On day two of the ‘Inside Bitcoins’ conference in Seoul, Andrew Lee, CEO of Purse, took the stage in the afternoon to give his talk, entitled ‘Identifying Markets: Why Bitcoin Commerce Is Broken’. Possibly a puzzling statement from someone who runs a company that uses bitcoin! Purse.io is a marketplace which allows shoppers to use bitcoins to buy unused Amazon gift cards, giving the user significant discounts on the products. Recently they also announced their move to allow anyone to sell goods for bitcoin.
Beginning by comparing bitcoin to PayPal and other, traditional payment means, Lee discussed the areas of accessibility, technology, guidelines, trust, settlement times and cost of transactions, finding bitcoin ahead in every respect. Doing this, he raised the question of why then had bitcoin not taken off to the extent that PayPal did in its first couple of years?
Answering his question, Lee showed the steps that a traditional card transaction goes through from start to finish: much more than the scan and pay it appears. The number of steps in the process, says Lee, is almost the same with most bitcoin payments, with only one small part cut out. Lee stated that most bitcoin payment processes are “Not using bitcoin to its advantages”. This inefficiency means there are fewer benefits to using bitcoin than there could be, so people are less inclined to adopt the cryptocurrency. This is why bitcoin commerce is ‘broken’.
One way forward, Lee suggested, was the Purse model, which uses multi-signature accounts to process payments. Each transaction has 3 keys associated with it: the customer’s, the merchant’s and one belonging to Purse. Every transaction requires 2 keys to complete, usually the merchant and the customer; however, in case of a problem, Purse can step in to mediate, its key allowing it to settle decisions with either the customer or merchant.
Purse also uses a reputation system for merchants to guarantee the customers are not scammed. Unknown merchants have to wait until receipt of their goods are acknowledged before being paid where trusted companies merely have to provide an order tracking number. Using the multi-signature method may be the way to speed up bitcoin adoption – it has certainly worked for Purse!