There’s a new buzz in the market for a while now: Cryptocurrency. It is still new to a large part of the world. It boomed in the market in 2009, when Bitcoin was invented.
In the past few years Cryptocurrency has had a huge impact on the global market.
The technology used in producing and managing cryptocurrency is Blockchain. Blockchain technology has contributed a lot to the digital market, cryptocurrency being one of the earliest success stories. Let’s read about how E-commerce brands and food delivery app development are benefiting from cryptocurrency as a form of payment.
Cryptocurrencies already pay for products.
But what will the future of cryptocurrency in e-commerce look like? How should brands prepare themselves before using cryptocurrency as a payment mode? What all do they need to know it? Well, here’s a handy guide for you.
What is Cryptocurrency?
Cryptocurrency is a digital currency that uses cryptography to secure transactions. It is not produced or managed by any government. Each new coin “type” is invented by cryptocurrency.
Blockchain Technology and has definitely helped cryptocurrency gain popularity due its complete independence from banks. Since Bitcoin was invented, it’s value in the global market has exploded. Cryptocurrencies currently have a combined value of trillions.
Cryptocurrency was named so after its implemented encryption technology for controlling and managing its use and validation. Everything is tech savvy here. Every Transaction is verified by an independent and a completely decentralized system that analyses and validates the coins and the owners of those coins.
Coin owners have a completely public account, where each coin transaction is posted on a digital ledger. Owners can keep a track of their transactions. This prevents coin owners from spending too many coins.
Here’s something everyone from any kind industry or department needs to know. Cryptocurrency is rapidly growing in the market. People from e-commerce, oil and gas industrialists, or government officials can invest in Cryptocurrency. Since the world digitalized in 2020, this trend accelerated. After Elon Musk invested $1.5 in bitcoin and the public launch of Coinbase, bitcoin values started climbing from around $11,500 per coin in October 2020 which peaked at more than $63,000 per coin in April 2021. Something a lot of people don’t realize is that Bitcoin isn’t the only cryptocurrency. This means the market impact of all cryptocurrencies combined is way larger.
The only way we can analyse the future of cryptocurrency in E-commerce is by understanding the promises and risks of Cryptocurrency and how brands can make use of it. Lets read about this below:
Promises of Cryptocurrency in E-commerce
Cryptocurrency has become the smartest currencies today. It has gained popularity and consumer adoption due to highly appealing promises. Most of these have blown away e-commerce brands as well as consumers.
Here are the most important promises:
- Lower costs to transactions
One of the most attractive features of cryptocurrency is low transaction fee. Ecommerce transaction fees usually reduce margins for brands and are passed as higher amounts to the consumers. Brands paying through Stripe or Square have to pay 3–5% on each transaction, while cryptocurrency transactions are usually free or up to 1%. This makes a huge difference for brands in online sales.
-
New consumer base
In these times of high tech preferences, a lot of consumers wouldn’t pay through credit card or bank transfers. Offering cryptocurrency payments for your products will definitely give you a larger customer base. Though there is a minority of these consumers, cryptocurrency is gaining even more adoption. With the growing technology, this group of consumers is most likely to grow and having cryptocurrency as an option to pay will definitely attract consumers.
- Reduced risk of fraud, more security
When it comes to the technical aspect of payment procedures, cryptocurrency has a highly secured system. It has been known for reducing frauds. While using other modes for transactions, the fraudulent returns and chargeback will most probably do against your brand’s bottom line. The blockchain technology behind cryptocurrency guarantees eradicating fraudulent charges, making all your transactions safe.
Cryptocurrency Risks and Hurdles in E-commerce
Every exciting technology comes with its own risks and obstacles to be adopted. Cryptocurrency definitely has higher risks than any other new technology evolving in e-commerce global market. This definitely calls for serious attention towards these risks. Lets have a look at these below:
-
Little consumer buy in
Cryptocurrency is still a complex or not learnt about tech concept for a huge part of the world. It is getting adpted gradually but still doesn’t have a large consumer base. Most people didn’t broadly understand the working of this technology. Another major turn off could be its price. Though you won’t have to pay a whole Bitcoin for more than 60 grands, the current prices have pushed out some consumers.
