Traditional payment methods will always have a role to play in how we conduct our financial lives – indeed, it is estimated that more than 63 million credit cards will be in use by the year 2025 in the UK. However, the financial market is evolving and digital payments are becoming more influential. The world of digital currencies has come a long way since the first model of a digital currency was conceived in the US during the 1980s. This saw a mass economic shift in payments, and since then we have witnessed the emergence of the first decentralised cryptocurrency in 2009, Bitcoin, and now many other forms of digital payment services such as Venmo and PayPal. Digital currencies are the next evolution of payments, but that needn’t be at the expense of cash. Instead, they will complement each other and work in tandem.By Anthony DiMarsico, Banxe CEO ( pictured)
The rise of cryptocurrencies
Cryptocurrency sparked interest when the world witnessed the sudden rise, fall, and rise again of Bitcoin between 2017 and 2019. The world became intrigued by the events, and people educated themselves on cryptocurrency’s offerings. Now cryptocurrency’s influence is growing, and a new era of payments is being ushered in, an era where cash and crypto can both be used as payment methods. Digital currencies are rapidly picking up momentum, and are being used by both avid and amateur crypto buyers. In fact, according to Statista the global user base of cryptocurrencies increased by nearly 190% between 2018 and 2020, and is only predicted to accelerate further in 2022.
Crypto adopters are attracted to digital currencies for several reasons: it offers a high degree of privacy and accessibility, the simplicity of only needing access to the internet to buy cryptocurrencies, and an option for individuals to send and receive funds without providing sensitive information. And this growing attraction has led to some comparing being involved in crypto currently now, to those who were involved at the forefront of developing the internet, including Ric Edelman, founder of Edelman Financial Engines. With there now being around 17,887 different cryptocurrencies, the future of payments is rapidly and continuously evolving, and that evolution lies in cryptocurrencies becoming more mainstream.
Imagine a world, where, in your wallet lies a debit card that allows you to pay for groceries, public transport, gifts, flights or anything else that forms part of everyday life, but not just in cash, but crypto too. A debit card that allows the option of which to pay with, as seamlessly as using a credit card currently is. This is the future of payments, where cash and crypto operate together to create a new era of financial transactions.
The downfalls of limited functionality
Converting crypto to fiat currencies (cash) has remained a barrier to this becoming a reality for the masses. But with more than 17,000 cryptocurrency ATMs in operation in America alone, it is clear the appetite for using crypto in the same way as cash is there, be it to pay a bill, buy a meal or use public transport. The future of functionality lies in giving people the option to switch between crypto and cash seamlessly, regardless of geographical location or currency.
Currently, people need to create a different e-wallet for each cryptocurrency they wish to receive and store, which is a time-consuming and complicated process – not to mention that cashing out crypto often comes at a financial price. The result is a cryptocurrency experience that is not seamless or personalised. This, the old way of using crypto will continue to hold back the adoption rates of cryptocurrency worldwide.
Uniting the old with the new
With cryptocurrencies in their early stages of development, there are numerous promising advancements on the horizon for them to grow in value and trust, such as more exchange-traded funds (EFTs) expected to hit the market and boost cryptocurrencies, and the UK Government currently considering implementing a central bank digital currency (CBDC). The Financial Conduct Authority (FCA) is also consulting on new rules on how cryptocurrencies are promoted, indicating they could one day become a mainstream form of payment alongside standing traditional payments. Merging both will revolutionise how payments are made every day.
For cryptocurrencies to become widely adopted further education is still required. Many people are unsure of cryptocurrency, in part because it seems daunting and they don’t understand it, or understand how they can use it in everyday life.
But, using a single access platform that bridges the gap between old and new payments brings an assortment of possibilities, and allows users to learn how to buy and trade in crypto, and unlock their financial potential. This is the future of payments; where cash and crypto operate together to create a new era of financial transactions.