Bitcoin may have hit a snag in its rapid ascension. The leading cryptocurrency, which has grown in value by massive amounts and topped $3000 per coin for the first time just weeks ago, has faced uncertainty from brick-and-mortar stores and retailers since its beginning more than a decade ago. And yet, in spite of a slow process of acceptance by real-world businesses, Bitcoin and other virual currencies have quickly gained prominence among investors in the online realm, particularly in the past several months. Now, a report by Morgan Stanley suggests that Bitcoin may continue to have trouble winning over support from major retailers and online merchants, many of whome see the recent price surges as being a negative factor.
Skepticism Among Merchants Growing
An article by Bloomberg suggests that retailers who were already skeptical of customers using Bitcoin to make purchases may have grown even more cautious in the wake of the currencies dramatic price gains since the beginning of the year. In fact, Morgan Stanley payments analyst James Faucette concluded in a report this week that Bitcoin is currently accepted by just three of the top 500 online merchants which are tracked by e-commerce news publication Internet Retailer. The discrepancy between the lack of acceptance among top merchants and Bitcoin’s recent skyrocketing price levels seems to be stark. “Bitcoin owners are reluctant to use the cryptocurrency given its rate of appreciation, more evidence that Bitcoin is more asset than currency,” he indicated. “Way easier to trade speculatively than convince new merchants to accept the cryptocurrency.”
Scaling Challenges Could Contribute
It may not just be the price hikes which have led merchants to be cautious. Faucette also indicated that retailers may be hesitant because of the widespread and highly-publicized scaling challenges that Bitcoin continues to face as it grows a larger customer base. This has caused transactions to slow down and become more costly and has even led analysts to speculate that there might be a dramatic split between two large groups of Bitcoin supporters at some point in the future. As transaction fees increase, the consumer bears the cost.
Internet Retailer’s top 500 list for 2017 is based on online sales and is led by e-commerce giants like Amazon.com, Inc. (AMZN), Apple, Inc. (AAPL), and Wal-Mart Stores, Inc. (WMT). Morgan Stanley’s analysis did not specify which of the 500 retailers is currently accepting Bitcoin.