The footprint of cryptocurrency on the future of payments

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As we approach the end of 2017, we’re thinking about what’s next, about how the future of payments will unfold. 

There are a couple payment technologies that continue to generate buzz: blockchain and cryptocurrency.

Since the first release of bitcoin in 2009, cryptocurrencies have been linked to problematic transactions. But what we currently see in the market is that cryptocurrency use is growing as consumers become more and more familiar with them. New crypto services are appearing, and shops and retailers have started offering them as a payment option. In the future, cryptocurrencies are very likely to become a common payment method.

Main conditions for successful payment methods

Speed, safety, and efficiency.

If all these conditions are met, cryptocurrencies can successfully act as payment methods. Efficiency can especially be improved at the moment. There’s been a lot of discussion on the fact that mining cryptocurrency is compute-intense and high in electricity consumption; e.g. a single Bitcoin transaction could power the typical U.S. household for roughly 5.5 days. Therefore, there’s a lot of room for improvement in this area.

 

 

Why are cryptocurrencies different than other payment methods?

While different innovations in payments are aimed at applications in existing technologies, cryptocurrencies show an entirely new transaction ecosystem. This kind of ecosystem facilitates the so-called “smart money and contract” for the exchange of money, content, property, or anything of value. This runs on the blockchain exactly as programmed without any possibility of censorship, downtime, fraud or third-party interference.

Cryptocurrencies are completely interchangeable with euros, dollars and more – something that didn’t exist until now. We’re entering a completely new area, one that will continue to develop given the attention that revolves around cryptocurrencies.

What’s next? 

As payment methods have very slow development, being mainly driven by customer behavior, cryptocurrencies will certainly play a more important role than they do today, eventually transitioning towards a method of payment. Consumers on the other hand will only accept and adopt using them when they feel it’s safe to do so.

A good example of this shift in behavior can be seen with contactless payments. Nowadays, this is a pretty stable trend, but it started changing about five years ago. It’s likely the same could happen with the development of cryptocurrencies. In the future we could see a number of different cryptocurrencies next to euros.

The most dominant cryptocurrencies on the scene include bitcoin, with a very safe and strong infrastructure, litecoin, which is easier to process and will play a much bigger role in small transactions, and ethereum – the most flexible of all. Etherum allows for the development of potentially thousands of different applications all on one platform, making the process of creating blockchain applications much easier and more efficient.

Last, but not least, a trend that I believe will become a basic habit—part of consumers’ daily lives—is using three or four different currencies for different transactions instead of just one. So, together with the other industry players, I’m excited to see the upcoming groundbreaking developments in payments and where this sector will take us.

This interview was first published by the Dutch Television channel, RTL Z.

The author

Gijs is one of the three Payvision's co-founders and acted as our COO until April 2020. He’s got extensive knowledge on the e-commerce and global payments industries, especially when it comes to joint ventures and strategic investments. With his industry expertise and know-how on the growth of the e-commerce sector, Gijs has become a distinguished panelist at events.

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