Top 5 challenges of cryptocurrency payment industry
Over the last decade the speed of technology change has accelerated exponentially. The more innovative technology is created, the more power we have in order to make a positive influence on others.
The blockchain is one the best examples of such an innovation that has the power to affect every possible area in the next 5 years. Payments are the first obvious use case that was implemented during initial Bitcoin creation.
Let’s discuss how far did it go, and what are the biggest problems that are preventing cryptocurrency from becoming as popular as cash or credit cards.
Bad user experience
Payments play a very important role in each business. It’s also an area that causes most of the headaches. Cryptocurrency on the other hand, simplify those headaches significantly by reducing fees to a mere 1%, and eliminating the need for extra hardware. which is a big plus.
However, due to the novelty of blockchain technology, all of the headaches were temporarily forwarded to the end customers.
Firstly, customers pay fees. Depending on the blockchain, you can end up paying from $0.01 (Dash) to up to $30 (Bitcoin) in commission which can push away regular people. That’s why cryptocurrencies that will offer the cheapest or free transactions will be eventually used by the masses.
Next, limited functionality. There are tens of different cryptocurrency wallets already, but most of them offer basic primitive functions of sending coins from one wallet to another. That’s simply not enough.
If cryptocurrencies want to compete with online banking, Visa/Mastercard, Paypal or Venmo, they have to deliver at least the same features that people are accustomed to: regular payments, various types of accounts, simple recovery, built-in bill payments, mobile top up, encrypted messaging, and even marketplace. Some of the networks have/will have one or two items from this list but there’s no unified open platform yet.
It’s very hard to find places that accept cryptocurrency
Despite the media buzz around Bitcoin, the growth of cryptocurrency acceptance has declined. It’s primarily related to excessive Bitcoin fees and high volatility. Hopefully, Paytomat supports several coins, and hedges merchants against the exchange rate risks by allowing to accept fiat currency to their bank account.
In any case, right now there are only a couple of resources that you can use in order to look for crypto-friendly places. Typically, they are represented in the form of a map which is rather visual. The problem with such services, is that you can’t be sure that a certain merchant still accepts cryptocurrency which leads to customer dissatisfaction, and decreases the level of trust.
If we assume that cryptocurrency will indeed become the next generation’s payment system for financial and non financial operations, then scalability has to be one of the main priorities.
Currently most of cryptocurrencies can handle 10–100 transactions per second. This limitation stops blockchain networks from being used by solid companies and real world business use cases. Obviously that’s a temporary thing that is close to being solved by various solutions, like Lightning network, Waves-NG, Graphene, etc.
The market is still unregulated
The absence of regulation is the most important aspect that prevents merchants from accepting digital currencies. Every country has its own laws that people have to follow.
Japan, Switzerland and South Korea have made the biggest contribution into this space by making it fully or partially legal, the US recently opened futures market for Bitcoin, Russia and Europe will have their own rules that will be determined soon.
We believe that 2018 is going to be a critical year when each continent will finally decide as to how to present cryptocurrency for their citizens.
The market is too volatile
There’s an idea that people won’t use cryptocurrency because its price is too unsustainable and volatile. We can’t deny this statement in 2017, but 5 years from now that might not be true anymore.
The market is volatile because it’s small. Just about 0.0001% of the entire population knows about Bitcoin, and even less use it. Moreover, in a market of $630 bn even a few millions can make significant damage. However, when the total marketcap reaches tens of trillions of dollars, it will stabilize and evolve into a solid payment solution.
Assuming that blockchain technology is here to stay, we are confident that all of those issues will be gone in time.