The world is ready for cryptocurrency, according to the latest surveys from Deloitte, PYMNTS.com and BitPay. So…which crypto could actually make it as a currency? Bitcoin (BTC-USD)…or stablecoins?
We’re getting some interesting answers to the question lately. Let’s flip through the recent developments and see what investors can do about it in their portfolio today.
Survey Says: Consumers and Retailers Attracted to Crypto
Tuesday’s report from PYMNTS.com and BitPay had some of the biggest numbers I’ve seen yet. When researchers surveyed 2,334 consumers and 202 merchants in February and March, they found:
23% of consumers said they held crypto at some point in the previous year. That jumped from 16% the previous year.
46% of merchants said they were accepting crypto payments. That rose to 85% of merchants with $1 billion or more in online sales per year.
55% of consumers with crypto held it as an investment, while more like 30% got the crypto for “transactional reasons.” This reasoning was noticeably stronger among Gen Z and millennials: 37%.
85% of merchants felt ramping up crypto payments would help them attract new customers, and 81% of them liked the ability to “eliminate middlemen” from the transaction.
77% of merchants accepting crypto said the transaction costs were smaller. Researchers noted that they’d be charged around 1%, versus 1.5%-3.5% for credit cards and other methods of payment.
Deloitte’s survey (conducted in December) was more geared towards future crypto plans at retailers, according to 2,000 senior executives surveyed.
64% of these retail execs saw “significant consumer interest” in crypto. 54% of execs at large retailers have invested more than $1 million on crypto payment systems so far.
85% of the retail execs agreed: “My organization anticipates that digital currency payments will be ubiquitous in our industry in 5 years.” For 47% of them, enabling crypto was a “very high priority,” while it was a “high priority” for 38% more.
So… Is Bitcoin Ready for Payments?
Bitcoin was the clear winner in the consumer survey by PYMNTS/BitPay. Nearly 17% of the respondents had held BTC in the past 12 months (or did now), versus 10% for Ethereum (ETH-USD), 9% for Dogecoin (DOGE-USD), and just 6% for Litecoin (LTC-USD), 5% for USD Coin (USDC-USD), and 4% for BinanceUSD (BUSD-USD).
Most “altcoins” were hardly known to the other respondents: anywhere from 10%, 20%, maybe 30% had heard of the other cryptos – versus 74% knew of bitcoin, even if they had never held it.
It’s no secret that bitcoin has always been the biggest name in cryptocurrency, worldwide. And naturally, bitcoiners will point to a laundry list of reasons why BTC is perfect for payments.
Here’s the argument from Singapore’s Bybit crypto exchange, cited in Cointelegraph in June:
“Bitcoin on Lightning [Network] is disintermediated, has finality built into it, faster, more secure and is many magnitudes cheaper in transaction cost than credit card’s ~3% fee.”
There’s just one major drawback – but it definitely is major: The price volatility of BTC from day to day. (Or hour to hour!)
Volatility is probably the best-known thing about crypto. Indeed, it was the #1 problem or deterrence for merchants, according to the PYMNTS/BitPay survey. 63% of merchants who do accept crypto still said it was a problem they experience.
The bitcoiners have an answer for that, too: “The payment does not necessarily need to be settled in BTC since the Bitcoin network can take dollars, convert them to BTC and transfer it across the network and convert it back to dollars upon arrival,” the communications guy for Bybit told Cointelegraph.
Indeed, converting to dollars is what already happens with the popular pay-with-crypto platforms like PayPal (NASDAQ:PYPL), right at the point-of-sale. And 93% of merchants in the PYMNTS/BitPay survey said consumers were using PayPal as well as Venmo at their store.
But this argument assumes that the currency is worth settling in. Globally, a lot of people are adopting crypto precisely because their local currency is NOT worthwhile.
Look at Argentina, which has some of the highest crypto adoption worldwide – while this has been happening there:
“In 2016, before inflation really took its toll, one USD was only able to buy around 14.72 Argentinean pesos. However, six years later, one USD is able to buy as many as 125.5 ARS,” reports Cointelegraph.
So, settling bitcoin transactions in local currency may be fine in major economies. But everywhere else in the world, it’s exactly what people are trying to avoid with crypto in the first place.
Meanwhile, Stablecoins Are Getting Popular
“In addition to Bitcoin, Argentineans have been turning to stablecoins increasingly as a means of storing value in the United States dollar,” which is something that their government officially limits them from doing otherwise, notes Cointelegraph.
That’s Argentina. But stablecoins are also becoming more of a thing in the European Union, for instance.
Now that USD Coin (USDC-USD) is pulling ahead in the stablecoin market for the world’s #1 currency, the firm that created it (Circle) just launched one for the #2 currency: Euro Coin (EUROC-USD).
“The European Central Bank (ECB) has long desired to make instant payments available to all” European payment service providers (PSPs), according to Ripple (XRP-USD), which has set up shop in Estonia.
“While SEPA Instant Credit Transfer delivers on providing instant payments for participating PSPs, it still requires the netting of transactions and the establishment of final positions for settlement by clearing companies or even prefunding in certain cases,” Ripple’s blog post points out.
Seems like Euro Coin could help with that. And Banking Circle – which does cross-border transactions in Europe, including the U.K. – announced yesterday that it will use USD Coin to meet “client demand for paying out in cryptocurrency.”
This is the type of thing that has U.S. Federal Reserve economists saying that stablecoins “could actually reinforce [the role of the U.S. dollar] over the medium run.” Even China now admits: “Once they are fully regulated, they are fine.”
Great, But How Do I Invest?
The spotlight might be on stablecoins these past couple of months… But a crypto designed to stay at $1.00 is hardly an investment.
However, if a platform has a stablecoin with a good reputation – then people using stablecoins for financial trades can make that platform a nice investment while this Payment Revolution is still gathering steam.
Take a look at Binance Coin (BNB-USD) and MakerDAO (MKR-USD) for this. BNB and MKR are the native cryptos of the organizations that brought you the #3 and #4 stablecoins: BinanceUSD and Dai (DAI-USD), respectively.
Binance Coin is a pretty simple play: If you trade on Binance – the #1 crypto exchange worldwide – then you can save 25% by paying your trading fees in BNB. Fees on Binance are already on the low end for crypto.
Other exchanges like Coinbase (NASDAQ:COIN) cater more to big institutions. But Binance is the king of retail crypto traders. In May, Binance even “flipped” Coinbase as the exchange with the most bitcoin, as institutions appeared to be pulling BTC from Coinbase in large lots since March.
BinanceUSD quickly surged in market cap to fill the hole left by the previous #3 stablecoin, TerraUSD. And in all the chaos lately, Binance – led by CEO Changpeng Zhao, who seems pretty level-headed – has been a resource for smaller teams…not a part of the drama.
It was not easy saying no to Super bowl ads, stadium naming rights, large sponsor deals a few months ago, but we did.
Today, we are hiring for 2000 open positions for #Binance. pic.twitter.com/n24nrUik8O
— CZ 🔶 Binance (@cz_binance) June 15, 2022
Binance has a whole list of ways you can use Binance Coin itself for payments, online services, and even travel. Ultimately, I’d argue that the stablecoins are the contender to watch in the Payment Revolution.
On the date of publication, Ashley Cassell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. To have more news from The New Digital World sent to your inbox, click here to sign up for the newsletter.