Miles Paschini, CEO at fintech bank FV Bank, told Cointelegraph :
“The use of cryptocurrencies as a form of payment has progressed in the past year but primarily into the area of settlement layers, advancements have been made with stablecoins, in particular with USDC and to some extent Ripple (XRP). The developments we have seen in the settlement layer are not exactly visible to the retail customer. For example, stablecoins denominated in national currencies can be very efficient in moving funds between institutional parties.”
The growth of crypto payment networks and public interest
According to a report card from Visa, its network processed over $ 1 billion in crypto transactions in the first quarter of 2021, which increased to $ 2.5 billion by the inaugural one-fourth of 2022. The report card highlighted that crypto payments have become increasingly democratic with the ascent in the habit of stablecoin payments. Mastercard partnered with USD Coin ( USDC ) stablecoin issuer Circle to facilitate crypto-based requital options for millions of users. With the rise in crypto-linked debit cards, Nexo has come up with its crypto collateralized recognition card in association with Mastercard. Nexo has issued 55,000 cards since its launching in April that could be used at around 92 million merchants worldwide, allowing investors to spend up to 90 % of the decree measure of their crypto. Antoni Trenchev, co-founder and do spouse of Nexo, told Cointelegraph about the rise of crypto as a class of requital, claiming crypto-linked cards are making it easier for retail customers to spend their digital assets just like decree. He explained :
“The concept of HODLing is well understood in crypto, but with crypto-backed cards, it is now possible to hodl your digital assets while also using these to spend on day-to-day transactions. This, in turn, has carved a pathway whereby crypto can be both an investment and a form of payment, increasing its utility as an asset class.”
He added, “ Crypto cards offer the possibility of spending your crypto directly, which automatically converts your crypto from a linked wallet into the decree currency needed to pay. ” many analysts besides like to point to the get up in stablecoin borrowing as a key metric function of crypto payments. Brandon Rochon, a data scientist at Web3 infrastructure provider Covalent, explained how the stablecoin USDC has managed to see over a 10 % surface in adoption year-on-year ( YoY ) despite a downturn in the market. He explained :
“ Looking at USDC, its supply grew from $ 373 million in July 2019 up to $ 1.0 billion in July 2020, representing a ~168 % increase in the annual time frame. This same 168 % growth was achieved in the first three months by October 2020. Over the adjacent year, the add grew at a rate of 2500 % to ~ $ 25 billion, at which orient Mastercard stepped in and launched its simplify payments wag offering with Circle in July 2021. Since this sharpen, stablecoin supply has continued to grow at a pace over 120 % YoY despite the market downturns in the -50 % + range, signifying impregnable utility. ” Omid Malekan, adjunct professor at Columbia Business School — where he teaches crypto — believes that stablecoin is a fairly metric to measure the requital use of crypto at present. He told Cointelegraph : “ One direction to measure crypto use in payments is to track stablecoin volumes since those serve a much more express affair than saturated crypto coins. On-chain book for payments has been very hard recently. Most of that is to accommodate inquisitive activeness ( people buying and selling crypto, borrowing in DeFi, etc ) but payment is a requital, and a significant character of the traditional organization ’ s payments volume is besides related to capital market natural process. ”
Crypto payments beneficial for merchants and consumers alike
While the infrastructure side of crypto payment has seen frightful growth, it would not be possible without the willingness of merchants to accept it. several surveys and reports have highlighted that merchants have benefited evenly from the crypto payment integration despite technical barriers and complexities. Another report from PYMNTS highlighted that more than 75 % of the customers in the United States are looking forward to using crypto as a form of payment in 2022. While 85 % of businesses with over $ 1 billion in annual sales are integrating crypto payments to gain more customers, many early merchants have said their overseas transactions increased and they found a new customer nucleotide after crypto requital integration. The key reasons listed by merchants for accepting cryptocurrencies as payments include significant cuts in transaction costs, elimination of middlemen and on-boarding of new customer bases from around the world. Stablecoins form a significant collocate of outgo by consumers. however, many analysts besides point toward significant growth of layer-2 networks over the past year. For exercise, the Lightning Network, the secondary coil layer on top of Bitcoin, has seen fantastic emergence over the past class. Bitcoin Lightning Network capacity grew by 4,000 BTC, foremost breaking the 1,000 BTC barrier in August 2020 and the 2,000 BTC barrier in July 2021. The capability has doubled in the space of 18 months.
Andry Lebedev, co-founder of Web3 payment infrastructure fast Swipelux, told Cointelegraph :
“At the moment, there is a rerolling of transactions from L1 to L2 thanks to the introduction of zk-rollups and optimistic rollups. Consequently, we see significant growth in transactions for the protocols and stabilization of transactions for Ether and Bitcoin at 125,000 and 240,000 transactions per day, respectively.”
He added that there has been an “ up vogue in the geomorphologic deepen of cryptocurrency, which alternatively of transfer of value becomes a form of requital in the emerging Web3. ” Crypto payment ’ mho popularity depends on the overall borrowing of cryptocurrencies ; the more people that are aware of and understand the nascent fiscal asset class, the more people will adopt it, as proven by several studies mentioned above. The excitability aspect of cryptocurrencies could be far dialed down by converting them into stablecoins .