How Content Creators Could Solve Bitcoin Cash's Biggest Adoption Obstacle

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Avatar for dave_gutteridge
3 years ago

There was a time when I was enthused about trying to help increase Bitcoin Cash adoption , so I went around to various shops I frequent to talk to them about accepting BCH. One of those shops was a great little Isreali restaurant in Tokyo, where I often go for lunch. The owner is quite progressive about accepting new modes of payment, so he's used to dealing with apps and QR codes.

I walked him through the whole payment process with my wallet, and he was fine with all of it. When I spoke about the minimal fees that are close enough to zero to not even think about, he thought that was great.

And then he found out how much the price of BCH fluctuates, and that's where everything came to a sudden screeching halt. Like many, if not most, if not all, small businesses, he's getting by as best he can with slim margins and simply can't afford the risk of any of his sales revenue suddenly losing 5%, 15%, or more of its value in the snap of a finger.

As far as I know, there is no system that would take BCH at the point of sale and immediately convert it to fiat. At least, not without service fees large enough to defeat the whole purpose. This means that any hypothetical brick and mortar shop dealing in BCH as more than just a novelty would have to hold some consolidated amount of BCH for at least some period of time before exchanging for fiat, and more time means more risk. In an ideal world, a business would be able to pay their suppliers and landlords in BCH and not worry about exchange rates so much, but we're a long, long way off from that.

I did manage to get one bar, Good Heavens in Tokyo, to start accepting Bitcoin Cash. Shortly after, the Tokyo Bitcoin Cash Meetup held one of their events there during the Satoshi's Vision conference in 2018. It was a smash success and the bar raked in tons of BCH. About a month after that night, BCH went up by about 50% and the bar owner was thrilled.

Now, at the time of writing this, everything he made that night is worth a quarter of what he got it for.


Fortunately, the owner isn't all that bothered about it, because his bar does well enough that he was willing to experiment a bit, and he's still curious to know where his BCH holdings from that night will go in the long term. And I believe that's the case for most, if not all, brick and mortar shops that adopt Bitcoin Cash.

The reality is that anyone with a brick and mortar shop who agrees to accept BCH isn't doing it because there's an undeniably sensible business model on offer. It has everything to do with how someone is willing to get involved with Bitcoin Cash as a concept, maybe because of their ideology, or their willingness to enter the casino of crypto prices, or some other reason. Whatever it is, using BCH is not a decision you would make because of cold, hard business calculations. If Good Heavens was getting most of its income in BCH, they might be out of business by now.

Until BCH volatility is reduced to a level no worse than major fiat currencies, businesses with fixed expenses are going to find it hard to justify using it on rational economic grounds. At the end of the month, suppliers expect payment at fixed fiat rates. If your income is all in a cryptocurrency that's dropped by 30%, you're screwed. Sure, given enough time, it might go up again or even out, but most businesses don't have the time it takes to find out.

Volatility is a known problem, and I think the solution most people have in mind is to build a "stable coin," which is a token on top of BCH where the value is tied to a fiat currency, usually the US dollar. Which sounds great, and I hope one gets made. As of writing this, I don't know if there are any stable coins available that are definitely reliable. Please let me know if that changes.

In any case, the problem with a stable coin is that it's a very top down solution. By which I mean, it relies on having some large entity hold on to millions, if not billions, of dollars in reserve. And that requires over sight, security, regulation, and trust. In my experience, most cryptocurrency enthusiasts are very wary of any kind of centralized power, and not without good reason.

It would be great if there were a way to reduce the impact of volatility without having to rely on some large, central corporate body.

I think there is a solution to the volatility problem that isn't being exploited enough, and that's to get more content creators on board with Bitcoin Cash.

A content creator's costs can be close to zero, and are often uncorrelated to the product they create. A writer's buy in is close to zero. A modern day digital artist or musician can have some significant upfront costs in terms of computer hardware or instruments, but from that point on, they have a nearly potential infinite output. Unlike, for example, selling beer, where every beer sold has to be replaced again to make a future sale.

