Cryptocurrencies are a new and innovative technology that have the potential to revolutionize the monetary system. The potential and opportunities they present to the world are truly extraordinary and should not be taken lightly. Cryptocurrencies have the power to provide fast, secure, trusted, and very low fee transactions on a global basis. Today there are no other technologies in the fintech industry that can achieve what cryptocurrencies can. While it may seem like a no brainer to adopt cryptocurrencies on a global scale, these types of revolutions take time. There are still many problems that need solving, new technologies to be developed, and more widespread adoption and everyday use of cryptocurrencies before it becomes mainstream. For this to happen, people must be able to easily spend cryptocurrencies, but this just isn’t the case, spending cryptos is difficult.
Take for example, you want to spend crypto on something, but first you must find a merchant who accepts cryptocurrency as payment. Once a merchant is finally found, you must evaluate their price and compare it with fiat dollars. Also, one must think about where the price of that specific cryptocurrency is going. Will it be worth significantly more or less in the near future? A story to back these points up is, back in 2010 a developer spent 10,000 Bitcoins to buy two pizzas. First off, it wasn’t easy finding someone to accept Bitcoin as payment, and now those 10,000 Bitcoins are worth nearly $100 million.
To this day, it is still very difficult to find merchants who accept Bitcoin and most people do not want to spend their Bitcoin in hopes it will rise significantly in the future.
Therefore, Bitcoin and other cryptocurrencies are still in their infancy and have many hurdles to overcome when it comes to spending them. So, what kind of challenges must we overcome and how can we overcome them?
Challenges of Spending Crypto
While cryptocurrencies present various benefits to both merchants and consumers, they are still rather difficult to spend and come with various challenges. For instance, in many countries, every time you buy, sell, or even spend cryptocurrency it’s a taxable event because they are not viewed as currency, but rather as an asset.
Another significant issue with spending crypto are the rising transaction costs. The tech behind Bitcoin and many other cryptos are not yet scalable for widespread use and therefore transaction costs can be very high. In December of 2017, Bitcoin transaction costs reached a high of more than $50, making it very undesirable as a currency.
An even bigger factor affecting the feasibility of spending cryptos are the acceptance of them from merchants. There are very few POS (point of sale) systems which have been developed to easily accept cryptocurrency payments and exchange these payments into fiat currency. As well, not only are payments difficult, but storing and managing cryptocurrencies can be very nerve-racking due to hacking, passwords, private seeds, etc. It’s all very technically advanced and not user-friendly enough for mass adoption. However, there are people spending cryptocurrencies every day, and developments are being made to improve spending and adoption.
How to Spend Crypto
While the challenges of spending cryptocurrencies are plentiful, there are solutions to these problems. For instance, a payments solution is being developed which turns your credit card into a crypto card using API integration at the merchant level. This payments solution is known as “Digits” and will provide cryptocurrency users with an easy solution for spending crypto. Another payment solution is the use of crypto wallets that have an integrated exchange for exchanging crypto and fiat currency for one another. Users can simply send or store cryptocurrency in these types of wallets and exchange them for fiat currency and send said fiat currency to their personal bank account or bank card. Another popular method of payment using cryptocurrency is to withdraw fiat currency from a cryptocurrency ATM, however this method is technically payment via fiat currency. While the payment methods mentioned here work and are catching on, the most popular method of spending cryptocurrency is online. It’s easy to search for merchants who accept cryptocurrency and send crypto directly from your crypto wallet.
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