[et_pb_section fb_built=”1″ _builder_version=”4.6.6″ _module_preset=”default” custom_padding=”||0px|||”][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.6.6″ _module_preset=”default” custom_padding=”0px|||||”][et_pb_row _builder_version=”4.6.6″ _module_preset=”default” custom_padding=”0px|||||”][et_pb_column type=”4_4″ _builder_version=”4.6.6″ _module_preset=”default”][et_pb_post_title meta=”off” _builder_version=”4.6.6″ _module_preset=”default”][\/et_pb_post_title][et_pb_text _builder_version=”4.6.6″ _module_preset=”default” min_height=”75px” custom_margin=”50px||0px||false|false” custom_padding=”||24px|||”]<\/p>\n
Although cryptocurrency has been around since 2009, when Bitcoin was launched, it is only in recent years that crypto assets have taken center stage and notably within the payments ecosystem. Cryptocurrency\u2019s main attributes of being permissionless, secure, irreversible, pseudoanoymous and most importantly decentralized, first attracted those that were anti-establishment.\u00a0 Today, governments, banks, fintechs, financial service providers, Big Tech and Retailers are seeking to enter the space.\u00a0 Notably, blockchain technology, which are the rails that cryptocurrency is distributed and recorded on, has created a race to define and implement a variety of payment use cases.\u00a0 In fact, Payments is one of the top funded use cases by VCs in 2021 with over $10bn (coming in second after Distributed Ledger Technology at $12.8bn).<\/span><\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.6.6″ _module_preset=”default” min_height=”66px” custom_margin=”50px||0px||false|false”]<\/p>\n <\/strong><\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.6.6″ _module_preset=”default” min_height=”262px” custom_padding=”0px||10px||false|false”]<\/p>\n Crypto was first used to purchase a pizza in 2010 for 10K bitcoins (worth $214M as of July 2022).\u00a0 Since then, the adoption of crypto has burgeoned but mostly in the speculative investment arena.\u00a0 It is being accepted more and more as a payment method, but it is not yet widespread as the volatility remains problematic.\u00a0 For instance, Bitcoin has dropped nearly 35% in the past six months, with the price points mimicking a roller coaster ride.<\/span><\/p>\n Despite the volatility of cryptocurrencies and its rapidly evolving environment, Payment Services Giants and Fintechs are eyeing cryptocurrencies with more interest, and many are trying to get ahead of the game.\u00a0 Payment schemes Visa and Mastercard tackle the acceptance issue by enabling prepaid cards to be loaded with cryptocurrency and then converting them to fiat currency so the user can pay at any merchant accepting Visa or Mastercard.\u00a0<\/span><\/p>\n Fintechs Klarna and Revolut have also joined the cryptocurrency trend.\u00a0 \u00a0In 2021, Buy-now-Pay-Later player, Klarna forged a partnership with crypto-broker Safello enabling their customers to purchase cryptocurrencies using Klarna\u2019s secure payment solution. \u00a0Neobank Revolult allows customers to buy, sell, and send cryptocurrency within its platform, as well as convert it to fiat currency.\u00a0 In November 2021, Revolut also annnounced plans to build an in-house crypto exchange.<\/span><\/p>\n Some payment actors are taking a prudent approach.\u00a0 After ending support in 2018 for bitcoin payments, the PSP Stripe announced it was re-entering the crypto space to build out its \u201cfuture of Web3 payments\u201d in late 2021.\u00a0\u00a0\u00a0 Neobank Qonto had long been bearish in cryptocurrency and has since changed its position on crypto, allowing its customers to invest in cryptocurrencies. Qonto\u2019s entry is cautious, as they take a very regulated approach and do not accept all activities or all transactions.<\/span><\/p>\n Some payment players have taken a strategic approach.\u00a0 \u00a0Paypal users have been able to buy and sell cryptocurrencies since early 2021 and they launched crypto checkout-service to its 29 million merchants later that same year.\u00a0\u00a0 Most interesting was Paypal\u2019s announcement in January 2022 that they were developing their own Stablecoin.\u00a0 Square\u2019s payment network \u201cCash App\u201d rolled out its bitcoin broker and wallet features, allowing users to buy, sell, store and send bitcoin.\u00a0 \u00a0Square\u2019s biggest strategic commitment, however, was in late 2021 when it changed its corporate name to \u201cBlock,\u201d signalling its expansion into the blockchain.<\/span><\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.6.6″ _module_preset=”default” custom_padding=”0px||||false|false”][et_pb_column type=”4_4″ _builder_version=”4.6.6″ _module_preset=”default”][et_pb_text _builder_version=”4.6.6″ _module_preset=”default”]<\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.6.6″ _module_preset=”default”]<\/p>\n Since the launch of bitcoin, several cryptocurrencies have flooded the crypto space.\u00a0 On the one hand, governments are entering the space with Central Bank Digital Currency initiatives or CBDC (which is essentially a defensive response).\u00a0 As of July, 105 countries representing over 95% of global GDP are now exploring a CBDC in some form (either in exploration, development, in pilot or launched initiatives).\u00a0\u00a0\u00a0<\/span><\/p>\n On the other hand, stablecoins are gaining great interest as they preserve some cryptocurrency features while taming volatility.\u00a0 To manage this volatility, Stablecoins are pegged to an asset, often the US dollar or to gold.\u00a0 Other ways to manage the volatility include backing with other cryptocurrencies (generally over collateralized to compensate for volatility) or non-collateralized stablecoins that use an algorithm to adjust supply and demand to keep the price stable.\u00a0<\/span><\/p>\n Stablecoins aim to combine the stability of stable assets, such as a fiat currency, and the digitization benefits based on blockchain technology of cryptocurrency.\u00a0 Consequently, Stablecoins have seen an explosive growth with a Market Capitalization of the top 10 stablecoins of $152 bn as of June 2022 (compared to $108bn in June 2021 and 10bn in June 2020).\u00a0 To put it in perspective, the dollar amount of US assets held in retail prime money market funds is $219bn.\u00a0 The market cap of stablecoins pales that of cryptocurrency, which hit just over 1 trillion in July 2022, but it had hit 3 trillion in November 2021 attesting to just how volatile crypto is.<\/span><\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.6.6″ _module_preset=”default”][et_pb_column type=”4_4″ _builder_version=”4.6.6″ _module_preset=”default”][et_pb_text _builder_version=”4.6.6″ _module_preset=”default”]<\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.6.6″ _module_preset=”default”]<\/p>\n Until recently, cryptocurrencies and stablecoins have been developed by private companies, relatively unknown to the consumer.\u00a0 \u00a0As Stablecoins rise in popularity, there is a growing number of brands looking to develop their own branded stablecoin underpinned by blockchain technology in order to reap benefits that go beyond what traditional currency can deliver.\u00a0 Retail and Big tech initiatives are popping up, trying to create branded private digital currencies that could prove to have the biggest impact in payments within this space.\u00a0 This area is still very immature, with some fails such as Facebook\u2019s stablecoin Diem which after much struggle was abandoned earlier this year.\u00a0 However other initiatives such as Casino\u2019s Lugh pegged to the Euro has successfully launched from a trading aspect and ambitions to roll it out to over 10K Casino Group stores would make it the first stablecoin to enter mass-retail markets as a payment method.<\/span><\/p>\nCrypto adoption in Payment Services<\/strong><\/h2>\n
Crypto is catalyzing a myriad of alternative digital currency initiatives<\/strong><\/h2>\n
The future of branded stablecoins for payments<\/strong><\/h2>\n