The New Era of Payments with Bitcoin: Is it Now the Norm?
Bitcoin payments are becoming a hot topic in the cryptocurrency sphere, as more eCommerce stores keep adopting it as a means of payment. But, not only online stores but offline shops, restaurants, ATMs, hotels, etc., are joining the adoption bandwagon.
According to Statista, in the number of businesses that either have a cryptocurrency ATM or offer crypto as an in-store payment method as of March 9, 2021, quick service and casual dining restaurants are leading the ranking, with 1,904 businesses, followed by accommodation and IT services, with 1,159 and 1,129 businesses, respectively.
Some of the companies listed in the ranking are retail chains or gas stations, while others are small businesses. This raises the question of whether big companies are open to using virtual coins. Tesla announced, in February 2021, that it was considering accepting Bitcoin as a direct payment method for its Model 3 vehicles. Since some large firms had used intermediary services before, this was a big change.
Regarding transactions, with more people showing interest in Bitcoin, Statista unveiled that the number of Bitcoins processed in a single day reached its peak at the beginning of 2021. There were around 330,000 Bitcoin transactions daily in December 2020 and around 400,000 in early January 2021. As of June this year, there are around 250,000 Bitcoin transactions daily.
Bitcoin (BTC) daily transaction history worldwide as of July 6, 2021 – Source: Statista
However eventually, can Bitcoin payments become the norm from a mainstream perspective?
Dion Guillaume, Global Head of PR and Communication at Gate.io
Speaking with Finance Magnates, Dion Guillaume, the Global Head of PR and Communication at Gate.io, said there are some challenges ahead in adopting Bitcoin payments.
“The problem with Bitcoin payments is that nobody really likes to spend their BTC. Nobody wants to be the next pizza guy, right? That is the biggest problem with using BTC as a payment method, and why I feel stablecoins could be the more preferred crypto payment method, at least in the short-to-mid term,” he commented.
However, Guillaume talked about some companies making the job easier for arranging Bitcoin payments nowadays, which is helping to bolster this adoption: “However, companies like Strike and BitPay have made Bitcoin payments a lot simpler. BitPay makes it simple for merchants to receive BTC payments. Meanwhile, Strike has done a great job integrating BTC payments with Shopify. So, I guess the main challenge for widespread Bitcoin payments is a combination of infrastructure and BTC’s scalability woes. Lightning Network (Strike’s or anyone else’s) could make the latter significantly more manageable.”
Bitcoin Payments in Developed Countries
Frank Corva, Senior Digital Assets Analyst at finder.com
Frank Corva, the Senior Digital Assets Analyst at finder.com, spoke with Finance Magnates about the challenges it faces for citizens of developed countries to adopt Bitcoin payments. “Because citizens of developed countries such as the United States, most European countries, and Japan benefit from the privilege of having relatively stable currencies, these citizens don’t have a good reason to use BTC as a medium of exchange in these jurisdictions. Even in countries like Argentina that are experiencing high inflation in their national currency, if citizens opt to use crypto as a method of payment, more [will] opt to use US Dollar-pegged stablecoins than BTC,” he said.
Corva also talked about the role of the lack of knowledge in adopting Bitcoin as a means of payment in transactions and the taxation factor: “Over 50% of Americans say that they haven’t invested in an asset like BTC because they don’t understand it. It would be difficult to get such a group of people to begin to transact in an asset that they don’t understand. Another issue regarding transacting in BTC is that, in many jurisdictions, you have to pay a capital gains tax when you spend it. Imagine having to keep track of every Satoshi (unit of a BTC) that you spend and then having to compare the price at which you spent those Satoshis (Sats, for short) to the price at which you bought them so that you can properly pay capital gains tax. This would be a huge hassle.”
What about the Network?
Kent Barton, Tokenomics Lead at ShapeShift DAO
Also, speaking with Finance Magnates, Kent Barton, Tokenomics Lead at ShapeShift DAO, put the major challenge that the Bitcoin network faces nowadays in context.
“Thirteen years after its inception, Bitcoin hasn’t achieved widespread adoption for everyday payments. The main challenge is the network’s ability to scale its permissionless payments without charging users relatively high fees. Currently, it costs about $1.80 in ‘miners fees’ to send a transaction. This makes it prohibitively expensive to use for common retail exchanges, such as buying a cup of coffee or a bag of groceries,” Barton commented.
He added that the long-term outlook for Bitcoin payments centers around the eventual failure of central bank currencies, and it relates to what he called the ‘hyper-bitcoinization’ dynamic that many Bitcoiners see as inevitable: a world where Bitcoin gradually, and then rapidly, replaces fiat currency across the globe.
All the experts agreed on the fact that literacy is the key to taking Bitcoin payments adoption to the next level. Moreover, improvements on the network are also in the eyes of the mainstream companies who would like to adopt this means of payment to better serve the customers and offer a smooth experience in crypto payments like the fiat ones.
This article was written by Felipe Erazo at www.financemagnates.com.