Some Promising Signs for Crypto Acceptance

Seven months ago, our piece for this space was headlined, “So, Where Are We With Bitcoin?” The concern then was a steady climb in Bitcoin’s value and whether it constituted a bubble. The associated question was whether the cryptocurrency could ever establish itself as a means of payment, either online or in stores. So we thought it was time to update what we know and have another try at the acceptance question. Spoiler alert: that question remains more promise than reality, though there has been some progress.

First, it may be useful to review briefly just why people might be interested in any cryptocurrency as a means of payment. In theory at least, the stuff addresses several key concerns these days in digital payments. One such concern is for so-called faster payments. The Fed has expended much time and ink in helping the industry evaluate faster-payment schemes. If they’re working right, digital currencies process in the blink of an eye.

Another concern is cost of payment. Merchants have been at loggerheads with card networks and issuers for years over this very issue, a bitter contest that has spawned lawsuits and federal legislation. Again, if they’re working right, acceptance costs for crypocurrency are exceedingly cheap.

Finally, a big headache with card transactions is chargebacks. There are any number of reasons for transactions to be charged back to the merchant, but in any case the returns are a headache. As currently conceived, cryptocurrency transactions are irrevocable.

So it’s no surprise, despite price volatility, blockchain congestion, high fees, and pokey confirmation times, that the promise of cryptos like Bitcoin continues to hold its allure.

But are more brick-and-mortar or online stores accepting any of the myriad cryptos (information site Coinmarketcap.com tracks almost 1,600 of them)? Hard to say. There’s no central authority checking on this. Still, there are some promising signs lately. In February, the big exchange Coinbase launched Coinbase Commerce, an acceptance platform enabling merchants to take Bitcoin, Bitcoin Cash, Litecoin, and Ether.

Meanwhile, independent sales organizations are starting to get into the act. One of these ISOs, Aliant Payment Systems, has already started marketing Bitcoin, Litecoin, and Ether to merchants. ISOs are largely responsible for the widespread acceptance of credit cards, so they may be best positioned to do likewise for digital currencies.

Last year, Bitcoin’s value multiplied by a factor of 20, then crashed as 2017 came to a close. Such moment-to-moment volatility deters merchant acceptance as sellers and buyers struggle to cover purchase prices. Lately, though, Bitcoin has calmed down, and so have its costs and confirmation times. Self-correction may just be this decentralized currency’s signal virtue.

—John Stewart, Editor, john@digitaltransactions.net