Exploring the Impact of Businesses Accepting Cryptocurrencies on Market Adoption
Summary:
The debate over businesses accepting cryptocurrencies as payment is explored, with enthusiasts suggesting that such a move would promote wider use and demand for the digital currency. Despite this, some fear that companies accepting crypto only to sell them on may undermine this. The practicality of a business accepting cryptocurrencies is also questioned as consumers may prefer to stick with local currencies. However, research shows that accepting cryptocurrencies could attract new customers and sales. Ultimately, while the drive to mainstream adoption is more complex, the potential benefits for businesses and customers are clear.
The concept of businesses adopting cryptocurrencies as a form of payment is frequently advocated by crypto enthusiasts. They believe that such a move would promote wider use and ramp up demand. Numerous crypto communities make considerable efforts to enhance commercial uptake of cryptocurrencies, even mapping businesses across the globe that are open to crypto payments. However, if businesses simply trade the cryptocurrency they receive, it might undo these efforts, as these coins are just being sold back on the market. Also, firms accepting crypto payments through an intermediary fails to uphold the crypto principle of businesses managing their private keys and having complete control over their wallets.
Contrarily, supporters believe that facilitating crypto payments paves the way for new propensity of users to transact in cryptocurrencies, leading to a new and efficient utility case. But does the fact that a business accepts cryptocurrency promote its adoption? In theory, a business that accepts cryptocurrency payments should encourage its uptake. However, if the received currency is instantly put into the market, it is creating as much supply as it is demand meaning that the buying-selling cycle may not enhance cryptocurrency adoption significantly.
Furthermore, the practicality of a business accepting cryptocurrencies for real adoption is uncertain. Consumers are unlikely to go through the rigmarole of buying cryptocurrencies when they can easily pay in local currencies. Adoption goes beyond just businesses accepting the currency, needing the consumer to find the cryptocurrency accessible and willing to transition to using cryptocurrencies for transactions. According to a study by Forrester Consulting, merchants accepting Bitcoin (BTC) enticed new customers and business. The findings showed that payments in cryptocurrency can drive up to 40% of new customers for merchants, and crypto customers usually spend double the amount of credit card users.
During the first half of this year, BitPay observed a 10% surge in new customer enrolments compared to the previous year, despite the unpredictable crypto market. Some firms may already have a tech-savvy user base when they start accepting crypto, other merchants may introduce new users to crypto. Big brands like AMC Theatres can connect with a wide base of customers that might need to understand the world of cryptocurrency better. Collaborating with renowned brands is an efficient way to enhance consumer adoption as this introduces crypto payments for everyday purchases.
Sankar Krishnan of Capgemini believes that cryptocurrencies capture significant interest from consumers today as they predict its value will grow in the future. However, Krishnan acknowledged the risks associated with cryptocurrencies, including their extreme volatility. Therefore, mainstream adoption of cryptocurrencies for daily transactions is still developing. He added that whether a business holds the cryptocurrencies it receives for goods and services or sells them straight away is matched to the company's treasury strategy.
He also stated that a firm accepting crypto payments and selling the coins immediately sends a strong message that they do not expect the cryptocurrency's value to increase in the future. This is a move to manage the risk. Justas Paulius, CEO of CoinGate, had a balanced perspective and stated that it can't be proven whether the buy-sell cycle has a small, large, or no impact at all as many factors have to be considered first. These include which cryptocurrency is used, how and where it is sold, and how much. However, Paulius noted that businesses want easy integrations, transaction notifications, and the ability to refund customers and accept payments on various networks, all of which are facilitated by payment processors.
The first question that arises is why would consumers prefer to pay with cryptocurrencies over their local fiat currency, especially if they don’t previously own crypto? Paulius stated that in some cases, banking is not an option, and cryptocurrencies could be a much-needed solution. He argued that many people use cryptocurrencies for purchasing VPNs, hosting solutions, proxies, and similar services because they allow the user remain pseudonymous and disclose less of their personal information to fewer third parties.
Cryptocurrencies can also enable faster transactions. In Lugano, Switzerland, for instance, BTC and Tether (USDT) can be spent in various shops and restaurants via the same point-of-sale terminal used for traditional card payments. Some startups are working on methods to enable users to pay directly from their MetaMask wallets via these terminals. Companies offering ways to use cryptocurrencies make these digital assets more familiar and usable. Moreover, third-party processors make it easier for businesses concerned about the complexities of accepting cryptocurrencies.
Whilst steps towards mainstream adoption are more complex due to what happens to the cryptocurrency and whether customers even choose to pay with crypto, it is clear that more tech-savvy users will prefer to use cryptocurrency payments in order to protect their privacy. Cryptocurrencies could also act as a lifeline in extreme situations. The acceptance of cryptocurrencies as a standard method of payment is yet to be seen.
Published At
11/8/2023 2:46:00 PM
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