I think we all knew this was coming.
“Bitcoin would be convenient for people who don’t have a credit card or don’t want to use the cards they have, either don’t want the spouse to see it on the bill or don’t trust giving their number to “porn guys”, or afraid of recurring billing.” –Satoshi Nakamoto Sept 23 2010
The question is are we up for the challenge?
One of the very biggest classified ads sites on the internet BackPage.com did over ninety million a year in sales through Visa and Mastercard. We say did because their access was revoked over a week ago. The repeat buyers who make their living off posting backpage ads were met with a “Your Charge is Declined” error message when trying to use their credit/debit cards. Backpage has had to rely solely on Bitcoin since.
As of Tuesday July 15th they got VISA back on board (no MasterCard yet) using a Dutch processor. It is only a matter of time before this happens again and this is a breather that we need to regroup and share information.
The Business Challenge of the Century
How fast can bitcoin restore a businesses revenue after losing credit/debit processing?
We don’t have any numbers but there is little doubt that BackPage took a big hit. So much so that they made all ads free and charged only for boosted ads. Those who make a full time living on backpage would need a boosted ad, thus it was a brilliant move to keep their existing user base while still getting revenue from their committed users. These users have had to run the bitcoin gauntlet, learning about bitcoin, wallets, blockchains, qr codes, mining fees and basic economics.
We at Paxful have made our number available, braced ourselves and barely survived the first wave. We answered call after call, wave after wave every moment of the day from everything from the enraged, the apathetic and everything in between. Confusion and frustration were the main themes with some callers spending a good five minutes cursing visa, master card and bitcoin before finally letting us walk them through the process. While many callers had not even the concept of copying and pasting what made the entire process painful was the flow of buying and using bitcoin.
Buying bitcoin via barter
Most Americans are used to feeding numbers to a corporate machine. With Paxful and Bitcoin they must now go back to an ancient custom, barter. This was met with intense frustration as users did not want to learn anything “new”. Some fought this tooth and nail but when they calmed down they realized that this was something that they had to learn for the long haul. They also began to see advantages to the process.
On Paxful users trade bitcoin directly with each other. For example a user who wants $20 worth of bitcoin quickly, without loading his bank account details as with most ACH based brokerages like Coinbase and Circle. Many BackPage users found a way to buy small amounts ($5-$20) bitcoin by trading them for gift cards from a now very busy Paxful trader named Tolan77.
Backpagers, got the concept of peer to peer trading well as Paxful is a listing service and marketplace much as Backpage is. It was only a small switch to flip for them to understand that now even “money” was peer to peer.
Only a peer to peer market could satisfy their need for bitcoin. Conventional exchanges accept funds via money wire, have an extensive KYC process built for corporations and offer advanced trading options for institutional investors. After one to two weeks they would finally get their bitcoin, not a feasible option. The various brokerages like Coinbase and Circle would not fare much better as the first transaction with them often takes over five days before delivery of any bitcoin.
We thought this would be the easy part for our flood of new users but it was by far the hardest.
The simple act of using a bitcoin wallet online turned into a nightmare for most users. It was not their fault. When you stop to consider that most people over a certain age hardly ever copy and paste and you try to explain to them step by step on the phone that they must copy a cryptic looking bitcoin amount like 0.01496 from one website to another website’s little itty bitty text field and then do the same thing for a long intimidating looking password from hell called “bitcoin QR code” only then do you understand their pain.
Feel the Pain
We walked over 1000 people through this process. We experimented with getting them to install a bitcoin wallet on their phones to scan the qr code on backpage.com to send but that made things far worse as most of them were browsing the web on their phones and they still had to send from their paxful wallet to their phone wallet and then go through the acrobatics of scanning a qr code with their phone on a website… Not a good move.
Despite our wallet being super simple and back page’s bitcoin billion page also being simple the process was clearly BROKEN. Only a completely overhauled effort could fix it. Despite this every single person we walked through it got it save for one. The language barrier, speech impediment and technical challenges were far to much to conquer over the phone and after a total of three hours and over 21 calls we had to move on and help others.
If we’re going to do this it must be a cohesive delta attack on the product, processing and community angles.
Product is King: Everything begins with product and the vital link is your dialogue and feedback with the customer. The feedback we got was invaluable. We completely overhauled the buy flow and while we saw only a slight decrease in customer support calls the calls we did have went by much faster and easier. Conversions also increased by over 30%. Those who sought bitcoins managed to buy them and use them.
Processing flow: The processing of bitcoin needs to become much easier. While we tech geeks can easily copy paste and scan QR codes the “normal” folks do not have these skills. There needs to be integration on the processor and first wallet levels. This integration will form the backbone of bitcoin as a payment network in the years to come.
Community: Education and support is vital. The bitcoin community has done an amazing job on every front and now we need to step it up a few notches. Better how- to guides, better videos and clearer communities without the noise. Welcoming the newbies with a smiling face rather than a cynical smile hidden under a hoodie must be the new norm.
We at Paxful are determined to be READY the next time that bitcoin is thrust onto the spotlight again. Bitcoin will show the world that it is not only a viable option to VISA, Mastercard and every other payment option but the superior choice. There will be no excuses anymore.
Welcome to a Paxful world.