Why haven’t crypto currencies been successful as a means of payment?

Paying with crypto currencies has long been at the center of discussions about why they exist and what they are useful for.

But despite their high growth and the excitement during the upward phases of the various cryptomonies, making payments remains the last resort at best. Cointelegraph interviewed both merchants and industry leaders to find out why.

Who is using cryptosystems today?

As a general rule, payments using crypto are made where there is no other. This continues to be the case for markets in the darknet, which according to a January 2020 Chainalysis report continue to record new volume highs.

Darknet market revenue vs. Darknet market share of all cryptocurrency received by services

Despite their small share of crypto activity, markets that sell mainly illegal products simply cannot use traditional means of payment. However, these markets are unattractive compared to the traditional cash drug trade, which is estimated to be worth approximately $400 billion annually.

On the legal front, Crypto.com CEO Kris Marszalek told Cointelegraph which types of products see significant use of cryptosystems:

„Now it’s all about cryptos. So we have Travala, which is the travel agency that accepts crypts. Ledger.com […] when we launched it the first day we were generating a volume similar to Mastercard’s.“

Marszalek talked about the figures of the „leading providers of payments in crypto“ BitPay and Coinbase Commerce, which report annual volumes of $1 billion and $200 million, respectively.

„The figures are very small,“ Marszalek said bluntly.

In fact, compared to Visa’s $2 trillion figure for a single quarter in 2018, crypt transactions have a long way to go.

The problem with crypto currencies

Marszalek identified a number of problems that are preventing the adoption of payments in crypts, lack of trust being one of them:

„For the vast majority of merchants, as well as for the vast majority of retail banking users, the crypto world remains an unknown quantity, something they have not yet learned to trust.

Peko Wan, CEO of Pundi X, the provider of cryptomoney outlets, told Cointelegraph a similar story:

„The general perception of cryptomonies today is that they are ‚complicated‘ to use or that it is risky to have them.

The example of this is a British airplane simulator company, which Cointelegraph interviewed. Despite having the option to pay for crypts, they said that „no one has ever paid using cryptomonies“. They also said, „we’re suspicious because there are a lot of impostors out there.“

Even among the most amateur users they say that making payments is the last use they would make of them. This is best exemplified by the WBTC broadcast for the decentralized funding of the Ethereum, which is now more than twice the size of the entire Lightning Network.

Marszalek believes that part of this is the chicken-and-egg problem, which limits the number of merchants who accept crypto:

„Because if you only have 50 million people in the

crypto world, the merchants have very little incentive to implement it, unless they have a business that has an audience directly interested in crypto.“