There are numerous reasons why a merchant may be hesitant to accept digital currency payments. In many cases, coins become popular quickly but then fade into obscurity, so there's no guarantee that customers will still be using today's trendy token in a week or a month.
Perhaps even more importantly, volatility continues to reign supreme in the cryptocurrency space, even among the biggest coins by market capitalization. For example, since the beginning of the COVID-19 pandemic, the price of one bitcoin has skyrocketed from below $10,000 to over $53,000. This could wreak havoc on a merchant's financial operations.
- There are numerous reasons why a merchant may be hesitant to accept digital currency payments.
- Nonetheless, many American consumers wish to have the option to use cryptocurrencies to pay for the items they buy in stores.
- In this U.S., approximately 2,300 businesses accept bitcoin as a form of payment.
- While bitcoin's high volatility, transaction times, and fees can cause a barrier for many customers not eager to risk spending more than they need to for small purchases, altcoins can provide cheaper and faster transactions.
Nonetheless, many American consumers wish to have the option to use cryptocurrencies to pay for the items they buy in stores. In 2014, the Internet retailer Overstock.com became one of the first big online sellers to accept direct bitcoin payments. In October 2020, PayPal started allowing customers to buy, sell, and hold bitcoin and other virtual tokens using their online wallets. Tesla (which had invested significantly in Bitcoin) also announced that it would accept bitcoin as a form of payment, but in May 2021 reversed course citing environmental concerns surrounding Bitcoin mining.
Growing public demand is likely to tip the scales toward cryptocurrency payments eventually, although many stores are reticent. One of the biggest questions, which remains to be settled in the debate over whether and how to incorporate digital currencies into the payment systems of traditional businesses, is which coin or coins will be best suited to the task? Below, we'll examine some of the reasons why bitcoin or other altcoins could be the best choice.
As the leader of digital currencies, bitcoin enjoys more than just the largest market capitalization and the most prominent name. In fact, bitcoin is at the front lines of cryptocurrencies making headway in traditional stores. Approximately 15,174 businesses worldwide accept bitcoin. In this U.S., approximately 2,300 businesses accept bitcoin as a form of payment.
The reasons why bitcoin might be the best option for a store considering accepting cryptocurrency payments are clear. Bitcoin is the most popular digital token available, and it has been since the cryptocurrency movement began. Stores worried about whether a large enough pool of customers will trade in a particular token should have their fears allayed by bitcoin. More than 21.2 million adults, or about 14% of the U.S population, own cryptocurrency.
Co-founder of crypto-merchant search engine Spendabit, Devan Calabrez, suggests that "BTC is by far the dominant cryptocurrency for transactions. This is likely due to the maturity of BTC, its 'brand recognition', and the momentum of bitcoin."
Bitcoin has also been one of the most resilient coins over the past several months of turbulence in the digital currency realm. This might also enhance its perceived approachability for many merchants. On the other hand, that bitcoin has preserved its value better than many of its competitors could also be an argument against its incorporation into traditional merchant payments, as investors may be disinclined to get rid of bitcoin that they own if they think it will continue to gain value.
Altcoins, the large group of cryptocurrencies that fly somewhat under the radar in comparison with bitcoin, have some compelling reasons for adoption as well. While bitcoin's high volatility, transaction times, and fees can cause a barrier for many customers not eager to risk spending more than they need to for small purchases, altcoins can provide cheaper and faster transactions.
BTC has the highest transaction fees of all major digital tokens, with the current average transaction fee at around $36.96. An alternative like XRP (the fourth-largest cryptocurrency by market capitalization, for instance, is just a fraction of that: XRP's transaction fees on average are $0.0041. Bitcoin cash and dogecoin are also much lower: $0.0073 and $0.728, respectively. Of course, these fees change all the time, so there's no telling whether this will hold true forever.
Many altcoins also offer faster confirmation times than bitcoin. This is appealing to both customers and merchants for obvious reasons. On the other hand, though, altcoins carry risks associated with being smaller and less popular than bitcoin. A merchant can never be truly sure if an altcoin will remain viable or popular.
For some merchants the decision between bitcoin and altcoins is an easy one: just accept a variety of different tokens and call it a day. For others, it comes down to one or the other. As time goes on, it will become clearer which coin or coins come out on top.
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