I have just read this article by @francis105d1 in which he proposes an idea to increase BCH adoption. In this article I would like to expand his idea to increase the ease of use and to reduce the risk for the onboarder.
His original idea is as follows:
When you onboard a new user to BCH, you could give them a price guarantee for 60 days. In case the value of BCH will be lower than the fiat value at the time of payment, the receiver just sends you the BCH back and you send them the original sum in fiat instead.
I like the idea. The receiver can basically enjoy speculating on the BCH price without any downside risk.
However, as francis105d1 points out, this method is mostly suitable for small communities where people know and trust each other.
You could try to expand this idea by writing legal contracts for every payment you make, but honestly, that would be very cumbersome.
I do live in a modestly big city and won't be able to use the idea with my landlord (whom I have never spoken with) or the local stores -- which are almost all part of big chains and the employees cannot decide which payment method they will accept and which they won't. I could only see myself using this method with family, friends and acquaintances. And even then it is a big hassle to keep track of all the payments I guarantee them.
In addition, note that if you give such a guarantee, you take the downside risk for the recipient: If the BCH price drops a lot, you will effectively buy back the BCH above market price. And for doing that, you will need to have enough fiat or liquid assets (other than BCH) to make that purchase. This may be an issue if you spend and replace your BCH.
In our discussion in the comment section of his article, francis105d1 adds that once SmartBCH is production ready, smart contracts could be set up: You would need to deposit a stable coin and BCH to the contract and the recipient would need interact with it -- which is probably a bit too much to ask from a new user who is an elderly landlord or a merchant. After all, they want to concentrate on running their business, not become crypto experts. When you onboard a new user to BCH, you want them to have a straightforward, user-friendly experience with cheap, fast and reliable transactions.
I do have an idea how to maintain the nice and easy user-experience for both the recipient and the sender while also eliminating the downside risk for the sender. This idea could actually be implemented on a larger scale. And you would not need to keep track of all the different payments you make and all of the guarantees you give. You would also not need to keep fiat at hand to cover the downside risk.
If one or more BCH wallets would integrate the option to give the recipient of a payment a guarantee for the BCH price and the wallet provider(s) or a third party would be willing to take the downside risk, then all the above problems are solved and I could see merchants or even businesses use it.
However, if a BCH wallet offered this option at no extra cost, then people may abuse that system and send BCH to themselves. That is why this guarantee would need to be paid for by the sender. I estimate that a few percent should suffice to cover the downside risk.
The cost for giving the recipient such a guarantee is lower than the BTC fees -- if transaction value is low. And the sender will probably happily pay the cost to onboard a new user to BCH.
If BCH wallets would implement such a price guarantee, then it could also be bought by a BCH holder to temporarily eliminate the downside risk.
This could further help with adoption. And it would offer BCH supporters a way to earn some extra money as they could be the third party which gets paid to take the downside risk.
What do you think about this idea? Is it viable? Will it help with adoption? Would you be willing to supply a guarantee and get paid for taking the downside risk?
I promised that my next article would be the one about reducing the fossil fuel and energy usage of proof-of-work coins. I squeezed this article in spontaneously. The next one will be the promised article. Stay tuned!