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Why weren’t cryptocurrencies successful as a form of payment?

May 21, 2020

Paying with cryptocurrencies has been around for a long time the center of discussions about why they exist and what they are useful for.

But although its high growth and excitement in bullish phases the different cryptocurrencies, At best, making payments remains the last resort. Cointelegraph interviewed both retailers and industry leaders to find out why.

Who is currently using cryptocurrencies?

As a general rule, Crypto payments are made where there are no others. This is still the case for Darknet markets, According to a chain analysis report from January 2020, new volume maxima continue to be recorded.

Why weren’t cryptocurrencies successful as a form of payment?
Why weren’t cryptocurrencies successful as a form of payment?

Darknet market revenue vs. Darknet market share of all cryptocurrencies received by services

Source: chainalysis.com

In spite of Your small percentage of crypto activity, Markets that mainly sell illegal products You simply cannot use traditional forms of payment. However, these markets are unattractive compared to traditional cash drug trading, the volume of which is estimated to be approximately $ 400,000 million annually.

In the legal field Kris Marszalek, CEO of Crypto.com He told Cointelegraph what types of products cryptocurrencies use to a significant extent:

“Now it’s all about crypto. So we have Travala, the travel agency that accepts crypto. Ledger.com […] When we started it on the first day, we generated a volume similar to that of Mastercard. “

Marszalek talked about the numbers of “major cryptocurrency payment providers” BitPay and Coinbase Commerce, the annual volumes of 1,000 and 200 million dollars, respectively.

“The numbers are very small,” Marszalek said bluntly.

Compared to Visa’s $ 2 trillion in a single quarter of 2018 Crypto transactions still have a long way to go.

The problem with cryptocurrencies

Marszalek identified a number of issues that prevent the introduction of crypto payments Lack of trust one of them:

“For the vast majority of retailers and for the vast majority of private customers, the crypto world is still somewhat unknown, something they have not yet learned to trust.”

Peko Wan, CEO of Pundi X., the provider of cryptocurrency outlets, He told Cointelegraph a similar story:

“Currently, the general perception of cryptocurrencies is that their use is ‘complicated’ or that having them is risky.”

An example of this is a British aircraft simulator company that Cointelegraph interviewed. Despite the ability to pay for crypto, You said that “no one never paid with cryptocurrencies. “ They also said: “We distrust because there is many fraudsters Over there”.

Even among most amateur users say that Making payments is the last use they would give them. This is best illustrated by the issue of WBTC on Ethereum’s decentralized funding, which is now more than twice the size of the entire Lightning network.

Marszalek believes part of it is the chicken and egg problem. This limits the number of traders that accept crypto:

“Because if you only have 50 million people in the crypto world, traders have little incentive to implement it unless they have a company whose audience is directly interested in crypto.”

Stable coins to the rescue?

One of the biggest problems with crypto payments It is the volatility of even the most established assets. Marszalek believes that heMost people only know that cryptocurrency prices fluctuate. “Which doesn’t favor adoption by merchants,” he added.

This is also the premise of many payment providers Traders can completely avoid exposure to crypto volatility.

Marszalek believes that “Stablecoins are super powerful” For e-commerce transactions, stating their speed and cost, go to Crypto.com and finally create your own stable coin as part of your vision for a complete ecosystem.

Claudio Barros, the Owner of DBR Electronica based in Portugal and one of the dealers using the Pundi X solutions He believes stable coins would be a great addition to the ecosystem:

“Any improvement in currency stability will be beneficial. We need a range of stable coins to super-volatile coins to meet different needs.”

Will crypto payments come true?

Crypts they compete with established electronic money systems like WeChat in China and with new technologies like Calibra. Marszalek thinks he’s better than any of them both for its performance and for its privacy.

Marszalek, who lives in Hong Kong, personally witnessed how The move to “cashless” in China did not allow him to pay in a restaurant in Beijing. since Hong Kong, WeChat has not worked in mainland China. Either way, the The extreme monitoring of WeChat makes you feel uncomfortable.

Wan also pointed to developing countries and noted:

“In the past two years we have also found that in countries where the local currency has decreased over time and [la gente] is more interested in cryptocurrencies. “

For Crypto.com, “payments are just the beginning,” said Marszalek. However, he is firmly convinced that it is the company’s most important product that “will support our entire platform” to a hundred million users in five years”.

In the case of cryptocurrencies in general, the same claims will likely also be made.