As it is right now, in all but a few cases “spending” your cryptocurrency is more or less synonymous with “exchanging it for national currency and then spending that”. It’s a good workaround, but generally unfortunate one for a number of reasons. Amount limits, pretty intrusive KYC done by the same entity that can link you your immutable public transactions, exchange rates and all the other quirks are just some of the issues. Needless to say, it would be much better, faster and way more comfortable to just pay directly with crypto. Like they do in China, but decentralized. But to get there, we must first break through the network effect.
Which brings us to my main question here - What can we as an organization and a community do to change this?
We may want to start with merchants who already accept payments in crypto. How do we find them, rate them and compare them? One way to handle this could be a Token Curated Registry of merchants with some kind of reputation management system.
As for those merchants who are still relying only on fiat currencies, educating them about crypto sounds like a safe first step. A lot of those people may not even know the pluses and minuses of what crypto payments have to offer, but they are painfully aware of the issues they have with credit card processing and online payments. And those issues are very real: high commissions, bad customer experience with refunds (debit card holders can wait up to a month to get the money back), very high turnover requirements to get card processing installed in the first place and many more.
Obviously, every merchant likes income and just loves increased volume of sales. With the relevant knowledge, they should be able to make the comparisons themselves and reach a decision.
It would be good to find out reasons why merchants would or wouldn’t consider accepting payments in cryptocurrencies. Some of my own educated guesses are:
a) What’s crypto, again?
b) tax complications
c) unstable fx rates
Can we run some kind of a poll? It would be good to get actual feedback from say small business owners. We have to identify obstacles in order to overcome them.
When it comes to success metrics, we can define them as two dimensions: width and depth.
Width represents sheer number of merchants of certain type, e.g. 10 pizza takeouts that accept ETH is twice better than 5.
Depth on the other hand shows what kinds of goods or services you can buy for crypto, with respect to regulation, logistics and infrastructure. This is one possible list of increasing levels of depth:
- Crypto for other crypto on the same chain - e.g. most Ethereum-based token exchanges
- Digital goods or services (including off-chain other crypto) - e.g. buy digital images (or anything that can be delivered digitally), API access quotas or BTC with ETH.
- Physical goods or services - e.g. pizza (or anything that requires delivery), haircuts, nail care, paintball reservations, etc.
- Specially regulated goods, e.g. vehicles or properties. Ownership of these typically regulated with special registries, special taxes may apply and usually the value is much higher than with every day transactions. It is safe to say that this level of depth would indicate complete adoption of crypto as a method of payment in any market or jurisdiction.
So, there were some of my
ramblings ideas. Have any comments, question, ideas of your own? How can we make this happen? Let’s break this network effect!