When we’ll buy grocery with cryptocurrency
Since it was introduced to the world in 2008, cryptocurrency’s journey has been a seesaw of ups and downs. On February 16, the price of Bitcoin, the most popular of cryptocurrencies, surpassed $50,000. While many factors contribute to this upswing, one key reason is that in the face of much scepticism, cryptocurrency is becoming popular.
This popularity comes from acceptance, as more and more people are putting their trust into cryptocurrencies. According to the University of Cambridge’s third Global Cryptoasset Benchmarking Study, 101 million users joined crypto in 2020.
Despite acceptance to this level, the biggest challenge in the crypto space is trust. The concept of cryptocurrencies is complicated, so regular folks still view it with caution.
What does the future hold for crypto then? When will we shop and watch movies with crypto? Will we buy groceries with cryptocurrencies, if ever?
Crypto enthusiasts like Darshan Bathija, CEO and cofounder of crypto organisation Vauld, say, from a technology standpoint, we're not too far from there. “We are, in fact, a lot closer than you would think, but I think the space needs to work immensely hard to wash its hands of the earlier reputation,” he says.
Ray Youssef, CEO of Paxful, is confident of mainstream adoption. “Many countries already show signs of it, with crypto purchases being part of daily lives. You can buy anything from coffee to clothes or even property; worldwide acceptance of digital currency as payment is not far away,” he says.
Experts are optimistic about the rise of crypto, and we indeed see instances of it assimilate with the mainstream world of finance. However, before we actually buy groceries with it, there are a few tests it must clear.
The tipping point of mass adoption
Could the acceptance of crypto be measured in a timeline? Bathija predicts that in threefour years, the crypto space will see a 95 per cent acceptance the world over. He compares digital currencies to a social media app, the popularity of which depends on the number of people on it. “It’s a network effect product. Imagine if 80 per cent of the restaurants that you go to accept your visa card. Wouldn’t it be your preferred choice of payment?” he asks.
Often, we tend to use the means of payment that's more acceptable, which is why in 2018 and 2019, the aggressive push towards UPI and Rupay in India has left Mastercard and Visa clutching at straws.
Luke Stokes, MD of The Foundation for Interwallet Operability (FIO), says the answer is related to when crypto reaches the tipping point of mass adoption. “Eventually, you're going to hit a tipping point, when the adoption curve grows to where people might compare, for example, the yearly lows of the Bitcoin price,” he says.
Recently, many big global players have jumped on the crypto bandwagon. Paypal and Stripe, the two most popular payment companies in the US, have both accepted cryptocurrencies. Coinbase, the largest cryptocurrency exchange in the US, launched a payment gateway similar to Paypal in 2018. Among other examples are Circle, Skrill, and Revolut, which have accepted cryptocurrencies with the motive of appeasing a savvier audience.
Youssef says this acceptance is definitely an indicator that the world is moving towards mass adoption of digital money. “Every bank and wallet in the world will have no choice but to adapt to cryptocurrencies and join the revolution. Because if they don’t, crypto will enter the global financial space regardless, and they will be left out,” he says.
Regulation & compliance
Despite this, cryptocurrencies have yet to earn the regular consumer’s trust. Geeks might be going for it, but what about others? Are they ready to put their hard-earned money into something they don’t understand? After all, there is a risk in crypto investments.
Regulation is the answer, says Bathija, “because it weeds out the bad actors and the possible downside tangents that the earlier companies don't or didn't protect the user against”. He adds that compliance across different jurisdictions makes sense not only from a protection of funds standpoint, but also from a good governance standpoint.
Make it user-friendly
While crypto already appeals to geeks, the next step in making it popular is to make it userfriendly for regular people. Several crypto organisations are trying to do just that.
For example, the FIO Protocol offers human readable addresses. Paxful users can use crypto as a clearing layer for any form of money to be translated into another form. Recently, Coinbase launched its cryptocurrency Visa debit card in the US, allowing users to directly spend their cryptocurrency anywhere Visa cards are accepted. The introduction of Stablecoin is another attempt to popularise crypto.
A failsafe for volatile times
In the last year, the pandemic has forced us to change our perspective on several ideas, and the rise in crypto usage indicates this is one of those concepts. For example, some corporate organisations, like Microstrategy, started looking at cryptocurrencies as a failsafe to park their reserves in a volatile time.
There are so many innovations that the common man took to only after extreme caution and a hundred questions were answered. Cryptocurrency fits such a concept, more so because of the high stakes involved.