Cryptocurrencies were launched into the global spotlight when the value of bitcoin skyrocketed in 2017, drawing an influx of consumer and corporate interest to the nascent market. Since then, the concept of digital money and its potential applications has been the topic of ongoing discussion and debate as traditional financial institutions face the disruptive nature of decentralized payments and digital transactions. However, despite sustained interest in cryptocurrency applications, the majority of activity in the space has been limited to peer-to-peer trading and using digital assets as an investment mechanism. They have yet to break into the mainstream payments market or make themselves felt in the daily lives of consumers.
With thousands of crypto transactions taking place every day, it is clear that there is a sizeable user base for cryptocurrencies already. This user base may well serve as a foundation for bringing this revolutionary technology into our everyday lives, particularly as the applications of cryptocurrencies beyond trading become more and more apparent. Going from a somewhat insulated trading tool to a functional currency is the next big step for crypto. While this may sound like a distant future development, cryptocurrencies present many benefits and will likely achieve mainstream adoption.
Beyond trading and HODLing
With blockchain technology still very much in its infancy, cryptocurrencies are often thought of as high-risk investments for adventurous digital natives, Silicon Valley insiders, and Wall Street traders. However, despite their appeal as an investment vehicle, most digital currencies are built to perform unique functions, with a growing range of use cases. Digital money is poised to not only expand global commerce and promote financial inclusion, but will also transform even the most banal aspects of daily life: from the way we shop and save, to the way we do business.
Presently, cryptocurrency ATMs and crypto-friendly vendors do exist – however, they are often limited to a small number crypto hubs and we have yet to see the same level of market penetration as enjoyed by more entrenched payment methods such as VISA and Mastercard, or QR code payments like WeChat Pay. There are still a number of barriers to the widespread adoption of cryptocurrencies as a mainstream of exchange and payment to overcome but the potential benefits are exciting.
Crypto as a new payment solution
It’s no secret that blockchain technology, which underlies cryptocurrencies, is making itself known in almost every industry. The diverse nature of companies and industries investigating blockchain integration is testament to the transformative benefits it can present to global commerce and enterprise. The international payments sector is just one of a number of industries in which blockchain technology is poised to impact the day-to-day life of consumers.
Aside from reduced transaction costs for consumers and vendors alike, cryptocurrencies present faster settlements and a borderless network of payment.
One of the key benefits of cryptocurrency adoption is the reduction in transaction fees for retailers and consumers. Today, bank accounts, debit cards, and credit cards have all sorts of fees associated with them, including merchant fees, overdraft fees, foreign transaction fees, and minimum balance fees, to name but a few. Credit card companies can charge upwards of 3% in processing fees. These costs easily add up over time and create considerable inefficiencies within popular contemporary payment mechanisms. By contrast, popular bitcoin payment provider, BitPay, takes a flat 1% settlement charge for bitcoin payments. In most cases, a cryptocurrency “account” in the form of a digital wallet is entirely free and using cryptocurrencies costs absolutely nothing, aside from the transaction fee.
Mar-22-2019 02:45:28 PM