As cryptocurrency markets surpass the bubble phase and begin to mature in earnest, vendors of all scale are seeing the benefits of adding “pay with bitcoin” or similar to their sales funnel.
With widespread use speculatively just around the corner, entrepreneur and major contributor to Ethereum Joseph Lublin, explained while speaking at the South by Southwest Conference (SXSW) in early 2019 that the mass adoption of blockchain will lead to 10-fold global economy growth. He went on to draw parallels with email, which was a novelty and mystery for the majority back in the 1980s.
Accepting cryptocurrency payments has several benefits, especially over their traditional fiat counterparts, with many earlier issues already ironed out.
Low transaction fees
Blockchain transactions have no middleman processor. Their credit/ debit card counterparts incur 2-4 per cent transaction fees plus up to 20 pence GB sterling on top, according to Cardfellow.com. By contrast transaction fees on the blockchain are kept to a minimum, meaning more of the payment reaches the vendor.
Initial problems with mass transactions centred around processing speed. Bitcoin can only handle 4.6 transactions per second, according to Hackernoon.com (Visa processes 1,700). However, recent innovations and new coins have found intuitive ways to resolve this early hurdle.
The Lightning Network
A two-layer solution that sits atop the network, the Lightning Network acts as a peer-to-peer payment processor. A payment channel is opened and peer-to-peer transactions are made. The final balance is written on to the blockchain only when the channel is closed. It is particularly beneficial for parties making regular transactions and especially micropayments.
Daniel Alexiuc, chief executive officer at Living Room of Satoshi, when using the Lightning Network for the first time exclaimed that is was “so fast and cheap it sent chills down my spine!”
Litecoin and Dash (DASH)
Based on Bitcoin’s (BTC) code and almost as widely accepted, Litecoin (LTC) was developed to process payments faster and is a popular alternative as a result.
Dash (DASH) focuses on payments. Users make instant transfers with optional privacy settings. It is comparable to cash, in the sense that it is instant and transactions can be anonymous.
Since no third parties are involved, there is minimal risk of unwanted data collection and retention with potential future security breaches. Furthermore, cryptoassets together with data stored on the blockchain, are highly secure thanks to the underlying distributed ledger technology (DLT).
Adopting a cryptocurrency payment method can help to reduce loss through fraud and theft, of which credit card fraud is estimated to cost businesses $190 billion US Dollars (£150 bn.) a year. Adopting secure peer-to-peer transactions as a viable alternative to legacy payment systems puts small businesses at a significantly lower threat of similar kinds of fraud, according to Due.com.
Accepting a single payment method that doubles up as your currency immediately places your product in front of a global audience at every level. What's more, it gives greater control to the vendor regarding terms and processing with minimal reliance on intermediaries. Businesses typically see a positive return within two years when going global, with 34 per cent benefitting within 6 months, according to Due.com.
For the consumer, another way to pay is always beneficial and especially when there are complications over cross-border payments, currency transfers, and the complexities of intermediaries.
Naturally, there is a learning curve when it comes to adopting new tech. Familiarisation with cryptoassets, wallets, exchanges, and how they operate is very useful.
Fortunately, some regions are highly tech-literate and their example is a great one to follow. Sweden is aiming to go completely cashless, with everyday items (including coffee and beer) already being purchased with cryptocurrency. Martijn Wismeijer, manager at bitcoin company General Bytes, even stores bitcoin under his skin to pay for daily goods.
Over in Switzerland the canton of Zug is named “crypto-valley” for good reason. Here, business is focused on blockchain technology and cryptoassets. Offices are seen with bitcoin ATMs as well as “bitcoin accepted here” stamps in stores.
Further afield, businesses in Slovenia, Australia, and Japan are increasingly accepting of bitcoin cash (BCH) and other cryptocurrencies for payment. The Australian government has launched a national blockchain plan hoping it will bolster fintech. Karen Andrews, Minister for Industry, Science and Technology, announced: "I want Australia, as far as blockchain technology is concerned, to lead the world."
Accommodating early adopters
For merchants, there are user-friendly features including wallets, cart plugins, point-of-sale interfaces, and payment notifications. For consumers, there are well-known wallets to make purchases with cryptocurrency funds. Releases, such as the Samsung Galaxy S10 that includes a private key wallet, serve to bring the mainstream that bit closer to daily cryptocurrency transactions.
Industry giants are already underway developing blockchain platforms and working with cryptoassets to find viable business solutions, including Amazon, Tesla, Microsoft, and Digitec-Galaxius (the Swiss Amazon). Growing numbers of retailers accept cryptocurrency payments, including Overstock, Shopify, Newegg, global independent vendors, and finally PayByCoin: a merchant add-on developed by Quickbooks developer, Intuit.
Early adoption affords competitive edge, and accepting cryptocurrency payments could soon spell the difference among brands. With increasing use-cases emerging, as well as user-friendly innovations, anticipation is high for the near-future use of cryptocurrency for retail and commerce transactions.
The benefits of using cryptocurrency for merchants and customers are becoming increasingly attractive: best not get left behind.
Published 24 April 2019