I recently returned from Bitcoin 2022, the world’s largest bitcoin conference, in Miami. Bitcoin (and crypto more widely) is changing the financial space, but payments is going to be one of the last areas impacted. My big takeaways on the state of play today:
- Very few companies actually touch crypto – these are mostly the exchanges and the fully crypto-native companies like NFT marketplaces. Nearly all the payment companies I spoke to are offering fiat payment, banking and treasury services to these crypto-native companies. In some cases, the payment companies are simply ‘fronting’ services for banks, usually smaller banks as the big banks are not in the space yet.
- Merchants are definitely demanding more crypto payment options, and this will help consumers spend more. But there are still several key steps towards increased uptake for crypto, most notably to move crypto from what is still primarily an investable asset rather than a form of payment.
- There continue to be lots of issues around interoperability. There is not clear market or exchange rate between Ethereum and Bitcoin, for example.
- Trust is still an issue and will be critical for financial usage to become mainstream. The conference warned of bad actors (switch off Wi-Fi and Bluetooth) and KYC is still a challenge in the space with plenty of products built to get around ID or location tracking. Hacks continue to occur, some very large.
The shift to mainstream crypto will come but is a generational move (not just 1-2 years) as the Web3 and metaverse generation (teenagers and 20-somethings now) start to become more active financially and begin to have responsibility in companies. This group needs no education around crypto and are the ones who will drive change.