes sense’”

In 2017, crypto blogger Arcturnus found that some organizations that accepted Bitcoin in the past either hid or removed their Bitcoin donation options. These organizations included Ubuntu, Microsoft, Wordpress, Mozilla and Wikipedia. Arcturnus reported that of the 45,000 Bitcoin merchants listed by Coinbase, many of these organizations never accepted the currency in the first place or stopped accepting it.

Many so-called experts push Bitcoin as the ultimate solution.

Not so Winkers:

“I've always worked to make sure that small businesses aren't taken advantage of by others in the technical fields. And that includes blockchain. For some it's the right path, for others it’s a costly diversion.”

“Maybe in all my experience,” Winkers mused, “I’ve only found one ICO that makes sense, and that’s the one I’m with right now. A Russian company called Visor looking to create a payment coin. I'm providing some technical guidance, more on the architecture side. I think they have a good team that understands the need to meet the underlying business needs. It's not about them having a big pay day.”

To give Bitcoin credit, merchants who accept cryptocurrency earn about 1% per transaction, since they don’t need a bank to verify transactions. For low margin industries, this can mean the difference between surviving or shutting their doors. Cryptocurrency brings no international fees and no exchange rates, since shipping rates (and taxes) are void. Total savings? At least 8%, according to the New York Times. Crypto purchases are non-refundable, so a small business owner evades headaches like credit card fraud and bank chargebacks that cost anywhere from $5 to $15. Bitcoin users, too, are said to spend at least 35% more than “regular” shoppers, either because they’re wealthy and/ or because they find few Bitcoin-tagged purchases.

But if you’re a business owner, that's not enough to transition to blockchain.

Late 2017, Amélie Arras, director of marketing at the U.K. financial tech marketing firm Adastra, traveled from Toronto to Las Vegas existing only on Bitcoin. She won the “payments race” competition, where she showed how she used only Bitcoin to survive her trip, but she reported how challenging it had been. Most brick-and-mortar stores refused her purchases. 

So according to Winkers, sure blockchain will succeed, but not right now.

“Many ICO type companies have zero actual developers and are looking for someone to build out their dream for free. As for me," he continued, "I'm not willing to work for free full-time in an industry with a 98% failure rate.”

What do you think?