Last week, Bitcoin futures platform Bakkt announced the rollout of their consumer spending app, enabling customers to buy coffee at Starbucks with Bitcoin somewhere in the middle of next year. Is this the beginning of mass adoption? Not really, but it’s certainly trying to make us think that it is.
There’s still a strong recognition that cryptocurrency needs to be spent
Despite all the “hodl” and “stacking sats” rhetoric by the lower-tier Bitcoin fans, there’s an underlying understanding by the bigger players that utility comes before store of value, and in order for the coin to have long-term value as an investment, it must first be able to be used. It even says it right there in the post: “Unlocking the value of digital assets through consumer payments.” The implication is that the value of digital assets is locked up, or inaccessible, without consumers being able to pay with it, and that Bakkt must not only provide a means to access Bitcoin’s value through futures contracts, but it must also secure said value through making it useful.
The payments angle is a token demonstration, not a practical one
While Bakkt’s payments angle is important, it’s likely to be largely symbolic. First, people already have no issue buying their coffee with any number of payment method, and Starbucks is not dying to accept another means of payment for any reason. Second, cryptocurrency’s unique properties of immutability and decentralization are some of the least applicable to the retail coffee business and solving any problems they may have. Finally, instead of accepting crypto payments directly, instead of using an indirect solution such as Flexa, going to a futures contracts platform and trying to use it to buy coffee seems to be the most roundabout solution possible that makes the least sense. Even the announcement post is full of confusing industry jargon reminiscent of the “business agility influencer and solutionist” from Dilbert, not making it entirely clear why this is even a thing, or how it will work.
So why did a futures platform like Bakkt go to all the trouble to provide a consumer spending app? Simple: so we can say “I can spend my Bitcoin at Starbucks.” That’s it. This is likely purely symbolic so investors can say “Look, this is going mainstream, I can even spend it at Starbucks!” and subsequently get more investors to buy in.
If cryptocurrency had solved its usability issues, something like this would be useless
Finally, this shows pretty clearly that cryptocurrency today isn’t highly usable as a payments method. Eleven years later and it’s still not practical to use. Sure, we all know that advancements need to be made in how easy it is to transact, including doing away with less than intuitive public address and fixing ease of securely backing up funds. However, the real roadblock is the network itself. Can it scale? Is it secure against attack? How fast are transactions settled? And so on. The mix of usability and a reliable and efficient network are the secret sauce we’ve been missing. Until we get there, we’ll continue to be at the mercy of convoluted spending solutions like Bakkt.