The Rise of Crypto Commerce Reflects the Upside of Regulatory Uncertainty
If you follow the cryptosphere news, you’ll see regulatory uncertainty pop up repeatedly as a crypto bogeyman everyone loves to hate. To name just a couple of examples:
- There have been a lot of complaints circulating about the US Internal Revenue Service’s guidelines about the taxation of crypto and associated tax forms.
- Russian and Chinese crypto regulators are dropping crypto policies all over the place. They like cryptocurrencies and then they don’t. They want to introduce their own cryptocurrencies but outlaw mining. It’s very difficult to predict what will happen next.
Of course, you won’t just find regulatory uncertainty in the crypto world. Consider how commerce related to commonplace things like alcohol or even antibiotics is regulated in different jurisdictions around the world. For example, in some places you can’t buy alcohol on certain days of the week. In other places you can buy antibiotics at the local pharmacy like you would any other product, while elsewhere you need to have a prescription from a doctor. Go figure.
As usual, we try to avoid getting political. Laws might be annoying, but they’re on the books for a reason. In theory, that reason is usually societal safety — hopefully as defined by a democratically elected official.
The fact, though, is that the regulatory differences do exist.
And while these differences are often confusing and contradictory, they do have an upside!
Uncertain regulations encourage crypto innovation — as a way to create more business certainty.
As this Bloomberg article points out, crypto commerce is on the rise.
There isn’t just one reason behind this rise.
But we’d say that one huge reason is certainty. By that we mean:
- Certainty that crypto transactions are final. That has many benefits, one of them that crypto transactions are cheaper than fiat transactions with credit cards, for example. Remember that card issuers charge fees for profits (obviously) but also to cover the costs of risks of chargebacks and fraud.
- Certainty that your commerce won’t be censored. Practically speaking, the most common barrier to buying “uncertainly regulated” products like marijuana is that you can’t use traditional payment methods like credit cards etc. Why not? Because the credit card issuers don’t want the associated legal risks. Someone selling anything related to marijuana will probably have a far tougher time getting a merchant account than someone selling clothes, for example.
But wait — isn’t crypto commerce full of fraud? That’s not associated with “certainty,” is it?
Good question!
The main variable here is your counterparty, i.e. the person with whom you’re doing business.
Until the robots rise, we’re sure that your counterparty will be human :) And can you ever have total certainty as far as human nature is concerned?
Not like you can with technology! Not in our opinion anyway.
You can come pretty close, though.
- In more traditional commerce done via the fiat banking system with credit cards or PayPal, for example, you usually have some level of safety built in to the transaction. You can reasonably expect that your bank or PayPal will take care of you if you get scammed. As outlined above, this safety comes at a price.
- In crypto commerce, you can’t rely on any safeguards “preset” by a fiat payment middleman. Transactions are final, and if you get scammed that’s the end of the story. That means you need to be smart and build up business relationships with counterparties you trust. By the way — that’s the way business has been done forever, long before credit cards or PayPal existed.
That being said, crypto commerce innovators (like us!) are working to improve this type of certainty too.
To see one exciting way crypto commerce is evolving, chek out the BlockStamp OpenBazaar Listing Explorer!
There is no substitute for building your own crypto commerce business relationships.
But with this listing explorer — and our overall involvement with the OpenBazaar project — we’re giving you some crypto-powered tools to do just that.
Check it out here! We’ve also done a series of articles here on Medium introducing it and how it works. Here’s a good one to start with.
Make sure you’re part of the BlockStamp social community and feel free to ask any questions there!
About BlockStamp:
BlockStamp is a Bitcoin blockchain fork hosting an ecosystem of fair play apps, including a true-odds multiplayer crypto gambling platform, a decentralized marketplace listing optimizer, and a private messenger with sword-in-the-stone encryption (launching soon).
