Crypto transaction costs are dropping to their lowest thanks to a slew of innovations that have become regular features of the industry. Accordingly, crypto payment is rapidly becoming the most sought-after method of transactions in recent times, with experts seeing an increase in adoption in the future.
A Shift Toward Investment
The widespread utilization of crypto payments currently faces significant obstacles, such as regulatory limitations, limited understanding and adoption rate, and the predominant use of digital assets for investment purposes only. Satoshi Nakamoto, the Bitcoin creator, initially envisioned a concept deeply rooted in peer-to-peer digital currency, which was aptly captured in his 2008 document, the Bitcoin white paper.
Notwithstanding the early enthusiasm and unwavering belief that greeted this revolutionary system, the fundamental concept took a backseat as attention gradually shifted towards viewing cryptocurrency primarily as an investment vehicle. As a result, the much-heralded White Paper has been pushed to the background as more investors continue to consider cryptocurrency as an investment product.
The rapid spike in crypto trading platforms, non-fungible tokens (NFT) marketplaces, and the vast array of financial prospects brought about by the emergence of decentralized finance (DeFi) contributed to amplifying this phenomenon. Rarely do investments function as transaction mediums, and this prioritizes price over utility within the crypto space.
Nevertheless, novel decentralized systems are being developed, with some exclusively designed for utility.
Challenges Of Crypto Integration
Certain pioneering Web3 enterprises have enabled crypto payments by developing innovative products like crypto-based credit cards. These cards can be utilized on various platforms, offering innovative features and traditional perks like cashback.
The underlying concept behind crypto payments lies in decentralization, with additional advantages that make it more appealing to users. Furthermore, the advent of fiat-backed stablecoins has revealed the need for strategic collaboration between traditional finance (TradFi) and DeFi.
Nevertheless, it is crucial to recognize that specific well-known stablecoin initiatives, like Terra (LUNA) and even Tether (USDT), has faced scrutiny over questionable operational practices. In addition, limited public knowledge, high transaction speed, and regulatory uncertainty have failed to stop users from finding ways to integrate crypto payment for goods and services.
Positive Outlook For Crypto Payments
Meanwhile, renowned crypto trading platforms have initiated several projects to ensure the integration of virtual asset payment solutions. In 2018, Coinbase introduced Coinbase Commerce, a web-based platform enabling businesses and individuals to embrace various cryptocurrencies as acceptable forms of payment on their websites.
Other traditional brands later followed in the footstep of Coinbase by adopting Bitcoin (BTC) and other crypto assets as payment for their services. Achieving widespread crypto adoption appears much closer than anticipated, considering the ability to acquire essential commodities like fast food, automobiles, travel services, and software with digital currencies.
The catalyst behind this transformative shift lies in the accelerated progress of blockchain technology. This progress manifests in various forms, such as payment gateways that facilitate crypto integration into e-commerce, interoperable blockchain networks, and the arrival of stablecoins that streamline the pricing of goods.
Using DLT For Payments
In line with the decentralization of the financial system, crypto payments present two advantages: enhanced financial inclusion and efficient cross-border transactions. Financial inclusion empowers individuals who lack access to traditional banking services due to various factors.
While centralized crypto firms adhere to KYC/AML standards, they serve a significant percentage of the unbanked population, as the barriers to entry are comparatively lower. Thus, crypto facilitates more streamlined cross-border payments due to the inherent nature of blockchain technology.
Meanwhile, observers believe that the uncertainty in the crypto ecosystem will continue to spur developers to create more innovative solutions to counter the increased regulatory scrutiny. Developers are improving payment gateways in an ongoing pursuit to enhance crypto payments.
Thus, established brands can seamlessly accept crypto payments for their products.