The vast majority of purchases made using cryptocurrency are for relatively big-ticket purchases, such as expensive cars and digital assets such as nonfungible tokens.
The main reason for this is a matter of maximising the economy of scale; the larger the transaction, the lower the transaction and/or gas fees are relative to the overall cost, which is particularly important during peak hours when mining costs can sometimes be quite variable.
These costs can be mitigated using the right crypto conversion platform, but in the early days of what is a relatively young decentralised financial world, there were many attempts by retailers of all shapes and sizes to adopt Bitcoin, Ether and other cryptocurrencies into retail channels designed with fiat currency in mind.
The first major retailer to accept Bitcoin was the online big-box retailer Beyond, then known as Overstock, which led to a wave of companies following in their wake, such as Virgin Galactic, Dell, Steam and KFC.
Whilst every retail company that adopts crypto as a payment option was a major financial news story at one point, the story of the Bitcoin Bucket, KFC’s boneless chicken bucket meal that, depending on your point of view was a tremendous success or a revelation of just how early crypto truly was in 2018.
Crypto Chicken
The Bitcoin Bucket, much like the two pizzas bought for 10,000 BTC is the type of cryptocurrency legend where it is important to separate fact from mythology.
Unlike Bitcoin Pizza Day, which whilst significant as the first transaction of Bitcoin with the intent of purchasing a physical product ultimately involved the use of a middleman who bought the pizzas on Laszlo Hanyecz’s behalf, the Bitcoin Bucket was an actual transaction between the customer and retailer.
It showcased how far crypto had come in such a relatively short space of time; buying food with crypto was no longer an exercise in proxy transactions but a genuine offering retailers could provide to customers through dedicated payment service providers.
For a variable sum of bitcoin that roughly equated to 20 Canadian dollars, a hungry crypto investor could get ten chicken strips, waffle fries, a choice of medium side, a medium gravy and two dips.
A particularly nice touch is that KFC Canada’s website had a live tracker that would include the sum in question.
It was a limited-time deal, and within an hour Canada’s entire supply of Bitcoin Buckets had run out. Whilst the company claimed that they would run the promotion again, little evidence exists that the humble bucket was ever sold again.
There were a few reasons for this, some of which were foreshadowed by the fact that KFC included a live tracker for Bitcoin prices during the 2018 surge in crypto prices.
The first and simplest explanation is that it was purely a publicity stunt. They sold a small number of buckets on a Friday morning to enthusiasts and coasted on the publicity generated by vocal crypto investors and evangelists.
In that regard, it was intended as a short-term stunt akin to their VR training programme, their AI-powered talking Colonel Sanders and their dating simulation game. It was a series of marketing campaigns intended to go viral and nothing more. Judged by this standard, it was a huge success.
However, many comments on its initial announcement tweet on 11th January 2018 alluded to practical issues with the Bitcoin Bucket as a genuine way to bring DeFi to fast food, problems that were echoed by the decision by crypto fast food restaurant Bored And Hungry to quietly discontinue payments in crypto in June 2022.
Part of the problem is transaction fees. Outside of paying five dollars for delivery, the transaction fees varied significantly. The Bitcoin Bucket was released right in the middle of a transaction fee crisis, where the average cost per transaction was over 20 USD (27 CAD).
Contemporary reports noted, however, that transaction prices could reach over 50 USD (68 CAD), and in both cases, this was significantly more than the chicken itself.
As well as this, the transaction would need to be logged for tax purposes under Canadian law, which made it complicated for new users who might have tried the Bitcoin Bucket as a way to dip their toes into crypto.
Finally, transactions could take up to two hours to clear during peak times, by which point volatility may have rapidly changed the cost of the chicken and it would be far quicker to walk to a local branch and buy a bucket with fiat currency.
It showed how far there was to go in 2018, and some of the hurdles that will need to be traversed before crypto becomes viable for the transactions of low-priced goods.