Crypto still lacks the stability and simplicity necessary to be a currency
Though it won’t happen tomorrow or even next week, a real potential exists for cryptocurrency to become a normalized global currency.
When it does, it will greatly affect banks. It will greatly affect card associations. It will greatly affect the processors that operate in the middle of merchants and consumers.
To understand the challenges that stand between cryptocurrency today and a future state in which it works for payments, start by looking at its origin. Bitcoin, the first cryptocurrency, was created by developers who crunched the numbers and came up with the first trustless peer-to-peer network. They definitely saw the potential for a cashless payment system but didn’t account for more practical matters, such as the merchant experience or requirements for retail adoption.
The next stage of cryptocurrency’s evolution will require adapting it to familiar payment experiences and providing the education around the pain points it can solve for every participant in the transaction. Clearly, there are barriers to overcome before we will see widespread adoption as a payment option, yet the path is viable.
First, there must be simple ways to exchange currency — such as crypto for dollars — without overcomplicating things for merchants. Merchants don’t want to step into an exchange and trade out foreign money, even if it goes by the name of crypto.
At the same time, merchants also need a stable value in any currency before they will be willing to accept it. When merchants make a $10 sale, they can’t go to exchange it only to learn that the coin’s price has dropped, that their $10 sale is now worth $5. Yet that is exactly what current coins are proposing that merchants do.
What’s missing today is a mechanism that can handle both exchanges and value stability so that it makes good business sense for merchants to step into adoption.