The Case for Crypto Payments
Alex Stoicescu
Aug 14, 2024
15 min.
Introduction
Purchasing two pizzas for 10,000 Bitcoins in 2010 was the first real-world crypto payment ever and showed how cryptocurrencies could be used as a decentralized payment solution. From the beginning, Bitcoin's vision was to allow users independent control over their finances and the ability to carry out mutual settlements without intermediaries. Despite such significant technological advances, cryptocurrencies are still not a commonly used means of ordinary payments. Most use them either to speculate with or to try and get their money away from, for example, the inflationary hold of the Argentine economy. While companies like Starbucks, Ralph Lauren, and Microsoft now accept cryptocurrencies, the majority of those transactions still happen within industries such as gaming (casinos and betting, to be fair) and luxury goods. As the crypto industry grows, they will come to represent an opportunity to redress the failings in established financial systems - opportunities being pursued by Request Network.
Understanding crypto payments
Crypto payments involve conducting transactions using digital currencies like Bitcoin, Ethereum, stablecoins, and any other token you can imagine. These currencies operate on blockchain tech, ensuring transaction security and transparency while eliminating the need for intermediaries like banks.
The trifecta behind crypto payments
Blockchain Technology: Decentralized ledgers where transactions are recorded securely and transparently. This considerably reduces reliance on multiple intermediaries and increases transaction trust and integrity.
Digital Wallets: Cryptocurrency holders store digital assets in digital wallets, facilitating frictionless payment sending and receiving. There are online and offline wallets, each with different security levels.
Smart Contracts: An automated contract between parties executes a transaction upon fulfilling given preconditions, reducing the necessity of manual processing and third parties.
Why should we adopt crypto payments?
Crypto payments offer several advantages over traditional payment methods, addressing many longstanding challenges in the financial system. According to a Coinbase report, the top executives of Fortune 500 companies believe that the following are the top 5 benefits of using crypto (stablecoins in particular) for payments:
Instant settlement
Lower fees
In-company international money transfers
Easier treasury management
Near-instant cross-border transfers
Adding to the CEOs' perspective, we believe that the major benefits of crypto payments are efficiency, financial inclusion, and enhanced security.
To start using Request Network for Web3 payments, visit our Payments page.
Lower transaction costs and faster settlements
Crypto payments often incur lower fees and offer faster processing times than traditional methods, making them ideal for cross-border transactions. For example, traditional cross-border payment systems can cost between 5% to 10% of the transaction amount and take several days to process. In contrast, crypto transactions can be completed in minutes with fees as low as a couple of cents.
Financial inclusion
Cryptocurrencies have democratized access to financial services, especially among the unbanked and underbanked populations. In fact, when people cut out the middlemen and make crypto payments, they participate in the global economy without a bank account, marking an impressive departure from the current, outdated financial system. In some regions of Latin America and Africa, where traditional banking infrastructure is limited, cryptocurrencies provide a vital means of financial inclusion, enabling people to send and receive money easily and without the many needs associated with traditional finance.
Enhanced security and fraud prevention
It is well known that such technology is strong in the security measures taken to reduce the risk of fraud and maintain transaction integrity. Unlike traditional systems, which depend on centralized authorities, blockchain operates using decentralized verification processes. Security measures have been taken a notch higher through the use of quantum-resistant encryption and real-time fraud-detection systems, making crypto payments more secure than traditional means of payment.
Real-world use cases of crypto payments
The practical applications of crypto payments across sectors are becoming increasingly evident, showcasing their versatility and potential to be transformative in all aspects. At Request Network, we are building a secure, efficient, and user-friendly infrastructure for facilitating crypto payments. Now, let's have a look at a few significant use cases.
E-commerce / Retail
In e-commerce, crypto payments facilitate ease of payment by lowering transaction costs and allowing global selling without the challenges of foreign currency exchange. Major North American retailers like Overstock and Newegg have integrated crypto payments to offer customers the option of purchasing goods with Bitcoin and several other popular cryptocurrencies. Request Network supports such integration through automated invoicing and tracking of real-time payments for high operational efficiency and customer satisfaction. This trend will expand further with increasing numbers of retailers adopting crypto payment solutions.
Cross-border transactions
Taking out the traditional middleman allows businesses to settle cross-border transactions by blockchain at an interval of minutes, hence at a lower cost and greatly improving cash flow. This interoperability across multiple blockchains greatly increases the platform's utility for businesses that operate in many international markets.
Decentralized Finance (DeFi)
On platforms like Aave and Compound, users can lend, borrow, and earn interest on cryptocurrencies without using traditional banks' services. Request Network’s support for smart contracts automates these financial processes, offering users greater control and flexibility over their assets.
Real-World Asset (RWA) tokenization
Tokenizing real-world assets (RWAs) is an emerging trend that allows physical assets like real estate, commodities, and art to be represented digitally on a blockchain. Request Network facilitates this process by providing a reliable platform for secure and transparent transactions. Tokenization makes buying, selling, and trading fractional ownership of assets easier, increasing liquidity and opening up investment opportunities to a broader audience.
