accept payments in Bitcoin (CRYPTO: BTC) It has some notable advantages. Designed for an online world, the native cryptocurrency eliminates or reduces many pain points for merchants by lowering bank fees, and lowering transaction costs compared to digital payment networks such as Visa (NYSE: V)Accelerate the transaction settlement speed.
However, bitcoin is not perfect. Cryptocurrency and blockchain-based assets are still a new technology, so not many people know how they work or feel comfortable with them. The extreme fluctuations in the price of bitcoin are also a major detracting factor as a form of payment. As a result, most merchants are not yet considering replacing the traditional platforms run by Visa and major banks. At this point, the convenience and peace of mind when using existing networks outweigh any of the advantages of switching to blockchain-based payments. But here are three ways Bitcoin can Capturing a larger share of the digital payments market.
The development of bitcoin payments in one word: time
All the different movements that happen with Bitcoin and other cryptocurrencies can be summed up in one way: It will take time before Bitcoin becomes an accepted medium of digital exchange for things of value.
Although other younger blockchain networks such as Ethereum (CRYPTO: ETH) It has received more attention lately, it is worth noting that there are thousands of developers working hard on Bitcoin or on projects built on its platform. Some of them can be found in the same old payment networks. For example, the Visa network supports debit cards backed by cryptocurrency accounts, and the company has a small chip working on other ways to integrate Bitcoin into its system.
However, Bitcoin still has a way to go before it can bypass the huge and powerful institutions like Visa and banking partners that dominate the payments business.
More Bitcoin Facilitators, Not Just HODLers
As the cryptocurrency movement is gaining momentum, a term has emerged to describe some of its most ardent supporters: HODLers. HODL is a now intentional misspelling of “Hold,” an encouragement to hold onto cryptocurrencies even during some severe downturns and frantic fluctuations in value. It was also retroactively coined as an acronym for “Hold On for Dear Life.”
Individuals aren’t the only Bitcoin HODLers out there. Some notable companies have added Bitcoin to their balance sheets, including Square (NYSE: SQ)And Tesla (NASDAQ: TSLA)And small strategy (NASDAQ: MSTR)The pioneer of e-commerce in Latin America free market (NASDAQ: MELI). Some of these companies may simply have Bitcoin as an alternative to cash with the expectation that the price of Bitcoin will rise over time. Others, like Square, are trying to make Bitcoin the standard of commerce. Square CEO Jack Dorsey said last summer that Square was building a new developer ecosystem to accelerate Bitcoin’s usefulness as a payments platform. Even El Salvador has made bitcoin an official currency, although implementation has been questionable so far.
As a result of the work of some Bitcoin holders, a growing list of items and services can be purchased with Bitcoin – everything from low-value items like socks to expensive items like real estate or a college education. Given the further development, more businesses and consumers may want to accept Bitcoin as a payment method. This may prompt some to start spending their crypto assets instead of just accumulating them.
The use of derivatives has a stabilizing force over time
Financial products, such as futures and options built on or denominated in bitcoin, can go a long way toward developing their use as an everyday payment method.
Leading Derivatives Market CME مجموعة group (NASDAQ: CME) It launched bitcoin futures in late 2017 and has steadily added other bitcoin contracts in the years since. These financial tools help institutions that own or use Bitcoin to manage their risks – since Bitcoin’s volatility is so high compared to national currencies like the US dollar, institutions have to pay their bills and taxes. An appropriate analogy might be airlines, which use derivatives to manage large fluctuations in jet fuel. If more companies are to accept Bitcoin payments and use the Bitcoin blockchain instead of a traditional payments network like Visa, a deflation protection method is crucial.
Bitcoin has gained an important starting point as a legitimate investment asset, with a market capitalization exceeding $1 trillion. However, Bitcoin has potential beyond that to simplify and reduce the cost of traditional digital payment systems. But before Bitcoin is ready to take over the legacy digital payments industry dominated by the likes of Visa and major banks, a lot of work needs to be done — and it could be many years before that happens.
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