Cryptocurrency is one of the hottest technology trends of the past five years. The category of alternative currencies went from being questioned by experts to being pushed by some countries and adopted by others. This adoption hasn’t been as fast amongst individuals, who still see them as an investment vehicle and not necessarily as a viable way to pay for products and services.
This is primed to change in the near future and, when it does, ecommerce will be one of the first spaces affected by this adoption. We don’t know exactly how cryptocurrency will change ecommerce as we experience it today, but we have a few clues.
Why the hype?
The recent “legitimization” of cryptocurrencies has led to its acceptance amongst some of the biggest enterprises around the world. Mastercard has announced that it will incorporate cryptocurrencies into its network, and has bet big on NFTs and other digital payments, assets and currencies.
Tesla also toyed with the idea of accepting bitcoin payments, before taking a step back due to environmental concerns around the currency’s mining. This attention, coupled with the democratization of currency acquisition puts the new ‘digital economy’ top of mind for the public.
Cryptocurrencies’ focus on security seems to be a tailor-made compliment for ecommerce, which has surpassed the buyer’s concerns that existed in its inception, but is also continually looking for ways to make its processes more secure and immediate.
This natural partnership has already materialized in some trendsetting online stores, and even brick-and-mortar stores, which allow cryptocurrency payments. This usually leads to customers asking how it works out of sheer curiosity, says Jad Mubaslat, founder of BitQuick.co.
The benefits
Besides security and efficiency, cryptocurrencies offer other advantages for both buyers and sellers. The first of them is a “global payment system” that can be used in any country without the need to depend on exchange rates, which can help streamline international growth for companies, while offering an easier way to pay — and better exchange rates than fiat currencies — for consumers.
The use of cryptocurrencies can also help companies target a broader volume of customers, including those that don’t use credit cards, while protecting themselves from payment frauds during their transactions. Besides, the immediacy of crypto transactions means that retailers have a faster access to funds after a purchase compared to other forms of payment. As a side-benefit, the direct nature of crypto does away with transaction fees, since it eradicates bank involvement altogether.
The encryption technology utilized by these payment methods also protects customers’ data, which makes retailers less attractive to cyber-attacks, a growing concern amongst ecommerce actors.
The obstacles
Despite the appeal of crypto, it has its downsides, which could be hindering their adoption in the ecommerce space. The first of them is of course the volatility of the digital currency’s valuations, which could easily turn a simple return process into a nightmare, due to the constant need to reevaluate products.
This problem could be solved with the growth of “stablecoin”, although it would depend on the speed of adoption and the legitimization that this trend manages, since it would have to be impressive in order to merit consideration above crypto.
The other big obstacle that this innovation faces is the lack of trust that some big players in the industry seem to have. Apple has banned cryptocurrency wallets, although it later softened its position. Amazon, on the other hand, has reiterated it will stay clear of crypto, while applying for bitcoin-related cloud patents.
The main question around blockchain technology is whether it will impact the way the internet is currently thought of or if its impact will be limited to the payment space. Both end-results would require different responses from ecommerce sellers, but the question is still unanswered as of yet, and the final response will depend on the preference of both consumers and sellers.
Finally, tech savviness represents a big barrier, since crypto payments are more complicated than other options in the digital wallet. Lower transaction costs might give the consumer base a reason to jump on the bandwagon, but technology also needs to be simpler in order to reach broad adoption.
The bottom line
Even though crypto adoption hasn’t reached the mainstream yet, it’s announced itself as one of the most important technology trends to follow in the upcoming years, and ignoring it can cause ecommerce merchants to lose customers to more nimble and innovative competitors.
As cryptocurrencies earn a bigger space in worldwide transactions, it’s only a matter of time until they get adopted by a growing number of trendsetters, leading to customers’ demand for the option. Meanwhile, ecommerce retailers would benefit from considering what the future of cryptocurrency transactions will look like, because it might be closer than previously thought.
