With the crypto market continuing to grow in size, more and more financial institutions are embracing crypto payments. Very recently, Mastercard revealed their intention to support select cryptocurrencies. Their blog post hinted at the use of stablecoins rather than digital assets. However, nothing has been confirmed yet.
For now, we’re left to speculate: Will more financial institutions incorporate crypto payments into their systems? And will 2021 be the year crypto payments become a norm? Given recent events, this seems very likely.
The Rise Of Cryptocurrencies
To understand why financial institutions are beginning to embrace cryptocurrencies, we need to discuss their rise in popularity. One of the biggest reasons for it involves the increased level of security they bring to the consumer. There is an added layer of safety when making crypto payments. For one, it doesn’t expose your personal data. And while it does make a record of your transaction on the blockchain, it is not easily accessible to the public. As for merchants, they can reduce fraud, expedite transactions, and make international trades more accessible. A study by BitPay even found that businesses that accept crypto payments attract new customers and generate more sales.
Additionally, cryptocurrencies are growing in value, and this is in spite of the repercussions brought about by the global health crisis. This is evident on FXCM’s trading heat map, which shows that the digital assets remain strong despite a volatile year. The strongest pairs against the dollar are currently Bitcoin, Stellar, and Litecoin. Of these cryptocurrencies, Bitcoin has seen the most growth and is, unsurprisingly, one of the biggest reasons why cryptocurrencies are now more widely used. Following its surge in 2020, CNN reports that the value of Bitcoin continues to break records. Its price hit an all-time high at $49,714.66 (R726,858.66) in the middle of February. This is all the more surprising considering that last year, the price of Bitcoin was only around $10,000 (R1462,06.10). Some traders even view it as a safe haven, overtaking gold, which used to be regarded as the best safe-haven investment.
What to Expect
The growing value of Bitcoin and other cryptocurrencies has pushed fintech companies, most notably PayPal, to incorporate crypto payments in their services. Following the company’s announcement, PayPal CEO Dan Schulman said that the shift to digital currencies is inevitable and that it brought with it a myriad of advantages. No doubt, other financial institutions believe the same.
This year, we can expect more financial institutions to adopt crypto-based services. PayPal and Mastercard are only the beginning, and Wall Street giants are warming up to the idea. When this becomes the norm, traders and investors will find it easier to invest in cryptocurrencies. As for regular consumers, this new option promises a safer, more anonymous way to make online transactions. It will also pave the way for smoother international payments with lower transaction fees.
Overall, the implementation of cryptocurrencies in everyday financial services seems to be a step in the right direction. If done right, it can bring more security and convenience to both financial institutions and their consumers.