“Elaine, breaking up is like knocking over a Coke machine. You can’t do it in one push; you gotta rock it back and forth a few times, and then it goes over.”Jerry Seinfeld, The Voice
A long-time Anypay user who owns a restaurant sent me an email last night, sounding distressed. His business has been accepting bitcoin for over seven years. Until recent events made meetups impossible, his restaurant was home to the longest continuously running Bitcoin meetup in the world. Countless big names and major players in bitcoin have been his customers. So when his email came to me at 8:15 PM yesterday evening, I knew I had to reply immediately.
“I saw an article saying Anypay is no longer taking Bitcoin?!?! Please get back to me about this.”
Thanks Ian. Your click-bait article made everyone freak out at us and forced the issue.
Breaking up is hard to do. We said it was over with BTC in February. Then we took BTC back. Now it looks like we are breaking up again. Look, BTC is not marriage material. We had great times, but it is time to face facts: BTC has changed.
“In the information economy, the economy can change as fast as we change our minds.”George Gilder, Life After Google
If you already know why using BTC sucks, you can skip this post. But for those of you who are reading this and thinking, “What the hell?” please read on, or else you will soon be hopelessly lost and confused. You need to know the truth, and I am going to tell you what no one else will.
BTC sucks for merchants
Anypay supports 3 forks of bitcoin:
- Bitcoin Satoshi’s Vision (BSV)
- Bitcoin Cash (BCH)
- Bitcoin Legacy (BTC)
Anypay recommends against using Bitcoin Legacy (BTC) for payments. It is unfair to business owners and an overall bad experience for everyone.
At the time of publishing, the cost to get your bitcoin transaction into the next block is on the Bitcoin Legacy blockchain is 318 sats/byte (roughly $7.50). Let us say you are patient and can wait an extra twenty minutes to an hour, so you include a fee of $5.00.
How long can you wait?
Customers have to pay that extra fee on top no matter the size of their bill.
Even if your customer are only sending you $1.00, they have to pay $1.00 to you, plus $5.00 on top of that to send the transaction. It costs them $6.00 to send you $1.00.
Fine. Now say you wanna spend that $1.00. You can’t. You need at least $5.00 just to spend it. So now what? You can try and spend it by attaching a lower transaction fee, but then you’ll have to wait for it to get confirmed in the blockchain.
There were 80,000 unconfirmed transactions waiting in the BTC mempool earlier this week. Try transacting at a high-traffic time, and your transaction could take hours, days, or never happen and get rejected after waiting all that time. Bitcoin Legacy can only process so many transactions per day. The lower the fee, the longer you wait.
You might say, “Who cares about a five dollar transaction fee? I have a lot more than that.”
Fees, fees, fees
OK. But you have to pay a fee per input! That means if I paid you $25.00 in BTC, it would cost me $25.00 plus $5.00 to get it to you. Then you would have $25.00 in BTC, but you can only spent $20.00 worth because $5.00 gets eaten up in fees.
That is a scenario with one input, one output. What happens when you want to spend multiple outputs?
Instead of a one-time payment of $25.00, I pay for five separate drinks on five separate occasions. Let’s say each drink costs $5.00. I, as the customer, pay a total of $50.00 to transmit $25.00 of value in BTC. (That’s $5.00 for the drink, plus a $5.00 fee on top every time.)
Here’s the kicker: That $25.00 of BTC you have? It’s made up of five different inputs. Uh oh! That means you have to pay a fee on each one. That’s $5.00 per input, so it will cost you $25.00 in fees to spend. You get zero dollars of purchasing power from that $25.00 of BTC! Ouch!
How is it possible that someone spent $50.00 paying you, and you get $0.00?
Clearly, using this coin doesn’t make any sense anymore.
It screws the merchant.
And BTC fees are only going up.
We will keep supporting it, but God, how much longer can we continue to look ourselves in the mirror and pretend this is okay?
Fees on BCH, BSV, and DASH are all less than $0.01. I just checked, and it is currently over 31,279 times more expensive to transact on BTC.
Aaaand it’s gone
If you thought losing your purchasing power was bad, try this on for size: BTC has a feature called “replace by fee” that allows customers to send a bitcoin transaction to a merchant, and then before it is confirmed, they can change the output (“replace”) by supplying a higher fee (“by fee”) and send the bitcoin payment back to themselves! Well that sucks if you are a merchant!
Your cashier thinks the customer paid, but after the customer walks out, he reverses the transaction, leaving you with nothing.
If you owned a bar like this guy and had been accepting BTC for seven years, you would be rightly pissed to learn this information. All that money you think you made, but it is all going to get eaten up by transaction fees? If you are lucky enough to have some value left over after paying fees, your transaction could get stuck in the mempool for hours, days, or may never confirm. Oh, and some of your customers used “replace by fee” to reverse their transactions without you or your staff knowing about it, appearing to pay while actually sending you nothing.
This merchant has countless unspent outputs. When he sends BTC, can you imagine the fee he is going to pay? Bars, like most businesses, receive lots of small dollar value transactions. He may have lots of BTC, but it is made up of tons of small inputs.
There is good news. Remember those qualities that made you fall in love with Bitcoin in the first place? How about the ability to transact with anyone in the world, instantly, for a fraction of a penny? What about the promise of smart contracts — programs that “live on the blockchain” and self-execute when a user sends a payment? How about decentralized, time-stamped, and encrypted data storage? Tokenized assets. Verifiable identities. Immutable records. Consensus — the solution to the Byzantine Generals Problem.
You can have all this, plus the economics that provide stability and scalability. Bitcoin Satoshi’s Vision is the bitcoin outlined in Satoshi Nakamoto’s white paper. BitcoinSV’s fees are decreasing while the number of transactions on the network are increasing.
- Stable protocol.
- Miners have choice.
- Miners compete to process transactions, resulting in lower transaction fees.
- Lower transaction fees allow for lots of transactions for lower cost to users.
- More transactions become possible because miners can choose to mine big blocks. (Put another way, transaction processors can choose to process more transactions.)
- More transactions results in more fees to the transaction processors.
- More transaction fees attract new transaction processors, giving users more options and lower fees overall.
These are the economic conditions you want. A fixed protocol. Competition among service providers. Freedom to differentiate. A predictable supply of monetary units with a fixed upper limit. Put all this together, and you have the best tool for communicating value among people the world has ever seen.
Now you know.
With great love and respect,
President, Anypay Inc.