The Rise of Crypto as a Payment Option
Figure 1 Digital currencies are becoming more popular
Up until fairly recently, cryptocurrencies were more of an underground way of performing financial transactions. They seemed connected to a shadowy society that wasn’t designed for the mainstream. The stories linking digital currencies to crime also put off a lot of people.
But the uptake in online transactions and increased revenue – even before the global pandemic – has coincided with the likes of Bitcoin becoming front-page news. Even if cryptocurrencies are not fully understood by the general public, there is more of an acceptance of their place in the modern world and the future. But is it possible that these new currencies could take over the way we buy and sell goods and services?
How the Use of Crypto Has Grown
Bitcoin has been around since 2009 – and the technology for making payments with the currency has been available. But it is in the last few years, in particular, that the use has really taken off. More business sectors are recognizing the opportunity to incorporate digital currencies into their models.
Whereas much of the media’s attention has been on the market price, Bitcoin users have been more inclined to use it like any currency. The online world was already firmly in place before COVID hit – but now even the most tech-averse have gotten used to paying for goods in the digital realm. Cryptocurrencies have simply been a part of that.
The Decline of Cash Was Just the Beginning
Cash transactions have been in decline for a long time now. The emergence and domination of debit and credit cards – and then e-wallets such as PayPal – has shown that people are more trusting of using their money in a digital realm than before. There is no need to actually physically touch the money to own it.
Wire transfers were actually introduced back at the end of the 19th century, so we have been looking for more efficient ways of completing transactions for quite a while now. In a global, interconnected world, only having cash as a viable payment method severely restricts us.
Figure 2 Even face-to-face transactions have changed dramatically
Advantages for Businesses
Reporting on cryptocurrencies tends to focus on the individual and how it can benefit the consumer. But for any currency to become accepted, there needs to be something in it for the business end as well. The rise in usage suggests that some businesses have already recognized how crypto can work for them.
The first obvious advantage is that it opens up new customer demographics. Crypto is designed for international transactions and that brings in new potential customers. The new technology used can also help a business become an industry leader as well as offering an alternative to cash.
Potential Problems for Digital Currencies
Although many businesses have obviously already decided that accepting cryptocurrencies as payment methods is a good idea, there are some potential problems. This could be said of any relatively new innovation – but they are points that need to be investigated by any trader.
The biggest criticism of digital currencies is the value volatility. This is especially true if not all transactions are completed in the same currency. There is also the environmental impact to consider. It is incredibly energy-intensive. These problems are being worked on – but they will need to be resolved if crypto is to take over.
The Future of Payments
At this point, it is important to remember that we are still at a very early stage of cryptocurrency development. It has come so far in a short time – and already proved itself as a viable alternative. There probably needs to be further regulation though (something against the values of most crypto devotees).
It does seem inconceivable that crypto’s viability as a payment method will not continue to grow. But it may not be the current players that lead the way. Bitcoin may be omnipresent now but it is more than likely just the first major stepping stone into a future payments world.