When Bitcoin hit the market in 2009, few people suspected that cryptocurrencies would become a means of payment for everyday transactions. And yet, here we are, observing industries and mainstream companies adapting crypto for their needs. Will this become the new norm?
The only thing certain about the future is constant change. Have you ever imagined that you would be able to pay with cryptocurrencies for your new car, coffee or products in online stores? Well, it’s happening now!
Another step towards mass adoption
Elon Musk, an inventor and a Bitcoin zealot, announced in late March 2021 that Tesla, an electric car manufacturer, will enable Bitcoin purchases. Musk stressed that the company would not exchange bitcoins for traditional currency once payments are received.
That’s not the end of it. Around the same time, PayPal, a financial services provider, revealed that it would allow American consumers to use cryptocurrencies. This payment method will be available at 29 million online retailers worldwide. PayPal will not charge an additional commission for transactions carried out this way.
Popular café franchise Starbucks will let coffee drinkers pay for products and services through an app that converts Bitcoin into US dollars.
A long way for the public know-how
Mass adoption of cryptocurrencies is growing on an incredible scale. According to Statista, in March 2020, users made nearly three million transactions per day using one of the three leading cryptocurrencies (Bitcoin, Ethereum, Stellar). A year later, it was nearly five million transactions per day. The numbers may seem impressive, but they are still only a fraction of the transactions made with traditional currencies. More and more brands may be launching cryptocurrencies, but this does not match the public’s know-how and attracts mainly cryptocurrency enthusiasts rather than ordinary people.
The awareness of what cryptocurrencies are varies greatly. The adoption rate in the US is only 6 percent, 5 percent in Germany and 7 percent in China. It’s no secret that fiat money has long been the first choice for many consumers when shopping. Yes, old habits die hard.
Blockchain’s new world
There is a long list of advantages of crypto: easy transactions, no commission, cheaper cross-border payments. And, of course, no central authority controlling what you are doing. So, it is no surprise that crypto is getting more popular in Nigeria, Vietnam, the Philippines and Turkey, where traditional money transfers are difficult and expensive. Not to mention the ever-growing adoption in crypto-friendly Japan, Singapore, Canada and Denmark.
But the growing adoption brings its own problems. The more people are in the network, the longer it takes to confirm each transaction. And the fees for doing so grow exponentially. Need, however, is the mother of invention. New cryptos that deal with these difficulties have appeared on the market, e.g. Dash or Solana. Another example of such a project is the recently launched ELCASH. Thanks to a two-layer blockchain architecture, this coin is about to resolve the problem of slow and expensive transfers. Soon, by using this cryptocurrency, you will be able to pay for your coffee or a taxi in the blink of an eye.
What lies ahead for crypto payments?
Combining fiat money and cryptocurrencies in a single app could help make cryptocurrencies more widely accepted by regular users. The next step could be a debit card integrated into the application where crypto and fiat money are held.
There are thousands of cryptocurrencies on the market. Among them, stablecoins, backed in a 1:1 ratio by other currencies, such as the US dollar. This popular choice can prove to be an advocate for the entire crypto market.
Non-fungible tokens (NFT) are another exciting option in the world of crypto. Thanks to their unique digital features, they are not equal to other tokens. In this regard they can establish ownership and authenticity, which means far-reaching opportunities for industries such as arts, entertainment and real estate. It is no surprise that NFT’s are popular among entrepreneurs, artists, and sports celebrities who publish their achievements with a proper label. Some may see collector’s value in these pieces.
Market acceptance is also worth mentioning. Credible supranational institutions can play a leading role here. The European Central Bank has announced that the digital euro could become a reality in a few years. Other countries have also joined the work on Central Bank Digital Currency (CBDC), which is supposed to be the digital equivalent of fiat money.
Does that mean it’s time to say farewell to the traditional money? We will have to wait a little longer for an answer to this question. But without a doubt, the crypto revolution will affect how we think about money.