The Problems and Future of Crypto Payment - Beginner's guide

Hi, I'm Manabu.
This article explains Crypto Payment.

Table of Contents

  • 1. The Problems of Crypto Payment
  • 2. The Future of Crypto Payment

1. The Problems of Crypto Payment

In short, most people don't need to use crypto as a payment method. There is no demand. Bank transfer is fast and cheap enough for most people.

While crypto is convenient for those who don't have a bank, they use Binance QR codes:

Binance QR code is just a company's database that doesn't use crypto. However, because the fee is low and they can use a smartphone app, it is acceptable for people in Argentina. People in Argentina don't care the decentralization.

*It's possible that people will use Bitcoin or Ethereum if fees drop because there is no censorship when they use Bitcoin or Ethereum. However, there is a chance that Binance will freeze their account for some reason.

*I'm willing to use crypto for transferring money because I often use cross-border transactions. The fee is high, and the banks won't even teach me the exchange rate.

What factors accelerate the Crypto Payment

I will explain the following factors:

  • (1) War
  • (2) Countries
  • (3) NFT & Game
  • (5) Remote Work
  • (4) Big Companies
  • (6) Demonstration

(1) War

Russia is finalizing a bill to legalize crypto as a form of payment.

Oil and gas have a massive market cap. Furthermore, Russia will have BTC in its national treasury, which will increase the trust in Bitcoin.

(2) Countries

I will use three countries as examples.

i) UAE wants to be the new crypto capital of the world. Large cryptocurrency firms (ex: Binance, Bybit, and Crypto.com) are establishing a regional hub in Dubai.

Crypto exchange in Singapore, Crypto.com, said it was opening a regional hub in Dubai and “launching a substantial recruitment drive in the coming months.” The exchange claims to have 10 million customers across 90 countries. –Fortune

ii) Thailand is attempting to attract tourists who have "become wealthy" through cryptocurrency in order to help the country's post-pandemic economy.

“If they can use their currencies here without having to exchange it, or be faced with government taxes, then it would create convenience for them.” Governor Yuthasak said. –Bloomberg

iii) Bitcoin is legal tender in El Salvador. El Salvador also intends to issue the first bitcoin bond. You will be able to get citizenship by investing in it.

(3) NFT & Game

A huge trend has occurred in the NFT market. Many people purchased NFTs. Despite the fact that most of them think NFTs are art or JPGs, it is a token.

Like many people who purchased an iPhone thinking it was a phone, it's actually a computer. It's not a phone. NFT is not a JPG, a Token.

One aspect worth attention is that NFT has composability that allows different apps to communicate with one another without intermediaries. People will realize the power of composability and NFTs soon. As a result, it will accelerate the mass adaption of crypto.

Furthermore, crypto games are emerging. Many people will buy digital products for their utility. Axie Infinity, for example, is one of the biggest hits in the crypto industry. People in the Philippines make a living by playing the game. Many people purchased Axie. It looks like game characters, but it's actually a token.

It is becoming more and more common in people's lives.

(4) Remote Work

Covid accelerates remote work. Many people can live everywhere they want. That being said, there are obstacles to going abroad today because PCR testing and entry requirements differ from country to country.

But that is about to change. The more the borders open, the greater the demand for cross-border transactions. That will increase the demand for crypto transactions.

(5) Big Companies

The trend is already happening.

Profit is one of the reasons why large corporations are looking for crypto opportunities.

Etsy—the marketplace popular with crafters and DIY artisans—reported a total of $3.04 billion of gross sales value for the second quarter of 2021, which averages out to just over $1 billion of volume per month during that span. OpenSea’s August trading volume alone has already beaten all of Etsy’s Q2 sales value. –Decrypt

The company may be able to attract crypto-rich individuals to launch a cryptocurrency business. It is becoming too large to ignore.

(6) Demonstration

A crisis of democracy happened in Canada.

The government possesses too much power in this era. We can not protest against the government if they can freeze the protestor's bank account. These incidents have sparked debate. It is beneficial to crypto.

The following is a summary of the first half:

  • The Problems of Crypto Payment
    • Most people don't need to use crypto as a payment method
    • People in Argentina use Binance Pay because of the lower fee
  • What factors accelerate the Crypto Payment
    • (1) War: Russia will accept crypto as payment
    • (2) Countries: Countries are targeting crypto-rich
    • (3) NFT & Game: NFT is not an art or JPG, but a token
    • (4) Remote Work: Increase cross-border transactions
    • (5) Big Companies: Crypto is becoming too big to ignore
    • (6) Demonstration: Controversy causes change

2. The Future of Crypto Payment

The Future of Crypto Payment

Here are three key points:

  • (1) Lower fees
  • (2) Micropayment
  • (3) Composability

(1) Lower fees

Transaction fees will become almost 0% in the future.

