Bitcoin Cash Merchant Adoption And Suggestions

With the rise of inflation is affecting millions worldwide, the use of cryptocurrencies as Bitcoin Cash becomes an excellent option as an alternative to fiat payment methods.

Venezuela is an example where the national fiat currency (Bolivar), collapsed because of multiple internal and external economic factors.

Venezuela is also a testing ground for cryptocurrencies for the last four years. We are expecting increased crypto adoption from economies ravaged by hyperinflation and fiat currency mismanagement.

Onboarding merchants to adopt Bitcoin Cash as a payment method, demands a professional approach and is result-oriented.

With better organization and planning we can achieve more than the example of Dash’s efforts between 2017-2019 or a short-lived crypto adoption phase.

Merchants Accept BCH But Will Also Require Customers

I want to clarify from the beginning, I find the onboarding process to be a success in multiple regions around the world, with an incredible job performed by initiatives and volunteers.

The merchant adoption in Venezuela is also bringing results, but as mentioned in this post: My Experience in Adopting Venezuela in the year 2021 by @BCHouseVE there are many issues we can't ignore.

Such as:

• Lack of customers: There are few people on the street who have BCH in their wallets, there are a lot of people who almost have fiat in cash and mostly use debit cards

• In time they stop accepting: We have several businesses that after 2 or 3 months stopped accepting cryptocurrencies because they had few or no customers paying with cryptocurrencies

• More incentive for companies or entrepreneurs: We offered them good publicity and free and constant advice, but they were not motivated, they did not want to attend the workshops, they did not want to get information.

A merchant, a business, a street vendor, or a giant multinational corporation, has one single purpose: Profit.

There are limited Bitcoin Cash users because worldwide there are not plenty of cryptocurrency owners, anyway. This is a user adoption issue and not just representative of Bitcoin Cash, but one that all cryptocurrencies face.

There are 100 million investors, but probably just a million users, more or less.

The part of all those millions that bought cryptocurrency in 2020-2021 that ever used their cryptocurrency outside of an exchange, (by moving to a non-custodial wallet) is apparently less than 1%.

With Bitcoin Cash, this is slightly different, though, but probably BCH hasn’t achieved millions of users so far either.

Expansion of BCH Adoption and Education in More Regions Will Cultivate A Culture of Payments

I checked the bitcoin.com map and it seems there were limited options in some regions of Venezuela.

The campaigns mostly focus on adoption in Caracas, which is understandable, but I think we should expand and onboard at least a couple of merchants in every city.

It is vital to spread merchant adoption in more cities, where currently are limited or no places accepting BCH. Read.cash user @gertu13 explained in these comments that in her location no merchants are available (state of Anzoátegui).

Perhaps there are at least a few Bitcoin Cash holders in many cities in Venezuela that simply don’t use BCH because they have no shop close to them accepting BCH.

Just the read.cash and noise.cash users from Venezuela are thousands.

Why wouldn’t they want to spend directly using their tips and buy their groceries or pay for other consumer needs with BCH directly?

Are the merchants asking for an extra commission for crypto payments and how can we ask them not to, since they probably have calculated the cost of fees to withdraw and the risk of holding a volatile asset?

I’m certain, though, users would love to pay with their mobile BCH wallet instead of withdrawing in a fiat currency form and wasting time and more money in fees.

A local survey may help in this, but perhaps one merchant in each city as a BCH representative hot-spot would be an ideal first step.

Crypto Education and User Experience

The allocation of resources should include crypto education on both the consumer and the business side.

What would also be helpful is to find Bitcoin Cash users beyond the active campaigns, those that will be writing articles or creating video content describing their experience paying for goods and services with Bitcoin Cash.

This is the best advertisement when it comes directly from the consumer. Word of mouth does wonders. Educating the public and explaining the properties of Bitcoin Cash as sound money is vital.

A great initiative would be perhaps a few crypto-experienced Venezuelans to form a BCH community and live entirely on Bitcoin Cash.

Bitcoin BCH is revolutionary money, it empowers the individual, and I'm sure that in some Venezuelan cities people can live without using any other money option, but Bitcoin Cash alone.

The Cost Of Adoption By the Merchant Side

If customers are paying in BCH, and since the cost of operations is not forbidding to the merchant side, they will probably adopt Bitcoin Cash as a payment option.

