The cryptocurrency payments system and adoption has grown exponentially since the Bitcoin whitepaper was released in August of 2008. In the last ten years, cryptocurrencies went from an idea to a full-fledged global payments ecosystem with over 20 million businesses and consumers plugged in. These holders are increasingly searching for ways to spend their digital currencies with retailers that support and embrace cryptocurrencies.
Companies like BitPay, Coinbase and Uphold are processing billions of dollars in cryptocurrency payments each year. These merchant service providers are connecting consumers and online retailers, both in store and online, at lower fees than the traditional credit card networks.
Cryptocurrency merchant services easily integrate with the retailer’s current operations, removing one of the largest hurdles in merchant adoption of cryptocurrencies. Meanwhile, seamless integration has been achieved both online and in store via the scanning of QR codes authorizing transfers from the consumer’s wallet to the merchant’s account. Cryptocurrency transactions credit the merchant’s account daily, in either crypto or fiat, leading to increased adoption and comfortability.
In the next five to ten years, consumers will utilize cryptocurrencies for payments in their daily life due to the rapid advancement of technology and increasing ease of use.
The Evolution of Purchases
Traditional modes of payment are ill-suited for the ultra-connected world we live in today and are not flexible enough to unify global payments. Even today, we are witnessing the proliferation of Venmo and PayPal instant payments over ACH and cash transfers as consumers demand cheaper and more convenient modes of payment. Digital asset networks are the next evolution away from traditional payments and to a reduced friction and cost framework.
The flexibility afforded to cryptocurrencies can’t be replicated in the traditional payment channels due to infrastructure constraints. Consumers can choose which coin to use based on the requirements of the transaction.They can use XLM (Stellar) to purchase gas due to virtually zero fee transfer, BTC (Bitcoin) to purchase a car due to wide acceptance, or XRP (Ripple) to make a cross-border vacation home purchase due to the 3.5 second settlement time.
The general public is just beginning to see the use cases and additional simplicity these currencies can provide buyers and sellers alike. This reduction of friction in local and global payments will reduce costs and increase the flow of commerce resulting in higher productivity and more sales. These advancements can lead to a replacement of traditional fiat currency, checks and debit/credit cards with digital fiat or cryptocurrencies.
Predictions for the Future
The benefits of blockchain and the cryptocurrencies tied to them will continue to advance as developers, merchants, consumers and government (in select cases) are embracing this technology-driven future to improve data and value transfer between parties. The future is; instant payments, virtually zero transaction fees and the ability for individuals to have complete agency and autonomy in how they conduct their financial affairs. We are at the precipice of the largest movement out of global poverty since the start of globalization due to this free economic exchange of value.
Venture capitalist Tim Draper said it best; ‘’Freedom equals prosperity.” He was referring to the freedom of individuals and companies to exchange goods, services and ideas without interference. This freedom of exchange, supported by blockchain and cryptocurrencies, starts with payments and is growing into the fourth industrial revolution.
Citizens that are stuck with governments that mismanage the economy and currency now have a second option. They can choose which currency they receive for payment and actively segregate themselves from the economic situation in their homeland.
We are seeing this play out in Venezuela and Turkey, where talented individuals offer their services online and request Bitcoin for payment. This allows them to receive payment in a currency that is not affected by their government’s poor decisions. It is their hedge against political corruption and inflation.
Countries that embrace this trajectory will become the future leaders of finance and technology as monetary and intellectual capital flows towards them. While countries that resist, have a potential check on their power that citizens can exercise through a decentralized payments system. The fourth industrial revolution is underway and those that are on board will succeed.
Edwin Handschuh is Co-Founder and CEO of 1Konto, a broker/dealer platform that provides instant buying and selling of cryptocurrency across multiple exchanges.