An Exodus to Crypto
By Sapien Wallet on The Capital
There is no doubt that cryptocurrency and crypto transactions have become increasingly more popular in recent years, especially after the crypto boom in late 2017. The volumes of cryptocurrencies being traded daily are in the billions of dollars, in Q1 of 2020 the average 24-hour volume of all cryptocurrencies was 72 billion USD. This is despite the fact that there are, by our calculations, only 14 million monthly active cryptocurrency wallets globally.
So, perhaps a more accurate conclusion to draw is, cryptocurrency is becoming more valuable, but it is still not such a popular method of payment or storing value. Much of the money that is being made in the crypto industry is made via trading and exchanging cryptocurrencies on the market, which is done in the hands of very few people, and not the mass market.
There are many explanations and reasons as to why crypto has not seen mass adoption as a payment method, two that seem to stand out are:
1. Scalability issues that prevent the mass use of crypto as a payment method
2. The complicated and user-hostile nature of crypto that makes it difficult for the average person to utilize
It is interesting to see that some big players in the online payment industry are making moves to enter the crypto market, namely Square’s Cash App and PayPal/Venmo.
The Cash App has been offering the option to buy and store Bitcoin on their application since January of 2018, becoming one of the first big Fiat online payment services to offer this option to their customers. Cash App had 7 million active users at the time of the Bitcoin introduction to their application. This was done during the tail end of the late 2017 crypto boom, which saw the price per Bitcoin reach as high as $19.5k in this period with other cryptocurrencies reflecting the same increase in price. Jack Dorsey, CEO of Twitter and Square had even commented on the viability of Bitcoin, in particular, being the “native currency” of the internet.
Q1 of 2020 saw Cash App, now with approximately 24 million users, generate $528 million of revenue, $306 million of which coming from Bitcoin. This was an increase from $178 million from Bitcoin in the third quarter of 2019. Cash App attributed this increase in revenue to the mid-March crypto market crash, which saw many cryptocurrencies plummet in price, with Bitcoin going as low as $3,400 USD, causing a buying frenzy.
Sources in June 2020 have reported to Coindesk that PayPal, the online payment services giant, is also looking to offer direct sales, storing, and exchanging of crypto, much like their competitor Cash App. These same services will also be available on Venmo, US-based online payment service application owned by PayPal. The timing of PayPal’s increasing involvement in the crypto industry with this move is very interesting. Industry experts have cited Cash App’s year over year increase in revenues and their Q1 2020 revenues as contributing factors to PayPal’s decision.
At the time of writing, PayPal and the US-based Venmo currently have 325 million and 40 million active users respectively. This means that crypto payments and the ability for users to purchase cryptocurrencies will soon become available for hundreds of millions of people globally.
With PayPal finally making the leap, along with the actively increasing interest in crypto by whales and startups alike, could this be the big push needed for crypto and crypto payments to become mass adopted?
