With some of the biggest names in the business turning to cryptocurrencies, it’s becoming harder to ignore just how influential and impactful these could be on the eCommerce industry – and likely sooner than you’d think.
Although relatively immature, cryptocurrency is making huge shakes in the retail sector, and certainly looks like it’s here to stay. Some of the largest multinational enterprises have already dipped into this new digital playing field and many others are following suit. Just last week, Tesla announced that it had bought $1.5 billion worth of Bitcoin to hold on its balance sheet, and is planning to allow its customers to use this coin to pay for cars. But it doesn’t end there. In the same week, Mastercard disclosed its plans to let merchants accept some forms of cryptocurrencies through its network later on this year, which will convert traditional money to digital currency before entering the companies’ systems. Other leading enterprises making the move to embrace cryptocurrency include Square, who already give users of its Cash App access to buy Bitcoin, and Fuse.io, who recently partnered with Monerium to create a platform for entrepreneurs to turn “communities into economies” via a blockchain.
What is Cryptocurrency?
Cryptocurrencies are based on a decentralized digital ledger system that’s used to make secure, encrypted payments between individuals or businesses. It utilizes blockchain technology to record transactions and verify the ownership of currency in real-time. This prevents ‘coins’ or tokens from being duplicated or stolen.
Unlike traditional payment systems, where transactions and data are controlled by only one entity such as a bank, cryptocurrencies are held in a peer-to-peer network. This ties together thousands of users – all of which have a role in verifying and encrypting new transactions. This makes payments highly secure and almost impossible to hack without alerting everyone in the network.
The Benefits of Cryptocurrency For Retailers
Broader market appeal
The rationale here is simple; the more payment options your ecommerce store offers, the wider the appeal you’re likely to have. Certain credit/debit card types are not available in all countries, which makes it more challenging for you to reap the benefits of a diverse customer base. Cryptocurrency has the advantage of being available globally and not controlled by any state or country, which makes it a particularly stable option.
Cost
Traditional payment methods such as banking and credit cards usually involve high transaction fees and commission, which is a big disadvantage to your business. While cryptocurrencies still involve third-parties, you have much more control as a merchant over what you’re willing to pay.
Speed
Payment processing times can vary significantly between banks and credit card companies, which has the potential to cause issues with your cash flow. Cryptocurrency transactions are processed instantly, giving you instant access to revenue from sales.
Security
Because all cryptocurrencies use a decentralized ledger system, it’s virtually impossible to reverse or cancel a transaction once it’s been made. This gives merchants much greater protection against fraud or theft.
Market expansion
One of the biggest problems eCommerce companies face during globalization is having to adjust prices and currencies to accommodate the individual fiats of each country. Fiat money is the government-issued currency used as standard in any given country, like British pounds or US dollars. While OnBuy is circumventing this concern for its retailers by providing auto-currency conversion and using PayPal to process global payments, cryptocurrencies also negate this concern entirely as they can be used in every country of the world without having to adapt prices or currencies, making global expansion far more streamlined for businesses. Further to that, there’s a vast, ever-growing community of people using cryptocurrencies across the world, offering an entirely new market share to target. Through accepting this method of payment, via a digital wallet or credit card platform, eCommerce companies could delve into this new market and appeal to a greater volume of consumers.
There are four key variants that are necessary for the mainstream adoption of cryptocurrencies in eCommerce: development and accessibility of the appropriate technology, consumer demand, corporate champions and an accountable regulatory central control. All aside from the latter are currently available, courtesy of stablecoin. If the final variant emerges over the course of the next few years, cryptocurrency certainly has the potential to successfully breach the eCommerce industry.
Interestingly, the aforementioned partnership between Fuse.io and Monerium may well be the start of this necessary transition to standardize cryptocurrency. This partnership aims to bring regulated fiat money to Fuse.io’s “low-fee” and “high throughput” blockchain, supporting micro-economies with a scalable, cost-effective payment solution. However, unlike stablecoins, the digital money will be “unconditionally” redeemable at any time, with funds capable of transferring directly into bank accounts without the need for counter-parties. This announcement has certainly excited the tech world, and it has the potential to act as a catalyst for the mainstream adoption of cryptocurrency if proven successful.
Accepting Magento Bitcoin
Accepting bitcoins on Magento ecommerce stores is super easy. You don’t need any programming skills and many Magento modules allow you to integrate Magento Bitcoin payment method in your store easily within a few minutes. Of the many options, CoinGate Bitcoin Magento extension is very popular and is widely used to accept Bitcoin on Magento stores.
3 Cryptocurrencies To Watch
1. Bitcoin cash
A hard fork from the existing Bitcoin system, Bitcoin Cash was launched in 2017 to increase the size of blocks in the blockchain. This allows it to handle higher numbers of transactions per second, making it more viable to exchange for commodities. The goal was to create an alternative to digital wallets like PayPal by pushing Bitcoin to act more as a currency rather than an asset.
2. Ethereum
In addition to being a decentralized payment system, Ethereum offers alternative uses such as smart contracts and codes which can be built using the blockchain system, ensuring that private information is held securely and avoids the use of third parties. In short, its applications are only limited by the skills and innovation of the developer.
3. WAVES
The WAVES blockchain system allows businesses to create and issue custom crypto tokens that can be exchanged with each other or other WAVES tokens, as well fiat currencies like USD and EUR. This makes WAVES tokens ideal for running a loyalty program or launching a crowdfunding campaign by providing more straightforward exchanges of value.
Widespread acceptance and usage of cryptocurrencies are still a long way away, but merchants should keep a close eye on developments in this space. Amid the seismic changes bought about by the coronavirus pandemic, consumers are viewing cryptocurrency as a practical solution to the issues they see in traditional commerce – which means major opportunities for the early adopters.