What this means in terms of volatility is that an artist who sees their income drop by 30% because of market fluctuations is definitely going to be bummed out about it. However, this won't affect future output. A brick and mortar shop might find themselves suddenly unable to buy next month's stock.

Of course, artists have life costs, like rent and food and utilities, that's why they're selling their art. So it's not that they have zero expenses, just much less than a business owner who has both a home and a storefront.

In any case, this brings us to the second reason volatility does not matter as much to content creators, which is that most income from a BCH revenue stream is not a replacement for other income, it represents revenue they might not receive otherwise. As opposed to selling a beer, where at the point of sale a customer is going to buy a beer in dollars or BCH, but not both, and once the decision is made, that beer is gone.

A content creator can post the same content on multiple sites, and get revenue from each one. So an artist does not have to give up their revenue on Patreon or Medium or Twitch or wherever else in order to also be present on a site that deals in BCH. Once they are making that BCH, it's a whole new revenue stream that they didn't have otherwise. So, when their Bitcoin Cash holdings drop in value, that's not good, but, every Satoshi they're holding is more than the zero they would have from not being on that site that deals in BCH.

As more creators make content that people pay for, then that transfers a lot of BCH into the hands of people who are going to want to find ways to spend that BCH. Nature abhors a vacuum. Knowing that there are people sitting on stockpiles of currency they want to move in exchange for things like food and things and maybe even rent and utilities, services will find it more appealing to move toward that demand.

That's an optimistic prognosis I know, but, at least it makes sense in terms of the economics involved. Everyone in the cycle is winning.

What I feel is missing at this time is an active recruitment of content creators. Consider that with every post on r/btc where someone says, "Obscure coffee shop in the outback of Australia now accepts BCH! #Winning!", that post represents some Bitcoin Cash enthusiast going into that shop and talking the owner into using BCH in spite of it's dubious benefits.

I don't know if I've ever seen any post saying anything to the effect of "Local writer's group sold on the benefits of BCH and convinced to start using! #ActualWinning."

I'm not accusing anyone of a lack of proactivity in that regard, I'm just saying maybe it hasn't occurred to many people yet that there would be more overall value in promoting to the writers group than the coffee shop.

Going out and getting brick and mortar shops to adopt BCH is fine, I would never say not to do it. But, for brick and mortar stores the economic sensibility of accepting BCH at this time are debatable.

On the other hand, enabling content creators to get paid makes financial sense for everyone involved. Shouldn't that be how adoption is driven? By sound economic principles, not by ideology?

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Avatar for dave_gutteridge
3 years ago



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3 years ago

Volatility is a known problem, and I think the solution most people have in mind is to build a "stable coin,"

fiat backed stablecoins are not the only way

$ 0.00
3 years ago

Thanks for sharing! Yeah the volatility is one of the biggest hurdles from BCH being widely accepted. But man aren't the low fees and the ease of sending so nice! In a dream world I can see BTC being a reserve currency and a store of value, with BCH becoming pegged to BTC and used more for everyday transactions.

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3 years ago

Thanks for your thoughts. Personally, I don't see any need for BTC in a world where BCH is an every day currency, just like people in the US don't have US dollars as well as some other currency to "store value." But in any case, we'll see how it plays out.

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3 years ago

I love to read article about bitcoin or bitcoin cash, due to less knowledge about cryptocurrency

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3 years ago

there is no system that would take BCH at the point of sale and immediately convert it to fiat

  • Use an Uphold account address and program automatic conversion. Fees are noteworthy here tho.

using BCH is not a decision you would make because of cold, hard business calculations

Once we solve the inflows challenge, it might be.

I like your idea of focusing on content creators.

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3 years ago

Precisely what some of us are labor at:
Using the utility of permissionless coin
to promote methods of improving whatever society we inhabit.

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3 years ago