Technology / 25 October 2019, 08:00am / Nic Haralambous
JOHANNESBURG – Despite being the talk of the town for the last decade, cryptocurrency Bitcoin and its myriad digital companions, such as Ethereum and Ripple, have only recently moved out of their infancy and into the world of business viability. How? Adoption. The next step is moving the world from early adoption to mass usage.
I first read the Bitcoin white paper back in 2011. Stupidly, it took me a further six years before I entered the world of cryptocurrency full time as the chief operating officer and co-founder of Coindirect.com, a crypto exchange.
I believe that crypto is the singular most important invention in the Fourth Industrial Revolution, but without fail, the number one question people ask when engaging with cryptocurrency is: what can I do with it?
And it's the answer to this question that drives us daily to move crypto from early adoption to mass market status.
By and large, crypto has surmounted some of the biggest stumbling blocks that other digital businesses still face. Cryptocurrency businesses are secure and private, mobile first, and agile.
Paying with cryptocurrency is quick, cheap, transparent, safe, and decentralised. Modern cryptocurrency payment systems include, as part of their standard offering, multi-currency operations (support of both digital and fiat currencies), custodial services, mobile conversions from crypto to fiat, and instant transactions.
Online businesses looking to advance their models (whether that means increasing market share, improving customer acquisition, or investigating expansion) can use crypto to leapfrog their biggest barrier – the tedious, and complex user experience of buying goods from a foreign online business.
In some cases, what should be a straightforward payment for goods becomes outright impossible because of the restrictions of a global financial system that won't (and can't) bend to suit the new digital landscape.
Our single major drawback right now is mass adoption. It’s a classic chicken-and-egg scenario. Early adopters have embraced this new technology but they are often left with few places to spend their digital currency while businesses are hesitant to adopt a new payment method without demand from their customers.
Price volatility is another drawback for B2B sellers, but cryptocurrency businesses are becoming increasingly proficient at mitigating this risk. Merchants do have choices in the cryptocurrencies they accept and there is a market for stable coins.
Furthermore, the payment systems that are being built, deal with this volatility directly and ensure that merchants receive the value of the item that they are selling from the buyer.
The volatility doesn't affect the transaction at the time of the sale and it doesn't affect the merchant afterwards either. If they choose to store their earnings in crypto, then they stand to make money if the price goes up. If they choose to hedge out of their crypto earnings then that's an easy step to take.
As we see further global integration, there is no doubt that models will improve; this is the beauty of a financial system still growing and adapting. We are able to transform it into a system that reflects the wants and needs of its user base.
Digital currencies will change the way we transact in the future; and the restraints of our current financial system will become the nails in the coffin of traditional banking. As the world moves towards rapidly re-inventing itself in almost every other industry, why not finance and banking too?
Will fiat money and traditional banks close their doors in the next five years? No. But just as the internet revolutionised banking two decades ago, so will cryptocurrency bring its own disruptions. Crypto has accomplished the feat of imagining and documenting a way for the world to be truly borderless. Right now, all you have to decide is whether to catch the wave early or watch it pass you by.