As more people continue to invest in digital currencies, experts predict that crypto will have an even greater impact on the retail sector in the future years.
Even though the cryptocurrency market appears to be experiencing a slowdown at the moment, there is no disputing that the industry has developed exponentially over the past few years, particularly in terms of acceptance.
According to a recent survey, the number of U.S. adults utilising digital assets for everyday transactions would climb by 70 percent by the end of the year compared to 2021, going from 1.08 million to 3.6 million users.
The principal author of the study hypothesises that as the crypto market’s volatility continues to decrease — due to the increasing use of stablecoins and central bank digital currencies (CBDCs) — more and more individuals will view these products as genuine payment methods. In fact, the analysis indicates that by the end of 2022, the overall number of U.S. adults using crypto will reach a whopping 33.7 million.
By the end of 2023, this number might reach 37,2 million, a figure that is extremely plausible, especially considering that the number of investors entering the global crypto market has nearly doubled in the last 12 months in countries such as India, Brazil, and Hong Kong. Narek Gevorgian, CEO and founder of CoinStats, a decentralised finance (DeFi) wallet and cryptocurrency portfolio manager, told:
“Cryptocurrency is gaining prominence in the financial mainstream in many circumstances, but not in a zero-sum sense relative to the existing established market. Due to the fact that millions of unbanked people have access to bitcoin transactions via their mobile phones, it is difficult to observe and analyse its progress using the economic lenses we have in place today.
Retail usage of cryptocurrencies is expected to increase.
Max Krupyshev, the chief executive officer of the cryptocurrency payment processor CoinsPaid, says that while the aforementioned figure of 3,6 million is extremely outstanding, it still represents less than 1 percent of the American population. In the next three to five years, there will be exponential increase in cryptocurrency payments, he predicts, adding:
“By 2025, I believe we will be able to speak of tens of millions of users in the United States alone. Innovative solutions can flourish in the American market. Another element pushing crypto’s popularity as a daily transactional currency is the ease with which these assets can be purchased and used with global brands.
Asia has the potential to surpass the United States in the long term when it comes to crypto payments, he added, because the area as a whole is extremely receptive to fresh and emerging technology. “We should also take note of the increasing popularity of cryptocurrencies in African nations. There is a high need for crypto apps and alternative investment instruments with a low entrance barrier, according to Krupyshev.
Brandon Dallman, chief marketing officer at DeFi ecosystem Unizen, stated that for the longest time, Western Union, PayPal, and Stripe dominated the retail payments/cross-border remittance ecosystem. In contrast, the increased popularity of cryptocurrencies over the past few years has enabled consumers to sidestep problems connected with middlemen and hefty fees, as well as the inherent red tape involved with the traditional finance system. He emphasised:
“Fast blockchain networks are suited for digital currencies such as the digital dollar, euro, etc. The blockchain that can meet the needs of financial organisations such as stock exchanges and clearinghouses will emerge victorious. Banks of all sizes are dipping their toes in the water to see how they can begin to connect with the new digital environment in front of them out of a rising concern of falling behind.”
Not everyone is convinced of cryptocurrency’s growing influence in the retail sector. For instance, Ben Caselin, head of research and strategy for cryptocurrency exchange AAX, stated that while it is possible that custodied stablecoins may be used in the near future, it is highly unlikely that we are headed toward a crypto payments utopia, adding:
“With more integration, we may anticipate more scrutiny and regulation, which bodes poorly for cryptocurrencies. A Bored Ape-themed restaurant, for instance, may accept ApeCoin as payment. In many other respects, however, I believe that real-world payments and the utility of a store of value will finally converge on Bitcoin, notwithstanding the continuous rise of online and offline microeconomies.”
Nonetheless, Caselin stated that it is good to observe a shift toward a better and more transparent understanding of what money is. “If merchants or organisations can genuinely hold the crypto assets they’re paid with, then this could become quite intriguing,” he said.
Which digital assets are ideal for the retail sector?
Dallman considers Solana (SOL) to be the frontrunner in terms of facilitating ordinary transactions due to the network’s rapid speeds and exceptionally low gas fee rates, which make the network more accessible. Moreover, with Bitcoin (BTC) and other major cryptocurrencies beginning to receive widespread acceptance as legal cash, he anticipates that the flagship asset will grow in popularity as a digital payment method.
Krupyshev is of a similar opinion, believing that Bitcoin, rather than any stablecoin, will become a more popular form of payment, despite the fact that the majority of items and services are denominated in U.S. dollars.
“Bitcoin is the most likely contender for the job of global payment medium, in my opinion. It has already demonstrated its survival by overcoming multiple crises and through multiple crypto winters.”
However, he noted that it is extremely improbable that Bitcoin-centric payments will be widely adopted within the next few of years. This is mostly due to the fact that production costs are still typically paid in fiat currencies, such as the U.S. dollar, euro, British pound, yen, or yuan.
Due to their market domination and investor appeal, Bitcoin and Ether (ETH) appear to be two of the most likely prospects for worldwide retail adoption, according to Gevorgian. “Bitcoin seems to work for larger transactions, and as solutions developed on top of the Lightning Network advance, it will become a more viable option for smaller transactions,” he added.
He further claimed that the most widely held and utilised cryptocurrencies will be the most likely to gain traction in the payments industry. This will likely result in the top twenty coins by market capitalization dominating as transactional currencies.
Contrary to the aforementioned viewpoints, Yair Testa, head of business development at blockchain-based payments ecosystem COTI, is certain that stablecoins will soon be the most popular option for retail transfers. He stated to :
“Enterprises and merchants must allocate a substantial amount of their revenue to operating expenses and cannot afford the risk. They require stability and confidence that their revenue will maintain its current worth tomorrow. We believe regulated stablecoins and CBDCs will be the dominant payment option in the future.”
Institutions adopting cryptocurrencies
In recent years, as crypto assets have gained a great deal of popular acceptance, the number of well-known brands that take digital currencies has been rapidly increasing. Microsoft, for instance, presently accepts Bitcoin as payment for its numerous in-house services, such as Xbox Live, Microsoft apps and games, etc.
Overstock, an American online furniture store, appears to be in the front of crypto shopping. This is because the organisation presently accepts a variety of digital tokens in addition to Bitcoin, including Litecoin (LTC), Ethereum (ETH), and Monero (XMR) (XMR). Similarly, Home Depot, the largest hardware retail chain in the United States, accepts Bitcoin purchases using Flexa’s checkout system – a crypto payments ecosystem sponsored by Gemini — allowing individuals to build a complete home using just cryptocurrency.
Starbucks has also teamed with futures exchange Bakkt to enable customers to pay for their morning coffee (and much more) with digital assets. The same holds true for the American international retail chain Whole Foods, which has teamed with the spending app SPEDN to enable customers to pay for all of their groceries with BTC, LTC, or the Gemini dollar (GUSD). SPEDN is not limited to Whole Foods, as consumers may also spend their digital assets at Regal Cinemas, GameStop, Jamba Juice, and Baskin-Robbins.
AT&T is the first American mobile phone operator to allow crypto payments to its customers, although indirectly. BitPay, a third-party payment gateway, allows users to pay for the company’s numerous products and services using Bitcoin and a few other assets.
In addition to the brands listed above, AMC, Travala, JCPenney, the Dallas Mavericks, and GameStop currently accept cryptocurrency payments.
As we approach a future in which digital currencies continue to gain acceptance at a rapid rate, it will be fascinating to observe how cryptocurrencies fit into the global retail environment, particularly in terms of competing with or complementing the present fiat payment system.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.