Andrey Diyakonov is commercial director of Kies.com, a MetaFi (CeFi/DeFi) ecosystem based on CeFi solutions from crypt and Charism’s DeFi protocol.
At the start of the year, all digital asset news focused on the ongoing crypto winter, the bankruptcy of lenders and other projects, and major events such as the bridge hack. Ronin fromAxie Infinity or the collapse of the UST algorithmic stablecoin of Terra.
Surprisingly, a significant change has been observed in recent months. Despite cryptocurrency prices staying close to the current low market, media coverage of the industry has been quite positive in recent days.
The reason for this change is quite simple. In recent months, a growing number of leading companies and government agencies have begun to embrace digital assets for payments.
Accelerate the adoption of cryptocurrencies by companies and states
In August 2022, while Gucci has expanded its list of digital assets by introducing theApeCoin and that the chain of luxury resorts Soneva started accepting major cryptos at the addresses in the Maldives and Thailand, Oxford City became the first non-league football club to integrate cryptocurrency for matchday payments.
In addition, companies have expanded the use of cryptocurrency payments in Australia and Argentina. Citizens of the latter can now use a prepaid card resulting from a partnership between Binance and MasterCard to transact with cryptocurrency traders. Meanwhile, Australians can now buy fuel and other goods with their digital assets at the 175 locations ofOn the run.
At the same time, states are becoming increasingly aware of the use cases and potential benefits of cryptocurrency payments. Of course, central bank digital currencies (CBDCs) continue to play an important role in government adoption of cryptos, especially given that China is about to launch its digital yuan (e-CNY). While visitors and residents can use e-CNY to buy subway tickets in Ningbo and Beijing, bus tickets can be paid for with this state-issued digital item in Guangzhou.
Smart Marketing or Real Signs of Cryptocurrency Adoption?
Big brands like Gucci, Balenciaga and Tag Heuer joining companies like Microsoft, PlayStation, AT&T and Subway to accept cryptocurrency is certainly good news for the industry.
However, before imagining Bitcoin (BTC) and other major cryptocurrencies peaking, it’s worth considering whether this is a genuine, clear sign of adoption, or just a sudden marketing orchestrated by these brands.
Like it or not, big companies are using cryptocurrencies for payments to meet growing consumer demand. In the case of Gucci, the luxury brand probably decided to integrate ApeCoin due to strong customer interest in the popular project’s non-fungible tokens (NFTs). Bored Ape Yacht Club (BAYC), which celebrities love Eminem and Snoop Dogg.
With an estimated 320 million cryptocurrency users worldwide, many consumers have realized the benefits of crypto payments. Compared to conventional forms of payment, digital assets are cheaper and faster to transfer due to the lack of intermediaries in transactions. At the same time, if users own their funds directly with the non-custodial wallets, they do not need to use a bank account, credit card or other financial institution services to make their payments.
For businesses, the benefits of crypto payments are even more apparent. Compared to traditional providers that typically charge between 1.5% and 3.5% for processing credit card transactions, a recent study found that it costs businesses only about 1% to accept digital assets with a competent processor.
The savings in fees and speed of transactions is a great opportunity for traders. If they can more effectively target prospects who are already familiar with cryptocurrencies, they are also much less at risk of unfriendly behavior i.e. fraudulent chargebacks.
Who is leading the way in cryptocurrency adoption?
In the coming months, I expect more luxury brands, especially those operating in the NFT and metaverse industries, to follow in Gucci’s footsteps and embrace crypto payments. Growing demand from merchants is likely to give payment giants such as MasterCard, Visa and PayPal all the more reason to launch new digital assets or expand their existing offerings to meet business demand.
At the same time, as future metaverses from tech companies like Meta and Microsoft get closer to launch, we could see an acceleration in cryptocurrency adoption in this area as well, where these assets can be used as a means of payment in virtual worlds. Whether and to what extent these new efforts will be sustainable and resistant to regulation remains to be seen. Meta hasn’t fully recovered from the flashback of the Scale. The degree of decentralization and peer-to-peer (P2P) of these infrastructures is yet another area of uncertainty.
Next year, we may also see new government initiatives aimed at reaping the benefits of cryptocurrency payments on all continents, from Iran to Argentina’s Mendoza Province, to the African states. However, I think all these efforts will be slowed down by the attention that may be given to the development of CBDCs.
Therefore, I expect companies to lead the way in adopting cryptocurrency payments in the coming months – or at least until China completes the nationwide launch of the digital yuan, paving the way for millions of new cryptocurrency users.
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