After watching the video above, most people will realize that the Lightning Network is great.

However, there are many problems to solve, especially related to decentralization. It's a trade-off. The pursuit of decentralization reduces convenience. *The details of the Lightning Network problem can be found here.

Of course, not only Bitcoin but Ethereum has its problems. Layer2 is a new technology that is on the rise. It lowers transaction fees, but there are still many security risks. Numerous hacking incidents have been occurring. * The details of Hacking can be found here.

(2) Micropayment

Lower transaction fees enable another innovation.

Please also take a look at the following:

But in crypto, you can cut out layers of intermediaries. Every time you listen to their music, a small amount of money goes to the musician every second. The musicians can use the money immediately. It will change their life.

(3) Composability

As I mentioned earlier, composability is an important factor.

Composability allows different apps to communicate with one another without intermediaries.

Let's use a credit card as an example. You can get the point every time you use your card. But don't you think it is too complicated to understand everything about that?

Composability solves the problem. You can use your points as cash. Composability and tokens make it possible.

Example: Crypto.com Visa Card

Crypto_com_Visa_Card The most advanced credit card in this field is Crypto.com Visa Card. Every time you use it, you can reward CRO, a native token offered by Crypto.com

The Problem of CBDC

Some people might think, "why don't you use CBDC." Yes, we can accept the CBDC. But again, here is the problem:

Besides, the cost of cross-border transactions won't be lower in the future; I think the government has an incentive not to reduce cross-border transactions in order to keep the money domestic.

People benefit from healthy competition. The same is true for money.

The problem after widespread Crypto

A quick review of three problems:

  • (1) No Taxable
  • (2) Money Laundering
  • (3) Crypto Country

(1) No Taxable

It's difficult for the government to collect a tax. Even today, wealthy people and big companies can reduce the tax using Tax Heaven, which will soon be available for ordinary people. They possibly won't pay tax taking advantage of crypto.

(2) Money Laundering

It's a difficult problem to solve. For example, according to The Defiant news:

The coin mixing service announced that it blocks addresses sanctioned by the U.S. Office of Foreign Assets Control (OFAC).
To be clear, the service doesn’t prevent blacklisted addresses from interacting with its smart contracts. Instead, it stops those on OFAC’s sanctions list from interacting with Tornado Cash through its website.

Nobody can stop the smart contracts. All we can do is stop cashing out. That being said, there are options to buy properties in Crypto. Also, the number of stores that can accept crypto is growing, which is a major issue.

(3) Crypto Country

We will be able to see the crypto country in the near future. Someone will purchase land from a small country and then establish their nation. Many people are enthusiastic about decentralization. I am one of them as well.

Recently, I have thought that crypto may not spread around the world. Instead, the world's divisions widen, and some people will create an ideal world (ex: Crypto Country).

There is a project which will pursue it already exist. Olympus DAO is building OHM, a censorship-resistant reserve currency that is community-owned and decentralized.

Summary:

Here is the summary. You can review the article:

  • The Problems of Crypto Payment
    • Most people don't need to use crypto as a payment method
    • People in Argentina use Binance Pay because of the lower fee
  • What factors accelerate the Crypto Payment
    • (1) War: Russia will accept crypto as payment
    • (2) Countries: Countries are targeting crypto-rich
    • (3) NFT & Game: NFT is not an art or JPG, but a token
    • (4) Remote Work: Increase cross-border transactions
    • (5) Big Companies: Crypto is becoming too big to ignore
    • (6) Demonstration: Controversy causes change
  • The Future of Crypto Payment
    • (1) Lower fees: Transaction fees become almost 0%
    • (2) Micropayment: Change happens in the creator economy
    • (3) Composability: You can use your card's points as a cash
  • The problem after widespread Crypto
    • (1) No Taxable: People can avoid a taxable event
    • (2) Money Laundering: Nobody can stop the smart contracts
    • (3) Crypto Country: Crypto people will create an ideal world

That's it. Thank you for your time. I'm on Twitter and posting information about crypto and new lifestyle. My tweets will be useful for you if you want to learn about new technology and lifestyle.