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More Companies are Offering Crypto Payments. What Does this Mean?

May 12, 2021 2:17 PM 4 min read

On March 31st 2021, this post from the official Twitter handle of Flipkart caused a sensation:

Three hours later, the company dismissed it as an April Fools' joke. 

People, however, were left puzzled. A section could totally buy into the narrative, considering the extraordinary surge in the number of corporations having started accepting payments in cryptocurrency. 

Fools' day or not, if there's anything to learn about crypto, it is that joking about them is what brings them closer to mainstream validation (Yes we see you, Dogecoin!). As more and more companies begin accepting them for transactions, they inch closer to widespread use and sanction. 

Old Dogs. New Money.

Ever since Elon Musk announced that Tesla would accept payment in Bitcoins, a milepost was carved in crypto enthusiasm with a greater number of companies offering payments in one crypto or another. As of March 9th 2021, cryptocurrency payments were offered in as many as 147 countries in the world.


Since October last year, PayPal, with 377 million active users, started offering cryptocurrencies to US customers directly on their Cash or Cash Plus accounts. Certainly offers a huge stage for any instrument to gain mass traction. By charging 2.9% to the merchants, PayPal pockets a significantly higher margin for crypto transactions than it does for credit or debit cards (which require sharing of the said charges with network providers, which do not exist in case of crypto). 

Food industry players followed suit with big brands such as Burger King, Coca-Cola, Pizza Hut and Starbucks now accepting crypto payments. Tesla was joined by a buddy in the auto industry with BMW allowing English and Canadian dealerships to embrace Bitcoin transactions. 

Old, more traditional companies are jumping fast on the bandwagon. Be it Mastercard, AT&T, or even Wikipedia (for donations)! The hawkish plebeian treatment once accorded to Bitcoin is wearing off especially when you see BNY Mellon (believed by many to be America's oldest bank) offering ‘cryptocurrency services’. 

Even the art world is growing increasingly fond of crypto assets. Sotheby’s, New York’s finest auction house, declared that it will accept crypto payments in its next sales event. 


Bartering the Bitcoins

Be it with crypto ETFs, stablecoins, NFTs, or digital currencies, blockchain is gradually taking over as a major niche in financial markets. Its origin, intended to replace the global fiat currency system, is powerfully cemented as crypto becomes easily accessible and acceptable as a medium of payment. 

Let's face it. Bitcoin is far safer than credit card payments where fraudsters can easily get hold of your credentials and make purchases (Yes, even OTPs can be hacked with simple SMS redirects). 

Bitcoin solves this problem because blockchain is a decentralised system and all personal/transactional information is encrypted. So even if hackers get into those systems there's nothing of value to steal. 

The need for multiple currency accounts is done away with. All you need is a single crypto wallet. There's great efficiency. Compared to bank transactions, Bitcoin transfers are almost instantaneous. 


Payback for Crypto Payments

But for every Jack Dorsey, Peter Thiel, Mark Cuban or Richard Branson endorsing the crypto rally, you have a Warren Buffet or a Bill Gates who hoists red flags cautioning against its ills like the inherent ‘riskiness’ or ‘worthlessness’ and the heavy energy consumption by the Bitcoin network (53 million tonnes of carbon production per year as per current estimates). 

One more ill - transaction fees - which were once muted on Bitcoin, barring a small proportion as miner fees. But with growing congestion in the networks and the latest crypto boom, the average Bitcoin transaction fee is now at $14, a shocking 661% rise from this time last year. 

Adoption Without Representation

One thing to remember is that not all of these companies are receiving Bitcoin directly. For instance, PayPal offers crypto transactions but doesn't invest in crypto assets (unlike Tesla). In fact, PayPal and Visa recently announced a transactional workaround by which users can be distanced from crypto-to-fiat swapping risks

This is where big corporations can weigh in by offering their research and records while dealing with crypto first hand. If the aim is to build a financial system based on open, borderless and immutable money, then institutional investment is the place to start. 

It is a high risk high reward play. Public corporations being shareholder-owned entities resemble trusts that are looked up to by people for financial guidance. As more corporations start offering crypto payments, perhaps, more credibility is placed in the value and reliance of cryptocurrencies. 

(This piece was published before Tesla's recent decision to stop accepting payments in Bitcoin was announced.)


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