Bitcoin gets all the headlines. But step beyond bitcoin and enter the world of cryptocurrencies approaching mainstream acceptance. And as Keith Johnson, general manager of Ternio, said in an interview with PYMNTS, bitcoin has yet to live up to its hype as a game-changer in commerce — but there’s great promise for other cryptos to do so.
At present, he said, a number of factors have inhibited the adoption of bitcoin as a transactional currency, including the fact that it’s expensive and can be very slow.
“For example, if you wanted to buy a cup of coffee with bitcoin, that transaction could cost you $20 (in network fees),” Johnson explained. Additionally, there is a speed issue that needs to be addressed, since transacting with BTC requires the blockchain to be updated with a number of confirmations, which takes time. In periods of high network congestion, that can take hours.
And, he added, many individuals want to hold bitcoin as an investment, while the volatility that marks the price of bitcoin itself makes using it in everyday spending also less than attractive.
“But if you start looking at other cryptocurrencies, you can get to that point where you can have a transactional cryptocurrency that’s used for everyday purchases — they will have different traits, and they’ll be cheap (to use from a transactional cost perspective) and fast (meaning they will be able to be transacted quickly),” noted Johnson. “For example, with BTC, there must be multiple confirmations on the blockchain, and this takes time. They will be rolled out to merchants and more people will be able to accept them.”
Wider adoption will be driven, in part, by regulatory frameworks that enhance security and foster trust in using cryptos in everyday commerce.
“Governments and regulatory bodies all over the world are concerned with money laundering and illicit activity,” Johnson said, adding that “the tools that are in place will have to allow us to identify transactions that fit certain profiles. And [regulators] will have to allow us to report, consolidate and collect this information — and be able to report it to the authorities and regulatory bodies that need it.”
Those data collection efforts, in tandem with artificial intelligence (AI), can provide efficient risk scores that will make various stakeholders more comfortable with using cryptos, said Johnson.
“KYC will have to be built into the actual transaction flow,” he said — especially for relatively larger purchases.
More Mainstream?
As cryptos go more mainstream, he said, and any number of use cases proliferate, “the killer app, so to speak, can hold crypto, or it can be spent in real time.”
That requires the ability to convert those crypto holdings to fiat when it’s desirable to transact, said Johnson. He pointed to Ternio’s own middleware and blockchain-underpinned offerings that enable cryptos to be spent at 40 million merchants worldwide.
As reported last year, Ternio partnered with Visa as part of the payments network’s Fast Track program as Visa’s first crypto-focused enablement partner. In terms of the mechanics of the partnership, Johnson explained, Ternio allows other innovative companies access to Visa’s rails, with the ultimate goal of taking the “integrating it into the blockchain world.”
Just a few months into the partnership with Visa, which was announced in October of 2020, interest in joining the Fast Track initiative — and Ternio’s white-label services — has grown, with many firms coming to Ternio ready to start development. “They have some ideas of what they want to do,” Johnson said. “They may have their own cryptocurrency, they may have their own solution, be it healthcare, rewards or rebates, or other opportunities. And they really are ready to go to market.”
Ternio’s white-label efforts are focused on building a solution and infrastructure that allows partners to merge cryptos’ stored values and integrate them with the Visa network. The company’s crypto debit card, BlockCard, has seen 500 percent growth in usage rates, measured year over year. The company also offers an FDIC-insured checking account to help spur crypto-friendly banking, Johnson noted.
Through that checking account, users can purchase crypto to be held in custody. “Or you can send it directly to your own private wallet,” said Johnson.
Looking Ahead
Johnson said the movement toward mainstream adoption of blockchain and cryptos can be likened to the pivot seen a few decades ago by big-box retailers.
“If you go back maybe 10, 20 years, you have companies like Home Depot and other big brick-and-mortar stores,” he told PYMNTS. “They may or may not have had an online presence. But over time, with Amazon, they changed their game.”
Now those retailers still have brick-and-mortar stores, but they also have an online presence that is crucial to their future, he noted. The same trajectory may mark financial services and commerce.
“Your traditional banks and financial institutions have their own rails in place. And now they’re starting to dabble in blockchain and support cryptocurrency or digital currencies,” said Johnson, adding that “we’re going to see the merging of digital currency and cryptocurrency into the traditional rails.”
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