Black Friday: A Chance for Bitcoin to Get Some Mainstream Love
By now, it's common knowledge that some people have made small (and, in some cases, not-so-small) fortunes on Bitcoin. But even though U.S. regulators and lawmakers gave bitcoins a tentative thumbs up last week, and an increasing number of merchants are accepting them as legal tender, you still can't walk into most retailers and spend them.
Enter Bitcoin Black Friday, designed to harness the indefatigable spirit of American consumerism to bring the world's most popular cryptocurrency into the mainstream. Shoppers will be able to spend their digital ducats this Friday not only on gift cards to Target, Banana Republic, Sears and other major retailers, but on airline tickets, Christmas trees, organic coffee, OK Cupid memberships, alcoholic beverages, Moroccan rugs and more.
More than 250 merchants are participating in the one-day shopportunity for Bitcoin users, a pumped-up version of a similar event launched last year by Bitcoin proponent Jon Holmquist. This year, Holmquist has teamed up with Internet activist group Fight for the Future to organize the event. Backers include the Bitcoin Investment Fund, Silicon Valley Angel and Ribbit Capital, who have helped with promotion and outreach to merchants.
"Bitcoin is at a very pivotal moment," Wilson says. "Since we feel like it's such an important and powerful technology, and something that could be really positive for the world, we think it's really important that it cross over and go mainstream as soon as possible. Because that's the moment when it becomes politically safe."
The goal of Bitcoin Black Friday is to speed things up that process, according to a media release.
Coinbase, one of the largest U.S.-based Bitcoin exchanges and a Bitcoin Black Friday sponsor, will be waiving its transaction fees on Friday. The exchange, which has raised more than $6 million of investment capital from major Silicon Valley players, usually charges a 1-percent fee for buying and selling bitcoins.
The shopping event puts the lie, at least for 24 hours, to the claims of Bitcoin critics that the cryptocurrency isn't very useful. "You can't use Bitcoin for much today besides gambling in online casinos and reserving seats on Virgin Galactic spaceflights," former Gawker writer Adrian Chen said Tuesday in an opinion piece for The New York Times. But in fact, to give just one example, you can buy the aforementioned gift cards with bitcoins on any day of the year through Gyft.com; the Black Friday deal simply provides a slight discount on the purchase price.
Even so, Chen is right to point out the "speculative greed" fueling much of today's Bitcoin trading. On Coinbase, the price of a single bitcoin is now close to $1,000, and the price has already reached quadruple digits on some exchanges. The crash, predicts Chen, will be great.
Wilson disagrees, though he admits that some Bitcoin traders are just out to make a quick buck. "What speculators are betting on is that Bitcoin will become widely used." And that, he says, "would be great for a number of reasons," among them the ability to avoid credit-card processing fees, a feature of Bitcoin which Chen acknowledges. "If Bitcoin succeeds, it's going to become the currency of the vast majority of online transactions," Wilson says.
If Bitcoin can gain mainstream respectability quickly enough by proving its usefulness to merchants and consumers, it may forestall the crash that some market watchers think is coming.
Brian Patrick Eha is a freelance journalist and former assistant editor at Entrepreneur.com. He is writing a book about the global phenomenon of Bitcoin for Portfolio, an imprint of Penguin Random House. It will be published in 2015.