- Volatility
Cryptocurrency is a well known for being volatile. This is definitely one of the reasons for slow adoption of the technology as it is like a game for a lot of consumers. For example, Bitcoin (in particular) are taking off currently and might potentially remain high in the future. The future prices cannot be estimated as cryptocurrency is not authorized by the government or other entities.
-
Transaction verifications aren’t spontaneous
This is a major concern for e-commerce brands. All transactions have to be posted on the public ledger (where its history is recorded) which makes the purchase satisfaction is relatively slow. The procedure is still nearly instant, but time processing time varies with crypto wallet and the website in use.
-
No consumer protection
Customers aren’t responsible for any fraudulent credit card charges. However, most e-commerce brands can wisely build a certain number of chargebacks in their estimated revenue. One huge risk for consumers is that no cryptocurrency has consumer protection, which means the consumer turnover lost in the case of fraud. This can also be avoided as some e-commerce brands build in their own protections for being loyal to their consumers.
- Coin Fragmentation
With the growth of cryptocurrency, there were around 40,000 cryptocurrencies in the beginning of 2021. E-commerce brands have had a tough navigating among the many options to enable payment of most used coins in the market.
- Energy and Environment Sustainability
This is probably one of the most unpopular important facts that you need to know about. Cryptocurrency needs huge amounts of energy for creating (or mining) coins by authenticating them on the blockchain. Without digging deep into the technical aspect, the energy used is quite large. For example, the Bitcoin mining consumes more electricity each year than that used by Argentina. Technologies acting sustainability can definitely land us into bigger problems. Creating cryptocurrency leaves large carbon footprint.
A lot of consumers have been taking measures to avoid brands that are involved in environmental depletion. No company would want to be part of the issue, when it comes to carbon emissions. Today, brands can’t avoid the energy factor and this could be a huge red flag of cryptocurrency. This be the biggest hurdle to have a bright Future of Cryptocurrency in E-commerce.
What E-commerce Brands Should Do
Can be cryptocurrency be beneficial for brands today? Though Cryptocurrency has way more cons that its pros, the trend has accelerated.
E-commerce brands
that benefited from the extraordinary change and sudden consumer adoption in the market after digitalization in 2020, realize that the any other market change can accelerate the trend unexpectedly.
By now, we know that Cryptocurrency technology hasn’t been completely adopted by small and medium e-commerce Even though cryptocurrency technology brands. But the acceleration has already begun.
We can’t really predict the exact Future of Cryptocurrency in E-commerce or when will cryptocurrency payments be highly preferred. There are high chances for this to happen very soon. E-commerce brands will have to be open to new technologies to be more efficient and tech savvy in the market. Some domains like multi restaurant delivery software have already adopted it. Even if you don’t have a customer base cryptocurrency as their top payment preference, adopting the trend can be beneficial.
Here’s what your brand needs to take care of:
- Analyze your customers
You will need to look at your customer base. Evaluate your regular, current customers as well as your potential clout. Notice if they have adopted cryptocurrency or are planning to. You can also do this by asking for opinions via surveys.
If yes, you should definitely make it available for them to pay for your products online. If no, you can still consider it to stand out and attract a new potential customer base.
2. Look to your competition
Be alert and don’t miss out on potential customers. Whether or not you see your customers as the “cryptocurrency type” your competition might see otherwise. You should regularly review your competition and check the options they offer.
If few or no competitors offer cryptocurrency payments, then you probably have some more time to bring in the change. But make sure you prepare yourself to begin with the shifts to stand out.
3. Look to the future
No matter what measures you’re taking currently, always be alert and adoptable to new trends. As a brand, you need to keep an ear to the ground. Though the Future of Cryptocurrency in E-commerce is hard to evaluate right now, market and e-commerce experts are researching, reviewing, and writing about the almost daily shifts to the scene.
You can keep yourself updated by subscribing to a reliable news source and prepare to shift as new trends come up.
Agility and Cost-benefit Analyses are deciding factors for adoption of technology for brands.
Evaluation measures as a brand it will definitely matter while adopting cryptocurrency and every other newfangled tech that comes our way.
Hope this helped you understand cryptocurrency and what you need to act on as a brand.