Even though the adoption of bitcoin has still not been widespread, it has been rising fast in the past year. Several major retail stores across the world such as Subway now accept bitcoin as a form of payment. Now eBay are also considering doing the same, and given the company’s status as a major ecommerce company, the news could be huge for bitcoin.
With more than $10 billion in trading volume daily, it has become harder for companies to ignore bitcoin. eBay is therefore simply providing a service for its clients who would prefer to use an alternative method of payment. However, just as the senior VP of eBay stated, the company is not about to jump right into it. Instead, they are only ‘seriously considering’ the move, yet it may not be the right time.
Recently, high bitcoin transaction costs have discouraged low-value transactions. Take the current bitcoin fees, which are over $10 per transaction and consider why a buyer would want to incur that cost for just a $20 purchase. It is because of these fees that other companies like Steam no longer allow transactions in bitcoin, despite having a large following of crypto enthusiasts.
Besides, the volatility of bitcoin could end up hurting eBay whenever there is a sharp drop in the value of bitcoin. For example, imagine if someone paid for something at 0.01 bitcoin, at the current value of $19,000, therefore being a $190 purchase. Then the next day there is a massive selloff of bitcoin, and its value drops to $15,000. That would mean the same item would have been devalued by $40 in just 24 hours.
However, the bitcoin network is working on a different scaling solution termed the ‘lightning network’. In this new framework, instead of all transactions being processed by the miners, it would be more of a peer-to-peer connection. When all transactions have to be processed by the miners, the result is a backlog of unconfirmed transactions, and this has been the cause of bitcoin’s problems. Through lightning network, though, there would be a smart contract introduced. This would then open a direct and private connection between peers. Transactions would then be confirmed while bypassing the miner, but the outcome of the transaction would subsequently be recorded on the blockchain.
Unfortunately, this plan is still being tested, with a trial run on the Litecoin network. If the developers agree to implement lightning network, bitcoin transactions would be more efficient and cheaper. Until then, the plans by eBay to add bitcoin support have to be shelved if the company expects to have any success with it. If it does work, though, eBay may have a positive impact on the adoption of bitcoin in 2018, making that $50,000 prediction seem even more likely.