If you had predicted ten years ago that bitcoin would end the decade as the world’s best-performing asset — surpassing gold, oil and the US dollar — you would have been dismissed as a dreamer. Ditto if you had predicted that a vast number of blockchain ecosystems and currencies would have flourished from the seed of bitcoin, creating an entire industry dedicated to challenging the orthodoxy of central banks and building a more equitable and efficient financial system.
The pace of progress has been rapid up to now, but as a new decade dawns, what does the future hold for cryptocurrencies like bitcoin and ether? It has long been stated that the path to mainstream adoption lies in greater usage of crypto as a form of payment, which will in turn kindle wider awareness and compel everyday consumers to trade fiat for crypto. At present, cryptocurrency is viewed by many as a highly volatile speculative investment. However, that perspective is likely to be fiercely challenged in the years to come.
Governments are exploring their own cryptocurrencies
Those who believe crypto exists and belongs on the fringes as the chosen currency for tech nerds and anarchists would do well to heed the actions of national governments that are in the process of implementing their own digital coins. From Russia developing their own cryptoruble to Japan pioneering the J-Coin in time for the Tokyo Olympics, the number of nations set to roll out state-backed crypto assets is staggering. What’s the expression? If you can’t beat them, join them.
This sea change from skepticism and wariness to objectivity and enthusiasm is likely to accelerate crypto usage in the years to come, legitimizing crypto as both a medium of exchange and store of value.
Facebook’s Libra could validate crypto in the minds of many
The change of heart exhibited by national governments is one thing, but Facebook’s decision to pursue its very own cryptocurrency will also validate the technology in the minds of many. Sure, it’s been mired in regulatory hell thus far, but given the company’s vast, loyal network — users are expected to hit 1.69 billion in 2020 — the potential of Libra and Calibra, Facebook’s associated crypto wallet, seems enormous. As outlined in Libra’s whitepaper, the company’s ambition is to create a global currency, giving citizens access to low-cost financial services and monetary infrastructure irrespective of borders.
Crypto is a cheaper and more efficient payment solution
Perhaps the best argument supporting the idea that cryptocurrencies will play a major role in the future of commerce is this one. While the consumer benefits from making payments with them, commercial enterprises undoubtedly benefit from receiving them.
Crypto transactions cut out the middleman, the intermediaries and mandatory fees, simplifying the process for both parties. Furthermore, the process is more accessible (anyone can download a wallet and use crypto), merchants get to exercise a greater degree of autonomy, international transactions can be securely conducted minus exchange rates, and settlement is immediate, freeing up working capital for businesses of all sizes. Cryptocurrency also suits the proclivities of modern consumers — namely to make purchases from their smartphones. Amazingly, 72.9% of e-commerce sales are expected to occur on a smartphone by 2021.
Because crypto transactions are irreversible, they are also immune to requests that funds be returned — a process known as chargebacks. According to consulting firm Javelin Strategy, chargebacks cost merchants $31 billion in 2017.
Growing merchant adoption
For these reasons, many major merchants, both bricks-and-mortar establishments and online entities, have onboarded crypto payments in recent years, not least Whole Foods Market, Nordstrom, Barnes & Noble and Starbucks. According to CoinMap, over 15,000 venues accept bitcoin at the time of writing. And with global e-commerce revenues projected to hit $4.88 trillion by 2020, up 2.5 trillion since 2017, this sector is likely to be awash with digital currency over the coming years.
The emergence of apps like Spedn and Paytomat, plus crypto payment cards like Wirex and Monaco, make spending digital assets easier than ever before. Even small businesses — cafes, newsagents, hairdressers, you name — can attract new clients by accepting crypto payments via point-of-sale terminals like Cyclebit and BitPay.
Merchants can even accept cryptocurrency from subscribers thanks to 8Pay. The network’s smart contract architecture facilitates automatic rolling payments (as well as one-time payments), meaning consumers can spend their crypto on the likes of gym memberships, streaming services, magazines, subscription boxes and the like.
A deplatform-proof medium of exchange
In the decade to come, it is very likely that crypto will be used more and more by individuals concerned by the worrying trend towards deplatforming. Unlike traditional payment gateways such as Paypal and Venmo, and especially unlike credit companies, crypto cannot deplatform individuals for wrongthink or holding contrary political views. Nor can it boot them from the world of commerce for being a sex worker or legally selling cannabis. Virtual assets permit immutable money transfers without judgement from a third-party such as a central bank, and you don’t have to be vulnerable to deplatforming yourself to view this as a major selling point.
Cryptocurrencies like bitcoin still have some way to go before they can fulfill their promise to revolutionize the world of commerce, and the process is likely to involve developers, regulators and, yes, the general public. As the largest cryptocurrency, bitcoin must address swinging volatility and scalability challenges in the coming years, while fiat-pegged stablecoins are likely to further legitimize virtual assets. Ultimately commercial enterprises stand to benefit from removing friction and permitting the use of crypto, and as barriers to entry continue to fall, the likelihood of virtual currencies gaining a stronger foothold in the industry seems stronger than ever.