The crypto industry began with the introduction of Bitcoin (BTC), which aimed to become a digital currency and a part of the payment method, particularly through the internet, or online.
Over time, various types of cryptocurrencies emerged with different goals, no longer identical to their precursor, Bitcoin, due to various reasons, in order to fulfill the needs and innovations in other sectors.
However, the global adoption of cryptocurrency as a payment method remains the main objective for crypto enthusiasts, aiming to have these digital assets increasingly accepted by society as a "tool" for payment.
Global Adoption of Cryptocurrency
The idea of adopting crypto in the real world, especially as part of the payment method, has been around for quite some time. This is because supporters, including investors and crypto enthusiasts, continue to expect functions that are more "human-centric" rather than merely being investment assets.
Support for Bitcoin to become internet money has long been present, with Twitter founder Jack Dorsey leading the charge. He has focused on major cryptocurrencies by building Square (now known as Block), which is currently focused on blockchain technology.
Although this is just the beginning for crypto to become a form of digital money in business transactions, it doesn't mean it's impossible for it to continue to grow and gain popularity.
What Can Support It?
Of course, the volatile prices of cryptocurrencies pose concerns for businesses. If an asset is in a bearish state, it can quickly eat into their profits.
For example, suppose someone buys clothing using Bitcoin (BTC) and the price of the clothing at the time of purchase is $50.
Suddenly, an hour later, the BTC price continues to decline due to volatile markets, causing the coins received by the clothing seller to now be worth $30. Is this dangerous?
For peer-to-peer transactions like this, it is certainly not ideal. However, it doesn't mean that using cryptocurrencies is impossible.
Currently, there are services called "Cryptocurrency Payment Gateways" that act as payment processors, accepting both cryptocurrencies and bank credit cards.
With the existence of these gateways, sellers can receive payments in cryptocurrencies, which are then converted to fiat currency and directly deposited into the seller's account. This eliminates concerns about volatility.
In an instant, the Bitcoin used for payment will be converted to fiat currency by the gateway.
Meanwhile, the Payment Gateway itself is a company that takes on the risks of cryptocurrency transactions (such as volatility) using their wallets to facilitate transactions between merchants and customers.
Of course, there will be some service fees associated with using these gateways, but they are designed in a way that benefits both users and gateway providers, without burdening the users too much.
However, it is crucial for the providers to have a secure and stable network to process a large number of cryptocurrency transactions. As time goes on, this will undoubtedly develop and expand following the expected growth in adoption.
Pros and Cons of Using Cryptocurrency as a Payment Method
There are various factors regarding cryptocurrency that make it appear either better or worse as a part of the payment method, resulting in its own set of pros and cons. Some of them are as follows:
Enhanced Security
Currently, news about credit card fraud and theft is increasingly prevalent due to various "simple" attacks by hackers that can result in nightmares for the card owners.
In the past three years, the use of credit and debit cards in fraudulent activities has skyrocketed, ultimately causing losses for business owners.
Credit card theft and its arbitrary use become sad stories for the owners because all transactions are made in their name, and they are powerless to do anything about it.
In fact, someone could lose their job because their credit card data was stolen and used for transactions on illegal prostitution sites. Without knowing anything about it, they are forcibly taken by the police, tarnishing their reputation.
With cryptocurrencies, maintaining the security of personal wallets is much safer due to various protections, including the use of highly secure 12-word phrases.
Simply holding the password to a personal wallet won't have any impact unless the phrase is also known. Of course, this is highly unlikely.
Without the need for third-party verification, the use of cryptocurrencies is highly private and isolated from data leaks. Even if hackers know the complete identity of the wallet owner, it won't have any impact.
Of course, one must not forget where they store the phrase to avoid it becoming a boomerang in the future.
Irreversible Transactions
All cryptocurrency transactions are recorded on the blockchain and can be viewed with utmost transparency. However, errors in sending payments can be a constraint when using cryptocurrencies.
Refunding an overpayment becomes a challenge if a business doesn't hold cryptocurrencies or only accepts payments with cryptocurrencies through a gateway service. In such cases, refunds would need to be manually processed in fiat currency.
Nevertheless, the risk is still minimal as carefulness in payment transactions remains crucial when utilizing cryptocurrencies for payments.
On the other hand, the clarity of cash flow with cryptocurrencies simplifies transaction bookkeeping, making it easier to read and manage.
Lower Fees
If we consider the digital payment aspect, cryptocurrencies typically impose lower fees compared to online payment giants like PayPal.
Moreover, second-layer blockchains like Polygon have the ability to reduce gas fees for transactions within the Ethereum network.
For international payments, cryptocurrencies offer lower costs and faster transactions since there are no intermediaries involved, even when sending cryptocurrencies between distant countries.
Although without the involvement of SWIFT, cryptocurrencies can securely reach the recipient, even in the case of transfers from an Asian country to a European country.
Apart from being a payment method, this is particularly suitable for remittance purposes for migrants.
Double Taxation
However, when using cryptocurrencies, users may not only have to pay taxes related to gross income but also capital gains taxes.
As we know, the value of cryptocurrencies is not fixed (except stablecoins), so there is a form of capital gains tax imposed on investors.
Of course, this will heavily depend on the regulations in each country, and how regulations are developed will determine the procedures for calculating these taxes.
However, if using a Gateway, businesses may not need to pay this double taxation because they never "hold" cryptocurrencies themselves.
All cryptocurrency-related matters are handled by the Gateway, so businesses do not receive coins or tokens; they only receive fiat currency.
Value Risk
Lastly, there is the risk that users, as cryptocurrency holders, face, which is the decrease in value of the cryptocurrencies themselves.
During bearish market conditions, the cryptocurrencies they hold will likely decrease in value, making it impractical to keep them stored in wallets for an extended period as their value continues to erode.
One possible solution to this problem is to store the cryptocurrencies or stake them to earn additional cryptocurrencies when the market is bearish.
In terms of payments, it is advisable to use fiat currency during bearish market conditions since cryptocurrencies are merely an optional payment method, not an obligation to be used as such. [pc]
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