Is 2022 the year cryptocurrency goes mainstream? – Consumer Trends

Every month, a bar, café or restaurant somewhere around the world makes headlines for adopting cryptocurrency as a form of payment. Like it or not, digital money is here to stay, and it would be worthwhile figuring out how you see it featuring in your company’s future. Once the preserve of tech wizards who would ‘mine’ for Bitcoins, the world of digital currency (of which cryptocurrency is a part) is barrelling ever closer to the mainstream. The number of cryptocurrency users is growing exponentially: In the UK alone, the figure has grown from 1.5m in 2018 to roughly 9.8m last year. Overall, it’s thought that the number of people worldwide using cryptocurrency is around 300m. There are certainly significant shifts to make this rather confusing world more accessible. In 2020, PayPal launched 'Crypto with PayPal' in the US, expanding it to the UK a year later. It allows users to buy, hold and sell Bitcoin, Ethereum, Litecoin and Bitcoin Cash within their PayPal account, bringing easy access to what is often seen as a mysterious, intimidating world to millions of users. It’s even making the crossover to vending machines - in 2020 Coca-Cola started accepting cryptocurrency payments for items at over 2,000 of its machines across Australia and New Zealand. On top of this, increasing numbers of companies are partnering with digital wallet apps that store cryptocurrencies. Starbucks has partnered with an app called Bakkt, which can hold a mix of cryptocurrency, loyalty points and frequent flyer miles that can be converted into US dollars and then loaded onto a Starbucks app for payment. (This sounds rather clunky, but it certainly gives us an idea of where the market is headed.) Back to basics So, what is digital money? It's cash that only exists in digital form that can be managed and exchanged using smartphones, credit cards and online exchanges. There are roughly three types of digital money: cryptocurrencies, which are decentralised digital money protected through cryptography, the most popular of which are Bitcoin and Etherium; central bank digital currency (CBDC), which is digital currency issued by the central bank of a particular country; and stablecoins, which are a form of cryptocurrency that’s tied to a basket of goods or fiat (ie government-issued) currency to try to provide more stability to the price. Cryptocurrencies have commanded a huge amount of column inches in recent years, with the incredible swings in value that they can experience. Depending on your source, there are over 12,000 or 18,000 cryptocurrencies in existence today, which is a mind-boggling number, with their values skyrocketing and crashing on an almost hourly basis. Volatile is definitely the word to use for this world. Moving away from the wild west of cryptocurrency chaos, governments have decided to get in on the act of digital money by developing their own CBDCs. In the Bahamas, the Sand Dollar - a digital version of the Bahamian Dollar - was launched in October 2020 by the Central Bank of the Bahamas. It’s a fully functioning CBDC with the same legal status as the standard currency, and residents can access their digital wallet through a phone app and use a physical payment card. Eight other countries have successfully launched CBDCs so far, while over 70 others are at some stage of development, from researching through to pilot. China is one of those piloting its digital currency, and the People’s Bank of China (PBoC) even brought it to the Winter Olympics in Beijing in February. The e-CNY was used by domestic residents and visitors alike, with a clear split on how it was utilised. Chinese consumers preferred using its ‘software wallet’ - an app that can be downloaded from Android or Apple - while foreign visitors preferred using the e-CNY payment card, which looks similar to a credit card. Foreign visitors were able to use special ATMs, inserting banknotes of their currency into the machines in order for them to be converted into either e-CNY or physical Yuan banknotes. The pros and cons As with everything, there are pros and cons to the adoption of digital money. On the plus side, they can lead to faster payments, less expensive international transfers, they can simplify accounting and bring people in that don’t use traditional banking models. Of course, it’s not all a bed of roses in the digital money market, though: too many currencies in existence, huge swings in value, the time it takes to learn how to use them, and the fact it can be susceptible to hacking are all criticisms worth considering. The amount of electricity required to make a transaction can also be very high - a single Ethereum transaction, for example, produces 102.38kg of carbon dioxide, which is the equivalent of over 225,000 Visa transactions. Having said that, while cryptocurrency puts some people off with its unpredictability, the introduction of CBDCs means that digital money is becoming legitimised and is here to stay. With new consumers being recruited to this method of money management every minute, is your brand ready to join this currency revolution?