Bitcoin and cryptocurrency have come a long way. Many are no longer just speculative assets but have crossed into hedge fund territory following the excessive printing of money and the spread of the coronavirus.
Bitcoin and Other Cryptocurrencies Are Failing in the Payments Department
However, despite all the major boosts in the space, it appears crypto assets are really faltering in one specific area… Payments. Initially, bitcoin and many of its altcoin cousins were designed to serve as payment tools in which one could use them to buy everyday goods and services. However, this has been a slow journey given that many stores, retailers, and businesses refuse to accept crypto payments, and the initial goal of digital currency has not been achieved just yet.
One anonymous manager explained in a recent interview:
I would take Monopoly money before I took cryptocurrency.
His attitude is common amongst many business owners and entrepreneurs, and to an extent, we can’t really blame him. The fact is that bitcoin and digital currencies are highly volatile, and thus are prone to dramatic price swings at a moment’s notice. This presents a rough situation in which many individuals or stores that accept crypto can potentially lose out on profit.
Consider the following scenario: someone walks into a store and decides to purchase $50 worth of merchandise with bitcoin. For one reason or another, the store doesn’t trade the crypto in for fiat right away. A full 24 hours go by and the price of BTC drops. That $50 suddenly becomes $40 as a result. The person still gets to walk away with everything they purchased, but the store has missed out on money. Is this fair? Not everyone thinks so.
Dan Dolev – financial tech analyst at Mizuho Securities – doesn’t believe crypto is replacing cash anytime soon. He thinks people are buying it for a multitude of reasons, but one of them is not because they need to use it to pay for things. He says:
It’s not happening. I wouldn’t even try to quantify it because it’s so insignificant. People are buying crypto because they think it can only go up, or because they’ve heard it’s the future, or because they don’t know why they’re buying it.
Nobody Should Want to Use it for Payments
Michael Saylor – the head of MicroStrategy, which has made a career out of buying bitcoin over the past year and a half – says that it doesn’t make much sense for anyone to use crypto as a payment tool considering bitcoin and many other assets have appreciating values. He says:
You really don’t want to pay for your coffee with your bitcoin. You want to pay for your coffee with a currency. I don’t really think it makes sense to pay for things with an appreciating asset. It makes sense to pay for things with a depreciating currency.