The first questions a merchant will ask is:

"How easily can they liquidate BCH to the dollar or Bolivar, and at what cost."

It is a logical question any merchant will immediately think of.

Education is important at this stage, but I doubt they will always understand the economics of Bitcoin Cash. It is probably best to explain BCH as "sound money" that doesn't inflate and is not affected by fiat money hyperinflation.

Equally important to explain the instant transaction speed and low fees, as well as provide pamphlets describing Bitcoin Cash in general.

If there is a vast network of other merchants accepting BCH at the same location, they can always use BCH without ever selling for fiat currencies.

Are Merchants Withdrawing BCH income in Bolivar and Why Aren't They Using Bitcoin Cash Instead?

If merchants care about volatility and want a less volatile currency they will probably sell immediately to USD or a stable coin.

Assuming a vendor or business wants to immediately liquidate BCH to a stablecoin or a fiat currency they have to calculate:

• The cost of trading to Bolivar from their wallet directly

• The cost of withdrawing the Bolivar to a bank

• The time it takes to find the funds in their account and be able to use them

The dollar is not legal tender in Venezuela and from this article (Venezuela, currencies and technology..., by @zulfrontado) I concluded banks in Venezuela are not so different from anywhere else. USD is not legal tender, so USD accounts are not available to everyone.

Also, the Bolivar is still experiencing hyperinflation, although the sources I found are giving different estimates (600% - 2000%). It is still at hyperinflation levels, so it is not financially wise to keep holding Bolivars for more than a few days since it rapidly devalues. 

With 2000% inflation the Bolivar probably losses 5% of its value daily at this rate, so it needs to be immediately consumed and used in the markets.

The merchants understand this, otherwise, they would be out of business from day one.

If the withdrawal process takes more than two days, then this is a huge cost for them to bear.

The whole process of liquidation into fiat doesn't seem to work well for merchants. Maybe it can work in a country with a stable fiat currency, but not with the Bolivar.

Move Adoption To The Supply Chain - Increase Users

A parallel currency is the paper-dollar in Venezuela, but not officially. However, as I read from read.cash user @zulfrontado , merchants ask for a minimum payment in dollars and don't carry change. In the digital form, there is perhaps Petro, which it seems is only used within the public sector but not in the market.

It seems, the physical dollar as a parallel currency is not working well with the market, and BCH has an advantage here.

It is up to the market to select a cryptocurrency as a parallel currency instead of the dollar. Bitcoin Cash is not forced as Chivo and LN in El Salvador. It is a great option for Venezuelans to adopt voluntarily.

Back in 2017, when I joined the crypto field, I thought BTC was going to dominate as a currency in Venezuela, as I failed to realize the BTC fees were excluding 99% of the population.

Bitcoin Cash is the fix to the inaction of Bitcoin Core devs. Bitcoin Cash solves the issue of scalability and can achieve what Bitcoin was destined to do all this time.

BTC, as it stands today, doesn't have the capacity to meet mass adoption and LN is a complex mechanism that completely missed the point. Consumers will select BCH over LN any time they are given this choice.

It would be ideal if the merchants started using BCH themselves for payments.

This could happen with discussions to adopt Bitcoin Cash in the whole supply chain, with certain steps.

Perhaps talk about Bitcoin Cash to the direct suppliers of merchants requesting them they accept BCH. Probably some suppliers will prefer Bitcoin Cash instead of Bolivar payments.

BCH or crypto volatility is not an issue when facing a constantly declining purchasing power of the Bolivar.

A Tax Bill Can Be Good News

The recent news on a Venezuelan tax bill on crypto transactions (New Tax Law for Cryptocurrencies in Venezuela) can help with adoption.

While Bitcoin Cash doesn't need a government's approval or regulations, a businessman doesn't want to mess with the government by adopting a payment method not compatible with the State financial system and networks.

There is also a big part of the businesses world that still thinks crypto is a scam. Most merchants won't accept any payment option that is not officially recognized by the government.

Taxation imposed on crypto transactions regulates it and makes it legal tender. It depends on the details of the announcement, but hopefully, the imposed fees won't be a barrier and will not hinder cryptocurrency adoption.

