Terence Zimwara
The number of merchants accepting crypto-currencies like
Bitcoin as a means of payments remains very low. Apparently merchants are only willing
to accept cryptos as payment when there are sufficient numbers of who wish to
pay this way. When that happens, businesses are likely to even display prices
in cryptos but it is still a long way before we get to that stage.
Meanwhile many potential clients will use cryptos increasingly
as a payment method when there are enough merchants accepting cryptos as means
of payment. No one wants to be stuck with a currency that is not widely
accepted. In other words, Bitcoin still has to pass the acceptability test even
after being around for 10 years.
The question then arises; what must come first; merchant
adoption or general public adoption?
Essentially, the idea must be to make crypto trade or the conversion
to and from fiat money seamless, with little to no involvement of
intermediaries. When that is achieved, merchants will be attracted to cryptos
because of the obvious savings they stand to gain.
In the same way a businessman would reject a currency from a
country he barely knows that is the same way he will reject crypto-currencies.
He does not want to be trapped with something that he believes no one is
willing to accept.
An understanding this means crypto-currencies issuers will
have to redouble their efforts at finding a solution that allows for this
seamless conversion.
The merchant does not even need to know the complex process
of Bitcoin mining or to even download the Blockchain software in order to start
accepting cryptos. Their only interest is serving their customers—including
those buying with cryptos—well and getting rewarded with a successful purchase.
The onus is on crypto entrepreneurs to proffer solutions and already there are
products on the market that are doing exactly that. Devices like the PundiX
Point of Sale machine, which allows the seamless conversion from Bitcoin to USD,
is one potential solution merchants are looking for, if only they are aware of
this.
PundiX does exactly what they ask for; it allows the
switching from Bitcoin to USD locally. There is no need to involve crypto
exchanges domiciled in foreign countries; everything is done locally over the
counter by simply swiping a debit card.
So going back to our earlier question, yes it is quite
possible for merchants to adopt crypto-currencies first without having to worry
about not being able to use these. In fact, a merchant need not understand the
complexities of Bitcoin, the POS device does that. The merchant only needs to
know how to operate the POS device!
Furthermore, the merchant will not be worried about tax evasion
concerns because the device can always convert revenues into legal tender when
necessary. Apparently this may be another key concern that is slowing crypto
adoption by merchants. Businesses are
wary of possible tax avoidance and evasion allegations should they decide to
accept Bitcoin, so a solution like the device mentioned above undercuts such
concerns. Government tax agencies will be satisfied as long as they know taxes
are being paid regardless of the currency used in settling transactions.
On a different note, the price volatility of cryptos is
another key challenge for merchants as well. No one wants to trade in a
currency that is unstable. You want to be certain of the value you get before a
deal is concluded and that the value stays the same after. So when Bitcoin
starts the day at USD11 500 but ends it at USD10 900, this is not ideal for a business
that has to make payments to suppliers at the end of that day.
And unless the merchandise is priced solely in
crypto-currency—which is even more complicated—there is little rationale for
accepting cryptos as payment in the first place. At least that would be the
thinking of businesses that refuse to accept cryptos.
Well there is a solution to that too! Today there is a
growing list of crypto-currencies or alt coins that address those exact
concerns and these are called stablecoin. Bitcoin remains king of
crypto-currencies but stablecoins—which are essentially hybrids—have a place in
this fight for adoption.
As the name suggests, stablecoins are created in such
a way that they do not fluctuate widely over a given period because the track
the value of an underlying asset. The underlying asset can be a commodity or a
basket of fiat currencies. True to form, stablecoins like the USD Tether have demonstrated
this ability to remain stable; the Tether has maintained a value which is more
or less equal to US$1 throughout its lifetime.
Using such a crypto-currency eliminates the volatility risk
thus making wider acceptance a real possibility.
Of course there are more advantages to those accepting
crypto-currency as payment but ignorance as well as hostility by regulators are
stopping potential users from realizing these advantages. Nevertheless, as more
people get disillusioned with the fiat currency system, it is imperative for
those working to promote the use of alternative forms of money to regularly
repeat this message.
· Crypto payments are prompt and the transactions
fees are significantly lower because there are fewer middlemen or
intermediaries involved, if any.
·
Crypto-currencies are usually not subject to
exchange control regulations or a particular monetary policy as is the case
with fiat money. A business organization can make cross border payments or
receive payments from abroad without worrying about the foreign exchange
control rules and regulations. Usually such rules compel recipients of payments
from abroad to surrender a portion or the entire proceeds at an uneconomic
exchange rate. For businesses operating in economically weak countries, an adoption
of cryptos means this so-called foreign exchange risk is eliminated.
· Cryptos are not affected by local inflation
trends hence they are a good store of value.
An understanding such advantages means more merchants will
start accepting cryptos as payment because they know at the end of the day,
they will be able to convert all revenues—using the POS—into a currency that
governments recognize. There is zero tax evasion allegation risk, there is zero
exchange rate risk and more importantly, there is zero entrapment risk!
Whatsapp 263 771 799 901, @tem2ra, Facebook
No comments:
Post a Comment