What needs to happen for crypto currencies to be viable?

There is a great nationwide debate going on about the viability of cryptocurrency. As a merchant you might accept it as a form of payment, you might not. If you are in the latter you are certainly not alone but you have undoubtedly wondered if it is something that you should at least look into. For now, cryptocurrencies seem to be here to stay and there is a path towards legitimacy for them but what are those steps?

Benefits of Crypto Currencies

Crypto currencies offer numerous benefits. They offer increased security thanks to blockchain technology, which is being incorporated into numerous other applications. As an alternative payment method it is possible to cut out the middleman and make payments directly to someone meaning fewer fees paid to services like JLE to facilitate payments. Merchants are less able to take advantage of customers by making fraudulent transactions and customers have less ability to claim fraud about a purchase thanks to blockchain.

A Fundamental Change by the Government

The first major thing that needs to happen is legislation. Cryptocurrencies are viewed by the IRS as property and not currency. If crypto is used for a purchase the user should document losses or gains just like buying or selling stocks which is not practical for its use with small everyday purchases. Legislators are beginning to rethink this as first seen with the Tax Fairness Act of 2017 to help remove some of the hurdles. If it were to be classified as a currency this would not be groundbreaking. Some nations have also already classified cryptocurrencies as actual currency.

Next more goods or services will need to be available for purchase with cryptocurrencies. Right now it is impossible to live day to day with only crypto, even in more progressive locations like New York or Los Angeles. Right now there is low demand but if legislation is crafted to make crypto more mainstream that demand will most certainly rise and more merchants will accept it as a form of payment.

A Simpler Process

For crypto to truly take off the transaction process must be simplified. There are hundreds of currencies available and the transaction process is extremely complicated. Exchanges are volatile and many merchants stay away simply to avoid risk or situations like in February where an exchange’s founder and sole operator dies and locks all the money inside. This risk must be overcome if crypto is to become mainstream. What can help to do just that (or to at least change the risk/reward balance) is the speed of the transactions. With the current ability to cut out the middleman it is possible to complete a transaction and transfer funds in seconds rather than hours or days which could be a major draw for both consumers and merchants. This network will need to expand and become more robust in order for crypto to truly take off.

Consumer Education

Last crypto currencies will need to get themselves in front of the average consumer. Many consumers shy away both from a lack of understanding of how these transactions work and because it seems like only the criminal underworld uses these. When the average person has an interest in crypto chances are they will get involved. One suggestion is a more modern adaptation of what Visa and MasterCard did in the 1970s of mailing cards to prospective users asking them to use the cards. As the general public becomes comfortable with the concept more people will get on board and it will become more mainstream.

Should this happen the payment industry could be completely reshaped. While this is not going to happen overnight, or probably even within the next few years it is something to keep an eye on and at JLE Business Consultants we are doing that. We are trying to stay as well ahead of the trends so that when the time comes we will have the answers that you need.