First, there came Bitcoin. And then two years later, Litecoin and Namecoin followed. Over the subsequent years, a flood of new cryptocurrencies joined the market. Some have faded into obscurity and are no longer active, such as Petro and KodakCoin, while others like Ethereum have become a resounding success.
There are now 4000 cryptocurrencies in existence but yet very few retailers accept them as a valid form of payment.
No longer a niche product and firmly edging into the mainstream, cryptocurrency is forcing the world to reconsider payment in a brand new light. Imagine browsing through the Smart and Final Weekly Ad, filling your basket and checking out using your crypto funds. Or buying a luxury product like a car, and even yachts with prime experiences, wouldn’t that be great?
The question remains though: when is the right time for retailers to start adopting this tech?
Early Adopters
Although cryptocurrency is a long way from fully penetrating the retail market, there have been some early adopters of the technology. With an increasing number of regular investors putting money into crypto, this is good news for those who want to draw on their profits for everyday expenses.
Walmart has thrown its substantial weight behind the tech launching a project with its leafy greens on the blockchain. And where Walmart leads, others follow. Alibaba is already adopting blockchain solutions for its subsidiaries to allow it to track its cross-border shipments more effectively. Crypto offers more than just a simple method of payment, and before too long, other retailers will be looking to explore everything it has to offer. But how long is this likely to take?
Barriers to Adopting Cryptocurrency
According to research, more than a third of US small-medium businesses now accept cryptocurrency as a valid method of payment. That’s an impressive feat but it means there’s a long way to go before crypto is universal.
Global surveys have looked at some of the reasons why retailers haven’t yet adopted cryptocurrency.
Some said there was no demand from their customers while others cited a lack of trust. However, the most common reason was a simple lack of familiarity and not knowing how to get started.
There were some other factors which influenced the decision from retailers such as the speed of transactions. At the moment, verifying a crypto transaction takes around 10 minutes, a lengthy time in a sensitive retail environment. Volatility in the value of crypto was another concern, with little stability in the market value. Although many forms of cryptocurrency have rocketed in value, they also experience much more rapid drops too, making them unpredictable as a currency.
Finding a Way Forward
Determining the right time to adopt cryptocurrency in a retail environment may partially be dictated by the target customer. Shops with a target demographic under the age of 30 reported a much bigger demand for crypto than retailers with an older customer base.
The specific products could also play a part in driving demand; those shopping for tech or gadgets are far more likely to be looking for a retailer that accepts cryptocurrency.
Supporting technology is evolving all the time, and this may help to overcome some of the objections that retailers currently have. For example, the Lighting Network has helped to slash the processing time for transactions and Bitpay protects against volatility by converting crypto to fiat currency on the next business day.
Since the 2020 global pandemic, there has been a sharp swing towards digitisation and this will help accelerate the use of cryptocurrency in everyday life. It’s now accepted that its strength lies not in pure investment, but its use as a functional currency.
Paypal now has 26 million merchants who have signed up to accept cryptocurrency. There are travel firms and visa card programs which are dedicated to Bitcoin et al. With the global appetite for transparency and a shared distrust of governments and financial systems, it seems likely that retailers will start moving towards crypto much sooner than they would have previously anticipated.