Will bitcoin (BTC-USD) become a widely used medium of exchange? His lack of acceptance as payment by merchants, along with its high transaction costs, “is changing,” Morgan Stanley analyst Sheena Shah wrote in a note to clients Thursday.
Room to grow? The global crypto market cap recently stood at $1.87T, which might seem large, but not when compared to more established asset classes like global stocks (~$90T), bonds ( ~$120T) and Gold (XAUUSD:CUR) (~$12T), based on 2021 figures.
A slew of payment companies, in particular, are looking to expand their reach in the growing decentralized space. For example, payment company Strike recently partnered with point-of-sale provider NCR (NCR) and rewards-based payment company Blackhawk Network, which “could mean a large number of physical stores, restaurants and cafes in the United States will be able to accept bitcoin payments in the near future,” Shah explained.
Additionally, in early April, Strike partnered with e-commerce platform Shopify (SHOP) to enable merchants to accept bitcoin (BTC-USD) dollar payments on the Lightning Network, the staking solution. on the most popular BTC scale. “It’s no small feat,” said SA contributor Mike Fay on April 14. “The merchant benefits from this type of exchange because they don’t need to pay traditional payment processing fees through traditional payment rails. since the merchant won’t have to build the processing fee into the cost of the item,” he added. The “evolution” of crypto adoption doesn’t stop there. payment processing Fidelity National Information Services (FIS) announced in early April that it would offer merchants the option of receiving settlement directly in USD Coin (USDC-USD), a stablecoin pegged to the US dollar.
Keep in mind that fees on bitcoin (BTC-USD) transactions using the Lightning Network are close to zero, compared to the average fee to transact BTC on the Proof-of-Work blockchain of around 1.50 $, which makes the Layer 2 payment protocol “much more convenient for small payments that would otherwise be made with a debit card,” the note states.
Given that 85% of sales in the United States take place in stores rather than online, it is more important to monitor the development of crypto acceptance by physical stores, Shah said. And while bitcoin (BTC-USD) price swings are known to be wild, volatility could ease significantly if the use of BTC as a means of payment, whether by card or payment terminal, becomes more widely accepted, Shah noted.
Additionally, Starbucks (SBUX), after recently collaborating with digital asset platform Bakkt (BKKT) to offer crypto payment top-ups through its app, is now one of the largest retailers that accepts bitcoin (BTC- USD) in its stores. In early April, Bakkt, which allows customers to seamlessly access and transact across all digital assets, gave American Bank customers access to bitcoin and Ethereum (ETH-USD).
But not everyone is on board. The CEO of e-commerce giant Amazon (AMZN), Andy Jassy, said in mid-April that his company was “probably not close” to adding crypto as a payment mechanism.
Earlier in the week ending April 22, Australia’s financial regulator unveiled a crypto policy roadmap as interest in the space grows.