Cryptocurrency enthusiasts often argue that businesses need to start accepting crypto as payments for adoption to grow — boosting usability and potent
Cryptocurrency enthusiasts often argue that businesses need to start accepting crypto as payments for adoption to grow — boosting usability and potentially creating strong demand for these currencies.
Some crypto communities often focus heavily on growing business adoption, with maps now compiling businesses worldwide that accept different cryptocurrencies as a payment method.
But if a business accepts cryptocurrency payments only to dump them on the market, it may undermine the entire effort, as the assets are just being sold back on the market right after payment.
Moreover, a business accepting cryptocurrency payments through a third-party processor isn’t adhering to the cryptocurrency ethos of managing their own private keys, meaning controlling their wallet fully.
On the flip side, proponents argue that the mere act of enabling cryptocurrency payments opens up new avenues for consumers to transact in crypto, bringing in a new, long-awaited use case.
Do businesses accepting crypto boost adoption?
On its surface, a business accepting cryptocurrency payments would boost adoption. Still, if the digital currency received is immediately sold back on the market, it’s generating as much demand as it is supply. This simultaneous buy-sell cycle may not significantly contribute to cryptocurrency adoption.
Additionally, it isn’t clear how relevant a business accepting cryptocurrency payments can be for actual adoption, as users are unlikely to go through the process of buying cryptocurrencies if they can just pay in their local fiat currency.
The essence of adoption doesn’t merely reside in the act of acceptance by businesses; it fundamentally lies in the ease of access and willingness of consumers to transition to cryptocurrencies for their transactional needs.
A study by leading research and advisory firm Forrester Consulting revealed that merchants accepting Bitcoin (BTC) attracted new customers and sales.
The study found that cryptocurrency payments bring in up to 40% of new customers for merchants, with crypto customers spending twice as much as those using credit cards.
Speaking to Cointelegraph, BitPay chief marketing officer William Zielke referenced the Forrester Consulting study and said cryptocurrency payment processors give cryptocurrency spenders a fast, easy way to pay for large ticket items and everyday purchases.
Zielke said that during the first half of this year, BitPay saw a 10% uptick in new customer sign-ups compared to the previous year despite the volatile cryptocurrency market. He added that while some brands may already have a technically savvy user base when they start accepting crypto, other merchants may end up introducing new users to crypto:
“Alternatively, merchants like AMC Theatres connect with a broad base of customers who may need to be better-versed in the crypto world. Partnering with big brands like AMC Theatres is an excellent way to boost consumer adoption since it introduces crypto payments for everyday purchases.”
Sankar Krishnan, head of digital assets and fintech at consulting firm Capgemini, told Cointelegraph that money serves “both transactional and savings purposes” and that he would argue that “cryptocurrency captures greater interest from consumers today as they anticipate its value will rise in the future.”
Nevertheless, Krishnan said it’s crucial to acknowledge the risks associated with cryptocurrencies, including their extreme volatility, which means that the mainstream adoption of cryptocurrencies for everyday transactions is “still a work in progress.”
Per Krishnan, when cryptocurrencies “become a more viable option for day-to-day purchases, we can expect more payment providers to embrace and facilitate cryptocurrency transactions.” He added, however, that whether a business keeps the cryptocurrencies it accepts for goods and services or sells them right away “is linked to the company’s treasury strategy.”
According to the Capgemini executive, the price volatility of cryptocurrencies heavily influences this choice, as the market can move in either direction between the firm accepting payment and selling the digital assets, which would only be beneficial if it were actively engaging in crypto trading.
A business accepting cryptocurrency payments and selling the crypto right away, Krishnan said, also “sends a clear message to the market that they do not anticipate the cryptocurrency’s value to appreciate in the future.” Per his words, it’s a “de-risking move” the business makes.
Speaking to Cointelegraph, Justas Paulius, CEO of cryptocurrency payments processor CoinGate, took a balanced approach and said that it can’t be proven whether this buy-sell cycle has “a small, large or no impact at all as there are many factors that need to be considered first, for example, which cryptocurrency is being used, how and where it is being sold, and how much.”
Paulius added that consumers “tend to re-purchase cryptocurrency…
cointelegraph.com