Washington Sanchez, co-founder of the well-known decentralized marketplace OpenBazaar, recently expressed his frustration over the high fees associated with Bitcoin (BTC) transactions.
On May 4, Sanchez tweeted, “I personally wasted so much time in the Bitcoin scaling civil war that I could have used designing/building dapps and opening up OpenBazaar to multiple currencies. Instead, we had to wait for fees [in BTC]to cripple any consumer usage before we woke up.”
Since 2014, OpenBazaar has been accepting Bitcoin payments, which have made up the majority of its transactions. Yet due to high transaction fees and wait times, the e-commerce website that was one of the first to accept cryptocurrency is looking to support a wider range of cryptocurrencies optimized for e-commerce.
Whereas OpenBazaar plans to emphasize alternative cryptocurrency payments, the leading e-commerce blockchain protocol, CyberMiles, has announced the launch of an online marketplace that is among the first platforms to support only cryptocurrency.
The marketplace, known as Blocktonic.io, exclusively accepts the CyberMiles ERC-20 token, CMT, as a payment method. Consumers can purchase more than 60 different products on Blocktonic.io, including electronics and the CMT Cube, which is CyberMiles’ new crypto mining machine.
“We’re excited to bring a true blockchain (crypto-only) e-commerce site,” Dr. Lucas Lu, founder of the CyberMiles Foundation, said. “Blockchain technology promises to revolutionize e-commerce, and we’re confident Blocktonic is a step towards that, enriching the CyberMiles ecosystem with real application.”
No Transaction Fees
While there are several unique aspects of the Blocktonic marketplace, the most notable is the exclusive acceptance of CyberMiles’ token.
According to statistics from transactionfee.info, Bitcoin’s median fee fell to a low on April 4 and 5 of 6.86 satoshi/bytes (sat/B). As of May 29, the transaction fee is 9.71 sat/B.
Alternatively, the CyberMiles blockchain waives transaction fees for consumers using CMT on the Blocktonic marketplace.
“Little to no transaction fees is necessary to encourage consumers, even and especially in the crypto community, to shop [on]blockchain-based marketplaces like Blocktonic,” Michael Yuan, CyberMiles’ Chief Scientist, told me. “This was a strategic decision on our part, having no upfront transaction fee and only a nominal (1%) gas fee on the back end for ETH withdrawals from customer accounts. The proof is in the popularity—nearly 10,000 product orders within a few hours of the site’s launch alone.”
Additionally, products that consumers purchase on Blocktonic.io are essentially free, as payments will be refunded over an extended period of time under a spending cashback program. Through the program, Blocktonic will offer a 100% rebate within a year to buyers who use CMT to purchase the CMT Cube. And Blocktonic shoppers can earn referral bonuses when they invite their friends to shop on the marketplace, which currently supports languages such as English, Korean and Vietnamese.
Why BTC Transactions Aren’t Optimal For E-Commerce
While Bitcoin might be considered a good investment for some cryptocurrency holders, it was never a great means of payment. High transaction fees and the volatility associated with Bitcoin prevent it from being a practical form of payment.
And while it’s convenient for merchants to sign on to accept cryptocurrency via specialized payment platforms, the rate of volatility and high transaction fees make it impractical for e-commerce merchants to implement. In July, Morgan Stanley issued a report saying merchants’ acceptance of Bitcoin was on a downward trend just as the cryptocurrency’s exchange rate went through the roof.
Due to the issues affecting Bitcoin payments, the few decentralized e-commerce marketplaces in the crypto space like OpenBazaar and Blocktonic will need to find alternative payment methods. OpenBazaar has mentioned plans for a site redesign to accommodate multiple cryptocurrencies, while Blocktonic will use the CMT token to avoid transaction fees and long wait times for purchases.