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Will Bitcoin (BTC-USD) Become a Widespread Medium of Exchange? His lack of Acceptance as a payment method by merchants and the high transaction costs “are changing now,” Morgan Stanley analyst Sheena Shah wrote in a note to clients on Thursday.
room to grow? The global crypto market cap was recently $1.87 trillion, which may sound big, but not in comparison to more established asset classes such as global equities (~$90 trillion), bonds (~$120 trillion) and gold (XAUUSD:CUR) (~$12 trillion), according to 2021 figures.
A number of payment companies in particular are looking to expand their reach in the growing decentralized space. For example, payments company Strike recently partnered with point-of-sale provider NCR (NCR) and rewards-based payments company Blackhawk Network, which “could mean a large number of physical stores, restaurants and cafes across the US in will be able to accept bitcoin payments in the near future,” Shah explained.
Also, in early April, Strike partnered with e-commerce platform Shopify (SHOP) to allow merchants to accept Bitcoin (BTC-USD) payments in dollars via the Lightning Network, the most popular BTC scaling solution. “This is no small thing,” said Mike Fay, SA staffer, on April 14. “The merchant benefits from this type of exchange because the merchant doesn’t have to pay traditional payment processing fees through traditional payment tracks to purchase goods over Bitcoin’s Lightning Network could ultimately result in lower prices for everything since the merchant doesn’t need to factor the processing fee into the cost of the item he added. The “evolution” of crypto adoption doesn’t stop there. One more payment transaction Fidelity National Information Services (FIS) announced in early April that it will offer merchants the ability to receive payments directly in USD Coin (USDC-USD), a stablecoin pegged to the US dollar.
Keep in mind that fees for Bitcoin (BTC-USD) transactions over the Lightning network are close to zero, compared to the average fee for BTC transactions on the Proof-of-Work blockchain of around 1.50 US dollars, making the Layer 2 payment protocol “much more convenient for small payments that would otherwise be made with a debit card,” the note reads.
Given that 85% of sales in the US are made in stores rather than online, it is more important to monitor the evolution of crypto adoption in physical stores, Shah said. And while Bitcoin (BTC-USD) price swings are known to be wild, volatility could subside significantly if the use of BTC as a means of payment, either through cards or payment terminals, gains broader acceptance, Shah noted.
Additionally, Starbucks (SBUX), having recently partnered with digital asset platform Bakkt (BKKT) to offer crypto payment top-ups via their app, is now one of the largest retailers carrying Bitcoin (BTC-USD) in its stores accepted. Earlier in April, Bakkt, which allows customers to seamlessly access all digital assets and make transactions, had given American Bank customers access to Bitcoin and Ethereum (ETH-USD).
But not everyone is on board. E-commerce giant Amazon (AMZN) CEO Andy Jassy said in mid-April that his company was “probably not close” to adding crypto as a payment mechanism.
Earlier in the week ending April 22, Australia’s financial regulator unveiled a roadmap for crypto policy as interest in the space increases.
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