The main driver for adoption is on the merchant side. As e-commerce cuts margins to the bone, those 2-3% credit card fees come under the microscope.
Those 2-3% credit card fees are there for a reason. Sure, profits are healthy at Visa, MasterCard and Amex and it is an oligopoly. However that is not the only story. Payment processors need that big % to deal with fraud. The ingenuity of fraudsters is boundless, you need a lot of people + process + technology (translation = lots of money) to combat fraud.
What makes Bitcoin fast and almost free is what makes it insecure – no chargebacks. Enter Mt Gox and all the other tales of Bitcoins going poof in the night that lead to people saying, “Bitcoin is not ready for prime time”.
We are currently in the Bitcorati phase of Merchant adoption. The big issue is that too many scammy merchants exploiting the fact that there are no chargebacks could quickly erode that Bitcorati enthusiasm.
There are only three ways that this can be prevented:
- Big payment companies and financial institutions become Bitcoin intermediaries.
- A couple of startups become big enough to become trusted intermediaries.
- There is a technical breakthrough.
The most obvious technical breakthrough is MultiSig. Here is a good explanation by Vitalik Buterin of Etherum.
Of course, it could be a technical breakthrough exploited by a well-funded startup. That seems to be what Bitgo is aiming for with the $12m they raised in June.