Charitable donations
Organizations such as the Red Cross and Save the Children would be able to accept crypto donations through Request Network infrastructure, thus allowing donors to support their respective global causes securely and efficiently. This could be done through blockchain, enabling transparency and allowing the donors to trace their donations - quite a way of making the donation process trustworthy. With transparency and ease of use, more people can join in and give donations to charitable organizations!
Current adoption trends
The adoption of crypto payments is a growing trend, driven by increasing interest from both businesses and consumers.
Global adoption trends
Cryptocurrency payment values have experienced significant growth globally between 2020 and 2024, driven by increasing adoption by businesses, consumers, and financial institutions.
Businesses and industries: Major companies like Microsoft, Starbucks, and AT&T accept cryptocurrencies as payment, while gaming and digital services also embrace crypto payments. According to a PwC report, the global market for crypto transactions is projected to reach $8 trillion by 2030, with a compound annual growth rate of 15%.
Consumer interest: While more consumers are becoming interested in using cryptocurrencies for everyday transactions, widespread adoption is still in its early stages, with challenges such as regulatory uncertainty and technological barriers to overcome.
Financial institutions have developed services that facilitate the conversion of crypto payments into fiat currency, minimizing the risks associated with cryptocurrency price volatility. This innovation makes it easier for merchants to adopt cryptocurrencies without the burden of managing fluctuating market values.
Barriers to adoption
Regulatory challenges: The lack of a unified regulatory framework creates uncertainty for businesses and consumers, hindering widespread adoption. However, initiatives like the EU’s MiCA (Markets in Crypto-Assets) framework aim to standardize regulations and promote innovation.
Volatility and scalability: The volatile nature of cryptocurrency prices and concerns about the scalability of blockchain networks can deter some businesses and consumers from adopting crypto payments. Stablecoins, pegged to traditional assets, offer a potential solution by providing stability, while layer 2 blockchains enhance scalability and lower the fees.
Consumer trust: Building trust is crucial for mass adoption. Integrating crypto payments with traditional systems, such as using crypto debit cards from Visa and Mastercard, can help bridge this gap.
User experience: Many interfaces are intimidating, requiring users to manage digital wallets and understand blockchain intricacies. The fragmented ecosystem and security concerns further deter users. Improving usability through simplified interfaces, enhanced security, and better interoperability is crucial.
How can Request Network help increase adoption?
Request Network offers many benefits that enhance the payment experience for businesses and people. Let's explore the most important ones.
Extensive blockchain coverage
Request Network supports payments across more than 25 blockchains with ERC-20 tokens. This extensive coverage allows people and businesses to integrate a wide array of cryptocurrencies into their applications and services, catering to diverse needs. Your business could even do payroll in its own launched memecoin.
To start using Request Network for Web3 payments, visit our Payments page.
Privacy and security
The platform offers both public and private encrypted payments, ensuring confidentiality and safety for users. By using blockchain tech, Request Network reduces the risks found in traditional payment systems, offering a secure foundation for transactions.
No transaction fees
One significant barrier to crypto payment adoption is the cost associated with transactions. Request Network eliminates this barrier by covering protocol fees through its Request Node operators. However, the transaction maker will need to pay the gas fees associated with the blockchain of your choice for transactions.
This fee-less model allows businesses to offer cost-effective transactions to their users, enhancing the appeal of crypto payments and encouraging broader adoption.
Ownership of financial data
Data ownership is a critical principle of Web3. Request Network aligns with this ethos by ensuring users retain their financial data ownership. By decentralizing data control, Request Network empowers users to manage their financial information without relying on third-party custodians, enhancing trust and engagement in crypto payment solutions.
You can read more about financial data ownership in one of our blog posts.
Interoperable and immutable receipts
Request Network provides interoperable and immutable receipts for each transaction, enhancing transparency and accountability. These receipts facilitate accurate financial reporting and auditing, making it easier for businesses to comply with regulatory requirements and maintain accurate financial records.
Seamless integration and automation
Request Network’s platform is designed for easy integration, allowing developers to seamlessly incorporate crypto payments into their applications without extensive technical overhead. The network’s API enables automated invoicing, payment requests, and financial reporting, streamlining business processes and reducing administrative burdens. Moreover, our recently launched invoicing template allows anyone to add Web3 invoicing features to their platform for free within minutes.
To start using Request Network for Web3 payments, visit our Payments page.
Conclusion
The way we handle transactions is changing with the rise of crypto payments. These digital transactions bring many benefits, like making financial services more accessible, reducing costs, and boosting security. The widespread adoption of crypto payments could significantly alter global finance and economic systems. A shift toward a fully digital economy may redefine how we perceive and use money, influencing everything from personal finance to international trade.
By tackling today's challenges and looking ahead to future possibilities, everyone involved can tap into the full potential of crypto payments and help spark the next wave of financial innovation. Request Network is glad to help anyone with a dream bring it to life by providing an efficient, reliable infrastructure and a grants program.
