The Bitcoin Conundrum — Will Crypto Ever Become a Payment Method?
Cryptocurrencies have entered a confusing time. Only last year, the digital coins became the hype that dominated the internet. Now the market is experiencing problems, and the value of crypto has become unsure. In spite of, or maybe because of this volatility, virtual currencies managed to attract the attention of central banks and monetary funds all around the world. One of those interested in crypto is the Dutch central bank. The financial institute recently published a study on the use of Bitcoin as a payment method for online stores. Will Bitcoin become the next shopping currency?
In its study, the Dutch central bank focused on the penetration of Bitcoin as payment method among Dutch online retailers. They asked the online store owners about their use of the cryptocurrency and their reasons for doing so or holding off. Those who accepted Bitcoin mostly did so because they think it attracts new customers (42%), as a response to their customers’ demands (23%) or because of their interest in the technology (21%). The nay-sayers cited unfamiliarity with the coin (58%), a lack of consumer demand (36%) and the perceived lack of trust (16%) as their primary reasons for not accepting Bitcoin yet. Those not accepting the coin weren’t steadfast on their position: 26 percent said that they would be willing to take cryptocurrency as payment in their online store if the consumer wants it.
And that last bit, the consumer demand, is where the issue lies for Bitcoin as a payment method. It seems that we are dealing with a chicken and egg scenario when it comes to the digital coin. The online retailer has little problem accepting the currency if the consumer wants to pay with it, but the average consumer has no interest in buying a coin that cannot be used as payment. There are, of course, exceptions in those people who buy Bitcoin and hold it as an investment. But for most consumers, the digital coin is something that doesn’t concern them, and that they have no use for at this time.
This puts the cryptocurrency in a bit of an impasse. If it wants to become the next payment method, it seems that something needs to change. These measures could help Bitcoin on its way to becoming an asset used in exchange for products:
Increased customer knowledge
Even though the coin has had plenty of publicity, the overall knowledge of it is still low. A study done among Americans showed that 79 percent had heard about Bitcoin, but half of those people were unsure about its legality. The company behind the survey, LendEDU, says that Bitcoin still has a long way to go before it moves onto the mass market. The education of people about Bitcoin and its workings can help move this process along. A better understanding of the coin can make it more attractive to the average consumer, and help push its acceptation by the bigger crowd.
Acceptance by shopping systems
We should give credit where credit is due: some big players in the eCommerce industry already accept Bitcoin. Shopping solution Shopify and payment method Mollie have both integrated the digital coin into their service. Then there are eCommerce solutions that do not support Bitcoin themselves but have an unaffiliated plugin that can be used, such as WooCommerce and Magento.
When we look at the most used payment providers and shopping cart systems, however, there is still room for improvement. Of the 15 most popular payment providers, only four support Bitcoin at this moment. With shopping cart systems this number is considerably higher, 11 out of 15 accept crypto, but 8 of them only do so via a plugin that isn’t theirs.
If Bitcoin wants to become a payment method, these numbers aren’t enough. For consumers to get the feeling that the crypto is an accepted way of paying, the large shopping systems and payment providers need to make their support of the crypto clear.
Bitcoin’s fluctuating price
It can be ten thousand dollars for a Bitcoin on Monday, and seven thousand for that same coin a day later. These staggering changes in its value make Bitcoin an unreliable payment method. You don’t want to spend a hundred dollars’ worth of Bitcoin on a new jacket, find out a day later that you have only paid eighty bucks because of the price volatility and then be asked to fork over that last twenty dollars to make up for the difference. Before the coin can become a payment method, it will need to stabilize.
Energy consuming transactions
It dominated the news last year: the process that transfers Bitcoin payments is a difficult one. The coin uses a great deal of power to process payments and on top of that, the payments can take a long time to go through. You can pay extra to make sure that the system handles your transfer first, but this makes the transaction fee so high that it is often not worth the cost. Before we can start to use Bitcoin as a worldwide payment method, these issues have to be solved. A solution in the form of the lightning network seems on its way, but we will have to wait and see.
Even if all these changes are implemented, and consumers become more Bitcoin-savvy, the question of whether Bitcoin will become the next big payment method remains. According to the study by the Dutch central bank: ‘It seems unlikely that crypto acceptance by online retailers will rise substantially in the near future’. We, unfortunately, do not have a crystal ball to predict what will happen to the digital coin. What do you think, will the future of Bitcoin be as a payment method?
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