Bitcoin versus American Express: a normal person’s reaction to $7 transaction fees

Bitcoin is clogging again, and transaction fees are going up again. I tweeted about this and a normal person I know, to whom this was news, worked out what this meant:

Since I have a bit of spare time and this piqued my interest a bit, I’ve done some rough maths comparing this to a real world use case.

My Amex card, which I’ve run exactly 101 transactions through since this time last month, has an annual fee of £25. Thus a bit of simple maths means that I have a fee of roughly 2p per transaction over the course of a year. And I get that back and then some in cashback so long as I spend at least £2 per transaction. Looking at the merchant side, even being somewhat generous and saying that the £17k I put through the card over the last year was charged at 5% card processing fees across the entire breadth of them, from local restaurants to Tesco and Amazon, all of the merchants I’ve spent money at collectively would have paid roughly $1,105 in transaction fees. That being the absolute worst case scenario I can think of.

Conversely the same level of transactions put through via Bitcoin would cost me personally $8,484 a year, of which I would get back precisely f— all. And it would take longer too, as opposed to using chip and PIN, NFC, Apple Pay etc to pay for things near-instantly. Also I can’t use it anywhere near as many places and there’s always the risk that my computer gets rooted and all of my money disappears irreversibly, because I am my own bank. Nor do I get nice meaningful statements and transaction lists or chargebacks or any kind of customer service whatsoever. Even if I was to assume that every penny of the transaction fees of using my card was passed on to me directly in the form of higher prices, it’s still not more expensive, risky or painful than using Bitcoin.

Bitcoin — the money of the future, so long as you don’t compare it to the money of the present.