Is bitcoin a viable payment alternative

Most of the attention has focused on cryptocurrencies as an asset class dominated by Bitcoin and a few other tokens. Speculators buy, hold and sell. Cryptocurrencies have the potential to be used as a payment system.

A person can send money to another person using cryptocurrency registered on the blockchain.

Accordingly, the critical question is not whether people can use cryptocurrencies as a payment mechanism, but whether they can be a viable challenger to existing fiat currency payment systems.

Cryptocurrencies could be a game changer

Image: Pixabay

The latest launch of The Bank of London as a self-proclaimed disruptor of banking fundamentals, particularly end-to-end international banking (only the second clearing bank launched in the UK in the past 250 years), also indicates that the change is in progress. the air.

A revolutionary innovation that offers much simpler, faster and less expensive solutions is perhaps long overdue.

Some argue that virtual currencies, or the underlying blockchain, could underpin these solutions.

Forms of payment Bitcoin would be valuable for

The possibilities of international payments are unlimited. Current procedures are long and costly.

We are seeing widespread adoption of cryptocurrency-based international payments for legitimate purposes; however, the volume is low, which can hinder progress.

It’s unclear if emerging tech players are driving this shift or if current players can move fast enough to stay in the game.

There are many other hurdles to overcome for volume trading, but the market is huge. Undoubtedly, the technology has enormous potential.

Many players are vying to be the first to create truly scalable, secure, interoperable, robust and energy-efficient blockchains.

We believe they will succeed. Considering the potential that bitcoin holds, adding it to your portfolio would be a good move. The focus will shift from the cryptocurrency element to the usefulness of the mechanism.

The cryptocurrency itself can become invisible to sender and receiver, with the transaction initiated and completed in fiat currency. Cryptocurrency simply becomes part of the technology solution.

Who will be the future participants?

Crypto currency market with a bitcoin
Image: Unsplash

Will today’s payment processors be able to develop and adopt new technologies fast enough to avoid Kodak’s fate? Will their value-added services and market dominance ensure their survival, albeit in a very different form?

Although cryptocurrencies and blockchain technology provide the infrastructure, the end-to-end payment solution is more than just wire transfers.

The uses and interactions surrounding it will be critical, and existing players will have a competitive advantage in these areas.

The threat to existing players does not stop with infrastructure providers (eg Swift, Mastercard, CHIPS).

What happens to commercial banks advising and confirming payments if customers can make international payments quickly, cheaply and securely?

Regulatory challenges are key, but let’s assume for now that an appropriate international regulatory regime will emerge.

Undoubtedly, regulators will play a critical role in the widespread adoption of such a payment infrastructure. In the meantime, many governments are considering issuing central bank digital currencies (CBDCs).

While not about cryptocurrencies, we could see a convergence of technologies and concepts and central banks taking back control of the payments space.

Conclusion

Predicting the future of payment systems and the role of cryptocurrencies in their evolution is impossible. However, we believe that payments are about to undergo a fundamental change that has never happened before.

New entrants will replace many of the main incumbents. A few Holders may be adaptable enough to survive. As a result, payouts will appear drastically different.

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Chris has been blogging since the early days of the Internet. It mainly focuses on topics related to technology, business, marketing, and just about anything tech-related. When he’s not writing, you can find him playing guitar or cooking up a nasty storm for your friends and family.

About Matthew R. Dailey

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