Most tech predictions already name cryptocurrency wider adoption as one of the key trends for the nearest future. The ball is already rolling, and once the payment infrastructure is built and all of its participants receive incentives to use cryptocurrency, it has all the potential to emerge into a new global economy. But before that, the industry needs to face some of the challenges and tackle them. Yurii Olentir, Paytomat CEO, calling out to the market.
There are several reasons why cryptocurrency is becoming more mainstream.
First, the hype created by the numerous success stories of 18-year-old Bitcoin millionaires drove mass attention to this market, leading people to buy into ICOs, trade or keep cryptocurrencies as an investment. As a result, around 7% of users from the largest cryptocurrency markets own crypto, and another 4% plan to buy some in the near time (according to the survey).
Second, traditional payment systems and big market players turn their attention to cryptocurrency. The American Nightlife Association, which unites 30,000 merchants, just recently declared its commitment to drive crypto adoption in the US.
Finally, more and more fintech startups build their business model around connecting cryptocurrency with the real economy. There are already crypto debit cards, plug-ins for existing point-of-sale software, stand-alone terminals, add-ons for e-commerce etc., allowing merchants to easily and quickly start accepting cryptocurrency as a payment. As a result, the number of places where users can spend their digital assets has grown dramatically over the past year, emphasizing on “currency” in the word “cryptocurrency”.
Even accounting for this, people find it difficult to imagine paying with crypto for everyday purchases. For example, one of the recent surveys by the Center for European Economic Research (ZEW) showed that only 13 percent of Germans by 2020 can imagine themselves buying a cup of coffee for Bitcoins, and 23 percent say that by the 20th they maybe imagine themselves conducting similar operations in the US or Japan. What is this – a total victory of the fiat world or just signals that we should do better as an industry? Well, as a representative of the company that works in the area of crypto-payments, I am sure that latter is true, and the situation can drastically change several times before then. However, the question remains: what exactly do we need to change?
Let’s start with the cause. As in any complex issue, there are several of them. However, each problem has more than one solution. In this post, I will describe only those decisions that we use as a guide in Paytomat. Without further ado, let’s get to it.
The HODL-FOMO problem
The behavior pattern of any user isn’t being shaped in just one day. Take a look at the market, and you’ll see a strange situation: even during a gradual decline in capitalization, users prefer to “wait and see what happens next”, because they still remember the times when the average Joe could have made Xs in three weeks and buy himself a Lamborghini. To change this behavior, the user needs to see benefits. Yes, they may not be comparable with the potential, but ephemeral profit. However, they need to be understandable and useful.
A variety of loyalty programs offer such incentives, which become more useful when more merchants offer the possibility to pay via crypto. Having received a “prize” for using their crypto once, a user will remember this for a long time and think twice next time whether they should “hodl” their assets or spend them and make profit. We want to see crypto as a liquid asset
The “store” problem
Payments via cryptocurrencies are undoubtedly cool and innovative, but the world of 2018 isn’t yet the most crypto-user-friendly place. Yes, there are bold early adopter merchants, but the majority is reluctant to innovate, which holds back the penetration of new payment methods on the market.
To solve this problem, we’ve used a versatile approach. Firstly, even if you have only one platform, it should be scalable: each type of the merchant needs the product to be designed perfectly for their specific business processes. If your primary market is the internet, we have a special plug-in that you can install in 10 minutes. Maybe, you have a traditional brick-and-mortar business with a POS system? No problem, we have developed an integration with your POS-provider, where Paytomat works as an add-on protocol that connects fiat and crypto worlds. Without the need to purchase additional equipment or anything else. If you have an offline business, but don’t own any centralized point-of-sale solutions, then you’re sorted too: we can offer merchant-up, which allows accepting crypto-payments in several clicks.
Secondly, merchants who pioneer this new economy can count on special offers – from zero fees to percentages from the Paytomat’s commissions.
The convenience problem
Imagine the following situation: you have a friend to whom you explained what blockchain means, how crypto works and even showed them where it could be accepted. Now ask them to buy their first Bitcoin, choose a wallet, transfer assets and then pay via BTC for some goods. Most likely, your friend will fail hard at this task. Moreover, they will fail at it not because they lack some special technical knowledge, but because of the simple inconvenience the vast majority of the proposed solutions have. What’s the way out? It might sound obvious, but the tools to interact with the cryptocurrency world must be user-friendly and intuitive.
Your crypto-wallet has to combine all the necessary tools for the user in one place. And every developer should understand that money transfering should not take more than three clicks, and the way it’s conducted shouldn’t remind anyone of programming in the 80s. At the very least, our team is guided by such principles developing the products for the end-user.
The Consolidation problem
Instead of having the cake all to ourselves, we believe the real strength of crypto-teams is in their unity. For years, the main players of the market have reminded everyone the industry lacks alliances that could express consolidated position on its development to regulators, protect the industry against the biases of traditional banking and introduce unified technological standards. Such attitudes will create a unified world, which will be much more welcoming to new adepts.
Lastly, I would like to note that these aren’t in any way all the challenges that we’re facing. For example, look at the pressure from regulators and traditional banking. In this material, I deliberately avoided them, because this isn’t a story about the problems of the end user. It’s a story as about to us – the very companies who are building the future of crypto-market.