Last year, people started learning about and buying Bitcoin and other cryptocurrencies. This year, they’ll start using it.
So says Stephen Pair, CEO of crypto payments processor BitPay. The prediction, made in a conversation with PYMNTS’ Karen Webster, dovetails with research showing that 14% to 15% of the American public owns or owned crypto — the vast majority of them bitcoin, but increasingly Ethereum’s ether tokens. And PYMNTS’ May 2021 Cryptocurrency Payments Report found another 17% already planned to dip their toe into crypto by the end of the second quarter of 2022.
See more: Cryptocurrency Payments Report: How Consumers Want to Use It to Shop and Pay
The numbers are clearly growing.
“I think in 2022, you’ll see many more people — that next wave of people — getting interested in crypto both from an investment perspective and a ‘let’s try it for a payment’ [perspective],” he said. “There’s going to be many more places with that service — that you’ll be able to spend crypto and do it in an in-person setting, which may make people more comfortable trying it out than perhaps if it’s on a website where they’re not sure if they’re doing it right or wrong.”
Of course, that can only happen if people have a place to spend their crypto — an increasingly easy proposition. Right now, most people who spend crypto do so using a Visa- or Mastercard-branded debit card issued by a cryptocurrency payments provider or exchange, which works at the point of sale by selling the crypto on your card and transferring cash to the merchant instantly behind the scenes.
In addition, a small but growing number of companies are using services from BitPay and its competitors that let customers pay directly with bitcoin and other cryptocurrencies. At that point, the merchants can decide to sell it themselves or hold onto it.
“I think it’s just a matter of time until it gets to a point where it’s both easy and there’s a compelling reason” to use crypto at the point of sale, Pair said. “There could be an inflection point in 2022 where it becomes more ubiquitous — where it starts to become a little unusual for you to not have some crypto and to have tried it out and maybe bought a little with it.”
What’s the Why?
Still, getting to that point requires more use cases to give consumers a reason why they should switch to using bitcoin to buy things instead of using a credit card or services like PayPal or Venmo.
Right now, Pair admitted, there’s “not a whole lot.” But where pessimists see a long, uphill battle for mainstream acceptance, he sees a marketplace ripe for reinvention — the potential to transform everyday tasks like paying bills by bypassing legacy infrastructure.
See also: Nearly 60 Percent of Consumers Want To Buy Stuff With Crypto
“There’s not really a lot of great bill payment solutions out there. You might give somebody your credit card and they bill it every month, but you don’t have a lot of control over that. Some of the older check-free, bank-based bill payment services are pretty antiquated and not very engaging. I think there’s a lot of opportunity to innovate.”
Blockchain offers possibilities that were not conceivable in the past, Pair said.
“There are a lot of benefits depending on who you are and where you are,” he noted. “If you are in a part of the world that isn’t well served by the banking system you can now pay for things using cryptocurrency — you just set up a wallet and you load it, do some work and get paid in crypto, and then you’re able to spend it right away.”
Paying a contract worker in Europe a few thousand dollars can rack up fees of more than $100 and there are other fees banks impose. That’s a use case Pair says he hears “over and over again” at BitPay. Fee avoidance also applies to merchants now paying Visa and Mastercard a big chunk off the top of every sale.
“I think more and more companies are going to prefer it as a payment method,” he said. “You may find some companies that will only accept cryptocurrency as the method of payment — from a consumer perspective, that could be the killer app.”
Chargebacks are another big selling point for merchant use of crypto. Specifically, there aren’t any. Blockchain transactions are final as soon as they are written onto the blockchain — 10 minutes for bitcoin, and seconds or fractions of a second for newer, competing blockchains’ tokens.
“It takes 10 minutes to confirm, but the transaction’s instant,” Pair pointed out, noting that the 10-minute gap is largely invisible on BitPay. “It takes 10 minutes to confirm and to make that payment final. It takes Visa and MasterCard 90 days to do the same thing. So, Bitcoin is way faster.”
Overcoming Other Pressures
Two big problems remain.
The first is volatility. Bitcoin, ether and other cryptocurrencies frequently move 5% in a day, and fluctuations of 10% or more aren’t unheard-of. Traders typically solve that problem by exchanging the crypto for fiat instantly.
But Pair takes a longer view. The dollar, after all, is hardly immune to volatility — inflation took a big bite out of its purchasing power last year, and keeping cash in the bank at low-interest rates doesn’t offer a very compelling return on investment.
“I think you can look at bitcoin’s history and say yes, it’s been volatile — it’s gone up, it’s gone down. But over sufficiently long periods of time, it’s trended up,” he said.
The question is what is it going to be doing “in any given window of time,” he added.
As for the growing perception that bitcoin’s huge appetite for energy, and the resulting pollution, are enough of a hazard — from both an environmental and PR perspective — that it is pushing companies away from accepting bitcoin, Pair is undisturbed.
“Every year that goes by, we make great strides in terms of usability and making it more approachable,” he said.
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