Dash In Venezuela As A Case Study

We still remember how in 2017 many Venezuelans experimented with Dash and a few more cryptocurrencies.

Dash had a vast campaign in Venezuela, that was heavily advertised in the crypto media (Coindesk, Cointelegraph, etc.), and as a newcomer in crypto in 2017, I thought Dash was going to reach mass adoption the way it was presented.

The campaign seemed like it was producing great results, but were Venezuelans educated on Dash or crypto in general?

Or perhaps they were just receiving the Dash tokens of the campaign and selling them immediately?

The Dash campaign eventually failed, since once it ended, adoption of Dash in Venezuela dropped back to zero. I don't wish the same to happen to Bitcoin Cash, and while a few campaigns are running, perhaps the approach should be different.

Do we want a campaign that will produce real users and real adoption? We need users that will find in Bitcoin Cash the money they wanted and will bring more people themselves next.

Crypto education and the advertisement of regional success stories will attract more merchants and multiply the interest in Bitcoin Cash.

Maintain the Bitcoin.com Map

This is a remark concerning the global side of BCH adoption, not just Venezuela.

I have done research in the bitcoin.com map and often came across entries that are not active anymore with websites taken down and probably businesses shut down.

The map of merchant adoption is an incredible tool that should always be explained when onboarding merchants or users of the Bitcoin Cash wallet.

Although, it has to convey the correct information. Perhaps someone should be employed with the task to check the data entries, contact the merchants and ask for details.

It can also be used for further analysis by contacting the merchants and asking about their experience with BCH payments.

Bitcoin Cash owners should be able to use this tool and find active shops or businesses accepting Bitcoin Cash.

Watching the Bitcoin Cash acceptance map of Caracas for example, we observe thousands of locations registered.

Maybe it is not a problem if just a dozen of them have stopped accepting Bitcoin Cash, but what happens if half don't?

Or perhaps have changed details, moved to another location, changed phone number, or shut down completely?

There should be a person or a team updating and maintaining the validity of the BCH merchant entries.

Can Crypto Cards Be Another Solution If Used By Merchants?

Maybe stable coins can help a merchant if they don't want exposure in BCH volatility. Sell perhaps to USDT, or FlexUSD and hold to a wallet until the funds are required.

Some options like BitPay and Gocrypto can be set to instantly liquidate into cash on the side of the receiver, and both are used widely around the world.

Perhaps crypto cards (Coinbase, Binance, Crypto.com) can also help the merchant in this approach but I haven't found related to Bitcoin Cash for the time being (although bitcoin.com advertises a few of them here).

However, I am not sure if crypto cards are compatible with the POS network of Venezuela, and there is usually an extra cost to use these cards depending on the exchange rates, fees, and bank network policies.

In Conclusion: Feedback and More Data To Define Adoption

I wrote previously this part about Feedback we should also ask from merchants and important data that could help us define how adoption is progressing. (source)

There is a need for feedback. It is a demanded process and contains important data that needs to be extracted to evaluate the outcome of a crypto adoption initiative.

This includes:

Feedback from merchants and data of BCH usage in their business.

Perhaps a questionary should be filled out by merchants after a certain period (3-month or 6-months), and provide an extra incentive for this purpose.

We certainly need to know:

• How many customers these businesses have in total, and how many use BCH (market-penetration level)

• How do the merchants deal with the BCH they receive (sell immediately for dollars or Bolivar?)

• Merchant and consumer experience levels (questionnaires)

• Are the merchants introducing BCH to others as a payment method? (Word to mouth is the best advertisement)

• Are these merchants paying for goods and services with Bitcoin Cash?

It is impossible to analyze market-penetration levels without having actual data and feedback from the side of the merchants.

Onboarding and not looking back again means it will just be a short-term process.

We need to present real volumes, numbers, and usage information from the onboarded businesses. Marketing relies on numbers.

It may be difficult to extract valid data from all BCH merchants. Perhaps a Google sheet with just three or four records can help reach important conclusions. There could be an incentive to the merchants to fill them, and it would be great if they also fill their public address, so the data can also be verified on-chain.

Maybe this is too much to ask, but having valid data will also help with better marketing of Bitcoin Cash, and I think there were similar issues with the earlier Dash initiative in Venezuela as well.

Cover Photo: by Jezael Melgoza on Unsplash (modified)

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