If you look at so-called “Crypto Twitter”, aka the part of the social media platform devoted to all things cryptocurrency, you are likely to come across accounts posting about businesses accepting crypto as payments, particularly Bitcoin. The posts serve to highlight those traditional businesses embracing crypto. It could be any type of business – ranging from NFL teams to a coffee bar in that country that has embraced crypto more passionately than any other, El Salvador.
But we know, of course, that accepting crypto as a payment remains a very niche concept for most businesses. There is hope in the crypto community that it will change in the future, but there are still many hurdles to overcome. And the problems are a lot more complex than simply persuading your local donut store to download a MetaMask Wallet so you can pay in crypto.
One of the main issues is the multi-functionality of most cryptocurrencies. For example, most people buy Bitcoin as an investment, so it makes little sense to spend that on a coffee, certainly if you are under the assumption that your BTC will rise in value.
Not every transaction is suited to crypto
The argument goes that crypto is faster, cheaper, and more secure to send. But that is only the case in some types of payments. If, for example, I wanted to deposit at an online casino in Canada, I can do so using the Interac payment method for free. It makes sense to deposit in fiat currency, particularly due to the fact you end up playing in fiat anyway. That is to say, your BTC or ETH funds get converted when you deposit.
Of course, the crypto community might say that we are looking at this the wrong way, and that we should be looking at it from the merchant’s point of view. Crypto is decentralized and peer-to-peer, so someone is going to have to pay for the facilitation of a fiat currency transfer somewhere down the line. It might seem like it’s free for me to use PayPal or Interac as the buyer, but it is not going to be free for the seller.
And that, perhaps, is the possible tipping point scenario. If you try to explain to the average person (who doesn’t use crypto) that one of the benefits of using it is that you can send a payment for free, they will likely shrug. After all, there’s no fee on Amazon when, for instance, you check out with a debit card or eWallet like PayPal. But if you explain that Amazon might be able to sell the products cheaper, then that’s a different story.
Faster payments across borders
Another interesting aspect is that crypto is always looking at the global picture. Two friends dining in a restaurant in Toronto can easily use PayPal to send each other money to settle the bill, but what about an immigrant working in Rio de Janeiro, Brazil, wanting to send money home to her brother in Lagos, Nigeria? It’s slow, cumbersome, and expensive. Moreover, that doesn’t even get into the question over the unbanked. About 1.7 billion people globally don’t have access to a bank account. This is something crypto – alongside the already-widespread adoption of mobile phones – solves.
Yet, it is still clear we have a long way to go. Another issue is that there are so many cryptocurrencies competing for a slice of the pie, and not all of them are going to be adopted by the mainstream. We have seen some talk of Ripple (XRP) becoming a global remittance network, and it has already succeeded in some respects. But Ripple has its own problems. Elsewhere, we have seen the success of the Bitcoin Lightning Network, yet it still raises the question of why people would want to spend their Bitcoin on a cup of coffee or pair of jeans? Bitcoin is called a store of value for a reason.
Stablecoins could become even more popular
A lot of experts claim that stablecoins might be the future of international payments. That, of course, raises the specter of CBDCs (Central Bank Digital Currencies). We already have most of the world’s major currencies represented as stablecoins, so why not stablecoins backed by central banks, i.e., governments? That might sound all well and good, but it kind of defeats the purpose of crypto putting power back into the users’ hands – decentralization.
As you can see, the picture remains highly muddied. Perhaps we are waiting for that eureka moment where things fall into place. That feels a little far away right now, given that we seem to be firmly stuck in the middle of the “Crypto Winter”. But there is a saying in technology that things happen gradually, then suddenly. We are in the “gradually” phase right now for mass adoption of crypto as a payment method. Will the suddenly phase come soon?
