Cryptocurrency usage is on the rise around the world. It’s therefore not a surprise that those currencies are coming onto the radar of more and more ecommerce websites, and being adopted as a method of payment. With more traders now hopping on the crypto-bandwagon, what exactly are they, and what exactly do they offer?
What are Cryptocurrencies?
Cryptocurrencies are digital assets designed to work as a medium of exchange. They are virtual currencies that use encryption techniques to establish their value and for verifying the transferring of funds. Blockchain (a growing list of linked records or blocks) serves as a ledger that logs and validates transactions. This system works without a regulating third party, such as a bank.
Why are E-tailers Adopting Cryptocurrencies?
According to Boston Consulting Group (from the article ‘The Economics of Change’ in The Washington Post), digital payment revenue could grow to more than $2 trillion a year in just 3 years (by 2023). And by 2030, according to the technology advisory firm Magister Advisors, the most prominent crypto units could be the sixth largest circulating currency in the world.
Alternative Payment Methods
Alternative Payment Methods (APMs – branded payments other than credit and debit card payments) are also predicted to replace debit and credit cards in the future, as users become more comfortable with the different formats available.
Alternative Payment Methods include: eWallet (eg Google Pay, Apple Pay, WebMoney), realtime bank transfers (eg SOFORT Banking), pre-payment, post-payment (eg AfterPay, ZipPay). These new payment method options allow customers to buy with or without a deposit at the purchase point.
Reliance on Banks and Centralised Control
One of the reasons for the likely increase in uptake of cryptocurrency is the lack of need for a bank account. In some countries banks are not the norm, or where they are, some people are refused bank accounts. That’s likely to be a very large number of people around of the world (some estimates go to around 1 billion). All you need is an internet connection to use cryptocurrency. Unlike a bank, there’s no list of requirements, you can simply download a wallet and use digital coins as a means of payment.
Banks act as intermediaries between buyers and sellers on the internet – whenever you buy or sell anything with a bank card then it is processed by that third party. Cryptocurrencies replace centralised systems such as banks, allowing one-to-one transactions, reducing fees and providing a greater level of autonomy for merchants.
As a result, retailers and shoppers can benefit from lower transaction fees of around 0.3% (credit card companies can charge up to 3% for processing fees), greater levels of privacy (customers do not need to disclose their details to third parties) and make international transactions without exchange rates.
Who’s Already Using Cryptocurrency?
Several large ecommerce sites have already adopted cryptocurrency:
And more. There are also thousands of small businesses around the world that accept cryptocurrency, highlighted by coinmap 2.0: coinmap.org. How many more will follow? 2019 will no doubt tell.