It is well-known by now that cryptocurrencies are here to stay. They have become an asset class with a market cap of over $1.7 trillion to their name. The market even topped the $2 trillion mark back in April.
Yet, despite the growing adoption, the gap between crypto and fiat worlds is still some ways off from completely closing. There are two main issues holding back cryptocurrency adoption.
The first is that while crypto and blockchain applications are prevalent, it isn’t straightforward for companies in the fiat world to integrate cryptocurrencies into their service offering.
A good example is Revolut. While they have the resources to introduce crypto-related services, they are still in the process of rolling out crypto-derived services after several years’ worth of effort. They only introduced a crypto withdrawal facility earlier this year.
Similarly, crypto projects have a hard time accepting payments in fiat. There are practically no solutions that make conducting local/cross-border payments possible for such projects.
Blockchain technology is relatively young, yet the sector is experiencing demand from companies outside the crypto world.
Companies who prioritize the effort internally or source a suitable partner to build blockchain infrastructures for them will undoubtedly still achieve first-mover status within certain sectors. In time, we will see the worlds of crypto and traditional fiat working in sync with one another.
Are payment market giants ready to accept bitcoin?
Major companies like Microsoft, Coca-Cola, PayPal, Expedia, and Starbucks already accept bitcoin as a form of payment. However, this is only in some regions and forms. In addition, Amazon may soon join them.
Banking organizations like Goldman Sachs and JP Morgan are moving into crypto, offering related services to their clients. Companies like Tesla, MassMutual, and Square have also made considerable investments in bitcoin. It is clear that cryptocurrencies are experiencing wide interest amongst corporate players.
That said, it is unlikely that bitcoin will be the option globally accepted by payment market giants in their businesses.
Stablecoins and central bank digital currencies stand a better chance of garnering favor in the coming years, seeing as cryptocurrencies like BTC and ETH are still bound to experience volatility.
The idea here is to improve the scenario of transacting, not add the additional complication of dealing with asset volatility “mid-transaction,” so to speak. Of course, this would be more realistically accomplished by utilizing stablecoins and CBDCs.
Within the next few years, we are expecting the launch of the first full-scale CBDC. Many countries around the globe have been putting effort into researching this particular avenue.
China’s DCEP (also more commonly called “digital yuan”) will likely be the first to achieve a full launch. India’s central bank also recently announced an initial implementation model for a digital currency that may be rolled out by the end of 2021.
Additionally, in 2022 we are bound to start seeing settlements in stablecoins for large companies. For example, earlier this year, Visa announced that it will support transactions in USDC on its payments network. By 2022 we will likely see the company make further inroads in this direction.
The benefits of versatility for payments
The greatest advantage of cryptocurrencies does not lie with their price. It comes from their versatility as instruments for settlements. The need for fast and efficient international payments is extremely high right now.
Today’s payment platforms and banks charge extravagant fees for international transactions. Also, those transfers can take quite some time to execute.
Integration of cryptocurrencies in payments can bring about cheaper, faster transactions and enhance transferring money across borders, making it much easier.
It will also lead to greater digitization and modernization, causing a major shift towards embracing blockchain technology and greater transaction integrity.
The need for a solution that enables companies to efficiently switch between fiat and cryptocurrencies is of the essence.
If we can create an infrastructure that allows companies to conduct local and cross-border payments quickly and at a low cost, it will become precisely the bridge needed to bring about mass adoption of cryptocurrencies for business-to-business payments.