Bitcoin.com spoke with a Wall Street trader on why PayPal’s centralized P2P payment system Venmo is preferred among his circle over Bitcoin to uncover what is preventing the cryptocurrency from breaking into the mainstream.
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P2P Payments are Booming
It appears that the never ending stream of Bitcoin eulogies is not slowing down anytime soon, as the world’s first decentralized currency refuses to die. However, the frustration of those hoping the digital currency will be widely used for peer-to-peer payments is palpable as other platforms such as PayPal’s Venmo are scooping up many users — and millennials in particular.
This nascent P2P payments market is expected to grow from $16 billion USD to an estimated $86 billion USD by 2018, according to Business Insider. Therefore, it is no surprise that social networks are scrambling to provide their user base with financial services (while taking a small cut in the process). Platforms such as Facebook, WhatsApp, Taringa!, and Snapchat, just to name a few, are all repositioning their business models around digital transactions, with some not only offering P2P payments, but also rewarding users for their original content.
Venmo vs. Bitcoin
Venmo is a service of PayPal that allows anyone to send money via Facebook, phone or email, and has seen impressive growth, particularly among young professionals and social media users. In fact, over $2.1 billion has been transacted over Venmo, which integrates with Facebook and its 1.5 billion active users.
“The social component (and free marketing) helped Venmo go viral,” explains Techcrunch. “When you go out to dinner with a friend or share a cab or go on a weekend getaway and want to split the bill, Venmo is almost always the easiest option.”
To dig deeper, Bitcoin.com spoke to Wall Street trader “John,” who despite asking us not to use his real name, had some revealing insights on why he still prefers Venmo over Bitcoin.
Bitcoin.com (BC): How old are you and how long have you been working in the financial industry as a trader?
John (J): I’m 30 years old and I’ve been working in the financial industry for 6 years. 5 years as an equities trader.
BC: When and how did you hear about Venmo? Are you a frequent user?
J: I heard of Venmo in 2014 from a friend. He said it was a quick and free way to send money around to/from any bank. I had already used Chase Quick Pay, but this was even easier to use and I could send or receive money with any bank. I use it a couple of times a week.
BC: How many of your colleagues and friends use or know about Venmo?
J: I think most of my friends know about Venmo. They use it mostly in the same way I do.
BC: When and how did you hear about Bitcoin? Are you a frequent Bitcoin user?
J: I heard about Bitcoin several years ago. An old coworker of mine was very interested in it, but I haven’t used it myself until very recently. Last month, I opened my first Bitcoin wallet and made my first few transactions.
BC: How many of your colleagues and friends use or know about Bitcoin?
J: Most of my friends and coworkers know of Bitcoin. However, none of them use it.
BC: Which platform do you prefer for peer-to-peer transfers? Do you have a preference for using one currency (Bitcoin or USD) over the other?
J: I opened a wallet with Coinbase. I still prefer US dollars.
BC: What features or what would you like to see that would make you switch to Bitcoin?
J: I think for me the biggest selling point for Bitcoin would be better transparency. I would prefer to have a major company (like Google, Apple or Amazon) own and give full backing to a wallet so that I could have comfort my money would be there; kind of like FDIC or something. Another issue is the speed of transferring is still rather slow. Let’s say I want to split a bill with some friends, that shouldn’t take a few minutes, it should be instant.
BC: Bitcoin is actually more ‘transparent’ since every transaction is recorded and can be viewed in real time on a public ledger.
J: Yea but I can’t call customer service.
BC: You can contact you wallet provider Coinbase just like you would call your ISP for any issues with your internet connection.
J: What if you forget your wallet password. They need a backup system for that.
BC: If Venmo integrated Bitcoin, would you use it instead or stick with your linked USD bank account?
J: Venmo is owned by PayPal so I feel that my money is safe. Also, it is very easy to use and track. Bitcoin is a bit more challenging, but it seems more secure. If someone theoretically stole and hacked into my phone, they could empty my Venmo account. They wouldn’t be able to do that with a Bitcoin wallet.
Thank you, John, for sharing your insight with our readers
It appears that what gives Venmo the edge is its ability to integrate with legacy infrastructure, which users are already comfortable with, as well as the very important social aspect. Whereas Bitcoin, from setting up your wallet and buying bitcoin, to safeguarding your private keys, can seem daunting even for a person who’s familiar with handling virtual cash.
For Bitcoin to become a viable player on the P2P payments market in the years ahead, the advantages of using a decentralized cryptocurrency over a centralized fiat currency must be clearly understood by potential users. The public’s reluctance to try Bitcoin due to the negative associations instilled by the media leads these would-be users to be wary of the network’s reliability and “transparency.” This also precludes the public from realizing that a lack of a central authority is not a bug, but its most important feature.
Bitcoin’s significant advantages — borderless, no middle-men, no personal information required, lower cost, and free from manipulation by authorities — can certainly be attractive for some users, and there is no reason why these platforms can’t coexist. However, until Bitcoin service providers gain legitimacy in the eyes if the public, it appears that many will still prefer to transact within their bank’s purview.
Do you think Bitcoin has a shot against Venmo on the P2P payments market? Please share your thoughts and comments below!
Images courtesy of thenextweb.com, businessinsider.com