Future trend crypto: digital currencies are finding their way into e-commerce

It's a question that you may have already encountered, and maybe you've even answered yes: Do you have Bitcoin? And perhaps you will come across this question even more often in the future: Do you pay in Bitcoin?

In recent years, cryptocurrencies have become particularly well known as an object of speculation. The value of Bitcoin, Ethereum and the like has gone up and down massively time and again, but if you look at the general development since the launch, the development is impressive.

Some online stores were quick to jump on the bandwagon and have been accepting cryptocurrencies as a means of payment for some time now. However, the industry as a whole was quite cautious for a long time. Nevertheless, the topic remains hot, as recent studies show.

For the Study "Demystifying crypto" by Checkout.com both stores and their customers were asked about their attitudes towards cryptocurrencies. In total, around 30,000 consumers and 3,000 retailers in 11 countries had their say. In this article, you will find the key findings of the study with regard to online retail. You will also get an outlook on the role cryptocurrencies could soon play in the context of e-commerce.

Quo vadis, crypto: means of payment or object of speculation?

According to the study, around 45% of 18 to 35-year-olds think that cryptocurrencies are more than just a speculative object. Around 40 percent of this group of people intend to pay with cryptos in 2022. In Germany, this only applies to a third, but the figure is still remarkable.

On the other hand, there is a fundamental problem:

As Visa and PayPal, at least two major transaction service providers, are already actively involved, at least the technical implementation should become increasingly simple. All that remains is the will - and the confidence - to do so.

Perhaps more providers should believe that virtual coins can boost their business, because:

For German stores, the offer is particularly noticeable in the gain of international customers.

On the other hand, only 50 percent of customers say that they definitely trust merchants who accept cryptocurrencies. This figure is somewhat difficult to interpret because it is not clear whether the other 50 percent do not trust such merchants because of their acceptance of cryptocurrencies or whether half of crypto merchants are generally trusted. In that case, this figure would again be considered positive.

Blockchain, stablecoins & Web3: knowledge is not yet widespread

Just under half of those surveyed are not yet able to form an opinion on whether they see blockchain technology as a secure and accelerating opportunity in e-commerce, for example. Knowledge about stablecoins, which are linked to a national currency and are therefore less likely to fluctuate in value, also appears to have a lot of room for improvement.

Yet it is precisely stablecoins that around 36% of the entrepreneurs, CFOs and corporate treasurers surveyed would definitely include in their balance sheets. The relatively stable value distinguishes stablecoins from the much more volatile cryptocurrencies on the market. They could be used not only for online shopping, but also for paying suppliers and employees.

Web3 remains a key concept in this context, referring to the decentralization of the internet and services based on blockchain technology. Among other things, it could lead to a complete change in value chains as we know them today, with new types of cultural assets and thus new economic sectors emerging from new digital lifestyles centered around gaming, creating and entertaining.

A strong trend in connection with cryptocurrencies is that private individuals and consumers are increasingly becoming producers, which can be seen in the gaming scene, but also in the arts. In this environment of the creator economy, the acceptance of cryptocurrencies is already very high.

"The world of cryptocurrencies is maturing and is increasingly driven by utility, pragmatism and consumer empowerment. Digital currencies have the potential to not only change the way people transact, but potentially reinvent the dynamics of the entire digital economy."

Ralph Piater-Frankenfeld, Vice President DACH Checkout.com

One problem remains: While Web2 was still very tangible, many people still have no idea what Web3 is. This further encourages the opinion that a lot of cryptocurrencies are still uncertain speculation.

Merchants must weigh up the opportunities and risks of cryptocurrencies as a means of payment

Anyone who decides to use cryptocurrencies as a payment method is hoping to attract the attention of early adopters in the target group aged between 18 and 35. If a store accepts cryptos in the future, it can expect a certain amount of media buzz.

This shows that cryptocurrencies are highly polarizing.

In addition, there are other risks cited by entrepreneurs in the study that speak against the use of cryptos:

• Tax complexity
• Risk of volatility
• Lack of understanding on the part of politicians
• Little support from third parties
• Little belief that customers really need it

In contrast, however, many entrepreneurs also report that cryptocurrencies have uncovered many opportunities:

• Faster payments
• More international payments
• fewer chargebacks
• Reduction in transaction fees
• Higher order value and more new customer sales

Outlook: Fintechs and regulations must lead the way, but this could mean losing the essence of cryptocurrencies

Ralph Piater-Frankenfeld, Vice President for the DACH region at Checkout.com, emphasizes (probably not entirely unselfishly) that fintechs are now in demand to offer easy-to-implement solutions to enable payment with cryptocurrencies. In addition to convenience, the focus is primarily on the security of transactions - for all parties.

Checkout.com recently acquired ubble, a company that specializes in identity verification. Checkout.com therefore sees the need to ensure greater transparency for payments with cryptocurrencies. After all, store operators need to know whether customers really are who they say they are.

However, the desire for more regulation, both from the political side and via clever solutions from fintechs, actually stands in contrast to the core idea of the decentralization of cryptocurrencies. The challenge now is to master the balancing act between trust in the technology and the creation of a legally secure basis for payment transactions.