The Challenges of Accepting Payment in Cryptocurrency, and How to Overcome Them
One of the biggest questions surrounding cryptocurrency during its meteoric rise to fame has been based around its real-world application. Are cryptocurrencies usable in the physical world, and will they ever be accepted by the mainstream for this?
It’s one of the remaining big tests for crypto. Ultimately, it’ll confirm whether or not crypto is a purely digital phenomenon with limited uses offline or a valid real-world currency that could potentially challenge fiat money in some areas.
How cryptocurrencies deal with that challenge could be the key to mass adoption of the technology. The ability to pay vendors in brick-and-mortar stores, easily and without risk, could be the deciding factor when it comes to mainstream acceptance of crypto.
The benefits are clear, too. Crypto payments promise greater ease, reduced transaction fees, lower waiting times, anonymity, reduced third-party interference, and much more. If popularized, this technology could be a real game changer.
On the other hand, if we can’t use these coins to buy goods and services in the real world, they lose a lot of value. For crypto to be taken seriously by the public, it needs to adapt to real-world transactions.
The good news is that’s more than possible. But first, there are some hurdles to overcome. We need to make it much easier for merchants to accept cryptocurrency as a form of payment.
The challenges for sellers
If you own a brick-and-mortar business like a store or coffee shop, there are currently a few things that might be holding you back from accepting cryptocurrency.
The first is the speed of transaction. Although crypto has the potential to complete transactions quicker than methods like credit cards, it’s been having some growing pains.
Larger blockchains tend to struggle at busy times, leading to increased waiting times of several minutes. This isn’t the end of the world, but nobody wants to wait around for their payment to authorize after buying something, especially since crypto is supposed to be faster than other payment methods.
It’s unpleasant for customers and can damage vendors’ reputations.
The other problem is that of volatility. It’s no secret that cryptocurrencies can fluctuate pretty wildly in value over short periods of time, even the bigger and more established ones.
This is a problem for vendors because the amount of crypto they receive in payment could lose a serious amount of value by the time they come to exchange or spend it. Imagine getting paid and knowing that money could be worth 10% less by the time you actually use it.
For these reasons, shifting to accept crypto simply isn’t worth it for vendors. It’s a big risk and could result in them losing money. There are numerous benefits to accepting crypto, but also some glaring risks.
We need to mitigate or remove those risks to incentivize wider adoption of crypto. That’s really the only way to move crypto into the physical world. But how?
Moving crypto into the physical universe
Some companies are looking at ways to make crypto more usable in the real world. These include T.OS, who are bringing an innovative new approach to using crypto with brick-and-mortar vendors.
Their project is still in its early days but is working well in Singapore. It uses two different currencies, built on two blockchains.
The first cryptocurrency, T.OS, is like any other. It can be traded on normal exchanges and its price changes day by day.
However, users can exchange T.OS in specific local exchanges for TOSP. This is a different coin altogether — it has a fixed price which is linked to the local fiat currency. So while 1 TOSP might be worth $1 in the U.S., it’ll also be worth €1 in Germany.
That solves the issue of volatility. Merchants can accept TOSP knowing that its value is only going to change as much as that of the local currency. They get peace of mind knowing that it isn’t going to halve in value overnight, and can be changed for fiat money or T.OS at the nearest T.OS exchange.
The coin is also structured to allow quick transactions, making it easy and pain-free to buy physical goods with cryptocurrency.
These kinds of innovations are important and are a big step towards a more universal acceptance of crypto. Over time, it might well be possible to pay with digital currencies almost anywhere, and that’s truly exciting.
Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.