There is tremendous growth in cryptocurrencies. The use of blockchain technology is a game changer. This is the reason individuals, as well as institutions, have accepted crypto. Settling transactions efficiently has led to digital currencies’ growth and made crypto mainstream.
What drives the efficiency of crypto payments?
Blockchain has made transactions fast and easy.
The absence of intermediaries or involvement of any government agencies makes payments via crypto effective. There are no waiting periods involved in digital money.
The mobile nature of cryptocurrencies.
There is no need to travel to the banks with crypto. Crypto users can make payments anywhere with access to internet-connected devices. This solves the infrastructure problem and allows the unbanked to transact.
Immutability in crypto.
Digital payments are irreversible, unlike fiat currencies. Blockchain ensures that digital payments are irreversible by financial agencies or the government. There are critics, despite the large embracement of digital currencies by investors and institutions. The fluctuations, volatility, and fear of risk due to bad experiences with digital currencies are criticisms and drawbacks of crypto.
Criticisms and drawbacks against digital currencies
Digital currencies are unregulated, and there have been fluctuations in prices for a period now. This has made transacting with crypto difficult. Investors feel it’s difficult to distinguish the time to buy and sell crypto to evade losses.
Crypto payments are yet to take off. The adoption rate has not reached its peak. Many still lack knowledge of digital currencies, and for this reason, they do not accept payments in crypto. Crypto has to prove to be a store of value and a unit of account.
The stablecoins have been a topic of discussion of late. People feel that stablecoins are better than other cryptos because they stabilise prices. They are the solution to turn to when the market is in bear mode.
Fear of risking
Poor experience in crypto makes users view it as ineffective. Often, investing in crypto is seen as a risk.
Can crypto payments be cost-effective?
Crypto has to improve payments and make them cost-effective. This can be done by having covenants and bitcoin improvement proposals. This will help solve security, adoption, and volatility issues, among others.