Time and again you will hear that Bitcoin is magic money that has no use or purpose and has no intrinsic value. You will be told that you can’t buy a cup of coffee with it and that it has no “use case” as money. Even some “believers” say it is not currency but is instead digital gold for staking up while it appreciates some incredible lofty value. This might be the case but Bitcoin is definitely money. It is valuable money as it is incredibly useful. Allow me to demonstrate.
I want to sell a product, let’s say I’m a business making some normal margin product, such as picture frames. A customer comes to me from Africa and he is desperate to get a container load of frames costing $20,000. I will of course say, “Pay me up front” and my new African customer says, “Sure.”
I am now ten days away from getting the money. They might take a day or two to get their paperwork straight, perhaps as much as a month. The paperwork we have to go through at our end is a nightmare and it may or may not show up as expected and it may or may not cost a couple of percent in forex charges and various other charges. Heaven forbids it’s a big order and we need a letter of credit.
All sorts of things can go wrong. The letter of credit can be fake. The order can be produced awaiting the payment only to find the order has gone away. The money can bounce around because one bank in the chain messed up. The whole process is fraught. So they offer to pay the lot on credit card.
We might not be able to take that payment and the charge from the company, even if we take credit cards, may be 3%-5% of the invoice. Then six months later the untested customer can call their credit card company and say they never bought the goods and we get a huge chargeback and have lost not only the profit but the principle too. So instead we say, “We take Bitcoin” and they say, “Fine.”
Then a few minutes later we have notification the payment has been sent. There is no going back for that money. A few minutes later we have the full amount confirmed and if we have our cryptocurrency ‘ducks in a row’ the fiat is on the way in another few minutes. That is an electrifying improvement in business process and it is real, today, right now.
“But,” the no-coiners say, “Bitcoin has a high cost, not the few cents it was meant to have.”
That can be true, but for this B2B order $50 is not an issue. The worst lag of say, one day to get the cash at the worst performance last year when Bitcoin was going mad, is nothing to the wait in conventional banking, and now the pandemonium over transaction times are back down to minutes and costs to a few cents again. Yet even then the fact that you can see the money on its way for sure is a huge benefit over the “pay and pray” system of international interbank transfers.
For B2B transactions and international ones, Bitcoin is a tremendous tool. As a businessman, I would prefer to be paid in Bitcoin now than paid in slow, expensive to process fiat that might arrive at some indeterminate point in the future. This is an extremely valuable “use case” for Bitcoin and it is the crypto coin’s liquidity not price that is the value.
I do not care if Bitcoin is $100 or $1 million a coin. So long as I can get it and convert it in a few hours, it’s absolute value is of no importance to me. You might think the price volatility is an issue, but moves can go either way so they cancel out over time and my holding period is short, so I have no material exposure to this volatility on average. So forget the revolutionary hype, which is real, and instead focus on the value-add.
This single Bitcoin use case is a huge benefit to a business that wants to be agile. It telescopes order processing, it brings cash payments forward, it lowers risk and it decreases work. This single example of valuable functionality that pioneering companies are exploiting today is why the cryptocurrency revolution is real and why it is no magic money, smoke-and-mirrors craze. So rest assured when you hear people say that Bitcoin is a scam with no purpose to exist, they are very wrong. Bitcoin is a fantastic B2B tool for companies looking to be as agile as possible.