Porcupine Freedom Festival

PorcfestI was at the Porcupine Freedom Festival in upstate NH last month and was conducting a survey about usage of Bitcoin.

The reason I chose to do the survey on Porcfest is because of the high concentration of Bitcoin users and enthusiasts and the high number who had likely used Bitcoin at an actual store. Without further ado, here are the statistics.

Total number of respondents: 168 (80 Bitcoin users, 88 Non Users)

For Bitcoin users:
74% had used Bitcoin online to purchase a product or service
74% had used Bitcoin in a store to purchase a product or service
(not the same 74% and many of the stores were vendors at Porcfest)

52.5% had experienced a problem when paying with Bitcoin
Most frequent problems included:
Bad network connection (53% of those with problems)
Commit time was too long (39%)
Other problem (31%)

For the 88 Non Bitcoin users:
44% didn’t use Bitcoin because the didn’t understand the technology
42% didn’t use Bitcoin because of a lack of Merchant acceptance
32% didn’t use Bitcoin because it was hard to obtain
32% didn’t use Bitcoin because the price fluctuated too much
11% didn’t have a computer or smartphone
62% cited other reasons including (too lazy, live off social security and they pay dollars, have iphone, not backed by physical asset, don’t trust the code, worried about the power going out, being broke, and security issues)

Respondents were further asked what would drive them to use Bitcoin more. The most popular answers were
If they could use Bitcoin without an internet connection
If it were easier to understand the technology
if it were more secure

The survey was conducted for a new business I’m involved in, Microdesic. To learn more about Microdesic, follow on Twitter @microdesic.

Alt Coins Bitcoin

Bitcoin and Recurring Billing

I had a discussion a few weeks back with one of the team working on SexCoin, one of the myriad of alt-coins flooding the market. They definitely have name branding right but still miss the boat in the overall justification section.

Litecoin recently tanked after one holder dump his/her holdings.

DogeCoin took a similar dive, recently.

The problem with the alt-coins is there is no reason to use them or have them, other than speculation. When that is the only value, you end up with another tulip bubble. Currency (or money) gets its value from its useability in commerce, but the level of commence for the alt-coins, let alone Bitcoin, is negligible. Unless an altcoin can be used in a very closed loop, closed community, with internal circulation, participants are just as well off using Bitcoin. In other words, A pays B in sexcoin, who pays C in sexcoin, who pays D in sexcoin, which eventually gets back to A. The circulation might not be exact and some in and out exchanges can occur but it won’t work if A pays B in sexcoin who sells it for Bitcoin to pay her rent. (Use of her pronoun is ONLY coincidental, right?). Seriously, though the same problem plagues Bitcoin because right now, people are buying Bitcoin to purchase stuff and then Merchants are cashing right out. This is unsustainable and will eventually make Bitcoin useless as a currency. The transaction costs are just too high to make this viable.

However, my post today is not about the viability of alt-coins or Bitcoin even, but about the notion of recurring billing. You see, in discussions with the sexcoin promoter, he admitted that most adult oriented websites wouldn’t touch it (or Bitcoin) with a 10 foot pole. Why? Well because they can’t do recurring billing. A typical adult website pays about $30-40 per signup in acquisition costs (advertising, promotions, etc). The average consumer who signs up ends up paying $29.95 per month for THREE months (before they realize they are still being billed). Some cancel after a month, some longer but the average is 3 months. [The actual numbers may vary but they are made up here for illustrative purposes]. The point is, the cost shift the costs of providing the service to those to unaware to cancel the recurring billing on the credit card.

Unfortunately, Bitcoin doesn’t have this capability. It’s more akin to cash, you pay it, can’t get it back, but also the merchant can’t get more of it than you authorize. And it isn’t just porn companies doing this. Many mainstream services do recurring billing onto people’s credit cards. I recently had a case of Blizzard Entertainment (the producers of WOW) doing the same to my credit card on an annual basis. I notice a charge fro $74.74 from Blizzard on this month’s CC statement. I called to cancel but this was actually a 2 year old service I signed up for my then girlfriend. She no longer used the service but I was still getting billed. How many people are blissfully ignorant of Blizzard’s billing practices as they fail to notice the charge on their CC long past their active uses of Blizzard’s services?

This is the dirty little secret of Industry, they often do cost shifting with low usage users footing the bill for high usage users. Can Bitcoin help stall that? Some companies like Coinbase are trying to replicate recurring billing, but for that to work they actually have to have a coinbase account, which is tied to a bank account or credit card.

Bitcoin Merchant acceptance

An open letter to Priceline

I’ve been an avid user of Priceline’s Name Your Own Price™ for hotels for years. I have 56 hotel stays in the last 2 years (from my history) and before that I refused to register but used Priceline in guest mode. I’m sure I’ve had over 100 hotel stays, mostly with Name Your Own Price™ though a few were Express Deals. I rarely pay full price except when I have to attend a conference and must stay at the conference hotel.

Recently, Expedia began accepting #bitcoin for hotel bookings. Michael Gulmann, executive VP of global product at Expedia, had this to say about their results:

“We did some estimates based on the size of Overstock and the size of Expedia, and came up with our own estimates of what we could expect, and we’re meeting and exceeding those.”

I am writing this letter to ask, nay beg, Priceline to begin accepting Bitcoin. At the very least, you should accept it for the Name Your Own Price™ product. Bitcoin is perfect for that auction because it is irrefutable. Name Your Own Price works because the bidder (me) basically agrees that if you can find me a decent hotel at this price, I will stay there. While I’m sure Priceline does some analysis to reduce the risks of charge backs from credit cards, the risks of fraud and charge backs is still there. Not so with Bitcoin. I could prepay and if I change my mind, tough luck on me.

So price line, what say you?