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Apple Could Beat Bitcoin Out Of The Retail Market

Apple's cut Bitcoins out of the App Store, but that's only a start. Next step: Unleash the iBeacons.

Apple Could Beat Bitcoin Out Of The Retail Market

[Image: Flickr user Nicki Mannix]

Bitcoin is winning over some retailers for its cheaper transaction fees and digital access, but it hasn’t permeated in-store purchases on a grand scale and might run into an unlikely contender: Apple. With its in-shop iBeacon platform, Apple could easily out-convenience Bitcoin and leverage its massive infrastructure to lure retailers away from the cryptocurrency market.

Apple’s anti-Bitcoin strategy is taking shape: Apple recently strong-armed the messaging app Gliph into eliminating Bitcoin sending on its iOS app, which follows Apple’s policy to oust the digital wallet apps Coinbase (back in November) and Blockchain (in 2012) from the Apple store, citing vague violations of its Terms of Service. Apple doesn’t want Bitcoin purchases happening on its servers.

Which is where Coinpunk comes in, an open source Bitcoin wallet that allows you to keep your wallet on your own server. Current Bitcoin wallets like Coinbase hosts wallets them on their servers, a dependency which Coinpunk creator Kyle Drake says makes them more akin to bank accounts. Using Coinpunk’s mobile web interface, even iPhone users can access their wallet and use a QR code scanner, which is the preferred way to enact Bitcoin transactions. With Coinpunk, Drake is hoping that privacy, safety, and simplicity will win people over from the transaction fee-heavy current online market and into the privacy-friendly world of Bitcoin purchasing.

But you'll have to pry them away from their iPhones. Apple’s betting big on another technology to facilitate the retail experience: iBeacons, which Apple’s been inadvertently preparing for since equipping Bluetooth Low-Energy (BLE) in iPhones since the 4S, amounting to about 200 million devices worldwide. BLE allows phones to talk to iBeacons (and vice versa) quickly and energy-cheaply, facilitating those fancy in-store apps promised in Macy’s and the Apple Stores that point out deals and, in the future, will likely allow on-the-spot purchases. If Apple wanted to keep Bitcoin out of these stores, they could mimic their App Store policy and require iBeacon users to similarly exclude Bitcoin purchases.

Combined with the iTunes media marketplace and its Passbook app, local purchases via iBeacons are setting iOS devices up to be central purchasing hubs with all your credit card and financial data keyed in. Tim Cook said last July that there are over 575 million active iTunes accounts, which dwarfs PayPal’s 110 million active accounts. If (or when) Apple decides to open its iTunes store into other markets, it already has the brand trust and device saturation to mainline purchases within its network.

Bitcoin’s decentralized freedom comes at a price: trust. Banks have the ability to sometimes recall fraudulent purchases or withdrawals, but Bitcoin’s exchanges are intentionally irreversible. SpendBitcoin’s list of places that directly accept Bitcoin has a front-and-center disclaimer stating: "All of these sites are listed by the site owners. We have not vetted them. Please search and ensure they have a good reputation before sending bitcoins to them."

Bitcoin’s first Black Friday had just over 400 retailers participating in special deals. As TechCrunch points out, there’s no reason for big-name outlets like Google, Amazon, and eBay to participate since they have their own digital wallet services (Google Wallet, PayPal, and Amazon One-Click). While Google Wallet is streamlined through Android devices, Apple’s still got the in-person retail hook with iBeacon. If it can keep Bitcoin out of its markets, Apple's got the best shot of keeping American retail safely within the iOS family.