Paying With Crypto: Then, Now and Tomorrow
While cryptocurrencies are primarily considered an investment asset class by many, we should not forget that the original purpose of decentralized digital currencies was to be used as precisely that: currencies.
The rise of cryptocurrencies as a payment method was initially slow but has started to gain substantial momentum in recent years. In this article, you will learn about the state of the cryptocurrency payment landscape and how it has evolved over time.
Crypto Payments: Then And Now
In the early years of bitcoin, there was little to no cryptocurrency adoption by retailers. When bitcoin first gained a degree of traction after receiving a handful of mainstream media mentions, several smaller online retailers started to accept bitcoin as a payment method.
It wasn’t until after the 2013 bull market that saw bitcoin shoot past the $1,000 mark for the first time that larger companies started to take notice. The first major retailer to accept bitcoin was online shopping giant Overstock in January 2014. CheapAir, Microsoft, Dell, and Gyft were also among the early adopters of bitcoin payments.
Driven by leading cryptocurrency merchant payment service providers Coinbase and BitPay, the number of retailers and merchants accepting bitcoin quickly rose over 100,000 globally by 2015. This figure rose substantially in the years to follow as the market for digital currency payments grew and more and more platforms, retailers and merchants started to integrate crypto payment options.
In metropolitan cities like London, Berlin and Tokyo, even bricks-and-mortar businesses such as cafes, bars and clothing shops started to accept bitcoin, which has helped bitcoin on its journey to becoming a viable alternative currency for the world.
In 2018, BitPay processed over $1 billion in digital currency payments, which is a testament to the purchasing power and willingness to spend of bitcoin users.
“BitPay’s B2B business continues to grow rapidly as our solution is cheaper and quicker than a bank wire from most regions of the world. To process over a $1 Billion for a second year in a row despite Bitcoin’s large price drop shows that Bitcoin is being used to solve real pain points around the world,” said Stephen Pair, BitPay’s co-founder and CEO.
Crypto Payments Intermediaries Are Enabling Crypto Purchases Globally
An important aspect of the cryptocurrency payments landscape are, somewhat ironically, intermediaries, such as BitRefill and Fold, that enable users to make purchases using crypto.
BitRefill allows users to top up their mobile phones, purchase Steam vouchers, buy gift cards for Hotels.com and pay for a VPN subscription using cryptocurrency. The service, therefore, enables active crypto users to spend their digital currency on entertainment, travel and e-commerce.
BitRefill even enabled love-seekers to purchase a premium Tinder subscription using Crypto on Valentine’s Day.
A similar service is being provided by the Fold App, which enables users to make crypto purchases at retailers, such as Starbucks and Dunkin Donuts, by loading bitcoin onto the app and having the app convert the coins into store gift cards. Recently, the Fold App has even enabled low-cost, high-speed Lightning Network payments for Pizza orders at Domino’s Pizza.
Crypto Payment intermediaries such as BitRefill and Fold are great for regular bitcoin users but also show that the world’s biggest retailers are not quite there yet when it comes to direct cryptocurrency adoption.
What’s Next for Crypto Payments?
In light of the continuous growth of crypto merchant adoption combined with the high number of millennials holding digital currency, it will only be a matter of time until major online and bricks-and-mortar retailers will start to accept bitcoin and altcoins as payment methods.
A recent study by Paymentsense, a London-based card payment provider, has found that over one third (35 percent) of the 504 surveyed SMEs believe that cryptocurrency payments will be a part of the payments landscape in the future. Small business owners seem to be particularly bullish on crypto. 21 percent of small businesses believe that cryptocurrency payments are just around the corner.
Moreover, a study conducted by Imperial College London and online brokerage eToro has found that digital currencies like bitcoin may become mainstream within the next decade as they “are already equipped to fulfill one of the three fundamental roles of traditional fiat money: acting as a store of value.”
The world’s largest retailers, Amazon and Alibaba, are yet to make the plunge into the world of digital currencies. However, given the substantial market share these retailing giants have, it would not be a surprise to see them issue their own private blockchain-based digital currencies that could help them track user behavior even more than they do already.
While it will likely still take some time before we can spend our bitcoin in the same way we use debit cards, it is not too far-fetched to envision a future where our children will only know a world where they can choose to pay using local fiat currency or cryptocurrency.
