Why aren't cryptocurrencies successful as a medium of payment

[EricJones]

I don't think the percentage number of people who are aware or invested in cryptos can be compared to those who aren't. Most people are unaware of its existence, or how it works. This could be a major factor affecting it. It could also be because of the fact that cryptos is not as easy and convenient to use as cash.

[jatoman]

Cryptocurrencies appeared only few years ago. Fiat money exists few thousand years. But I believe that in 5-6 years fiat money will be replaced by crypto in developed countries.

Revolutionary payment methods rarely are introduced.  The credit card was invented in the late 1950s.  It took the invention of the debit card before card payments saw widespread use.  Card payments surpassed cheque payments in the 1990s.
https://www.marketplace.org/2011/08/18/business/news-brief/short-history-debit-card

It will  take a combination of promotion and innovation before cryptocurrency will see widespread use.

[paul gatt]

Electronic money is not considered an official means of payment in other countries. Because most of the transactions through the code thanks to the network connection on the computer. And in particular it is not the official currency used it is not protected by law.

[jatoman]

Electronic money is not considered an official means of payment in other countries. Because most of the transactions through the code thanks to the network connection on the computer. And in particular it is not the official currency used it is not protected by law.

In many countries most payments are not cash.  For decades electronic payments and cheques have far surpassed the number of cash payments.

So, I'm not certain what you mean by "official means of payment" because neither electronic payments nor cheques are an official means of payment, and these are widely used.

Cryptocurrency payments or "crypto payments" are a type of closed-loop payment.
http://www.intelligentvenues.com/faqs/what-are-the-differences-between-open-and-closed-loop-payment-systems/

Just like any other closed-loop payment system such as a credit card, it uses a system of ledgers to track amounts among accounts of consumers, merchants, and banks.  These too use a system of electronic codes that pass through a computer network.  Functionally, crypto payments work like credit card payments.


Now, I don't believe anyone has.  Card interchanges such as American Express or Visa do offer fraud and other protections to consumers.  Crypto payments do not. 

I do not believe this is something consumers are aware.  So, I doubt this is among the top reasons why crypto payments are not widely used.

[jatoman]

Maybe because most of the countries have already a currency that they are being used intensively, changing that parameter would be difficult when you have so much time used to dealing with your currency, plus, bitcoin is still really volatile, it can rise in price but it can also drop abruptaly, and that generates losses to the business that could implement it as a medium of payment

Naturally, all countries have a currency (fiat currency).  And yes, most people are accustomed to paying with fiat currency.

People will change only when there are advantages in using an alternative payment method such as crypto payments. 

So, a question is, "what about crypto payments is better than paying with traditional payments such as cash or card payments?"

From the buyer's perspective, crypto payments provide a way to make electronic payments without requiring a bank account or a credit card.  For people that do not have access to banking services, or do not want to use banking services this is an important advantage.  There are other advantages.

From the seller's perspective, crypto payments eliminate cash payments.  Most merchants find cash undesirable because of the cost of processing cash and the security risk.  Crypto payments are much less expensive than card payments.

[sapnu]

The global economy is nearly 80 trillion USD per year.  Payments using any type of cryptocurrency as a medium of payment is a tiny fraction of this total.

What are some of the reasons preventing cryptocurrency from being more successful as a medium of payment?

Probably, the problem is the market volatility of cryptocurrencies. Fiat as a medium is having a stable market value which us an important aspect in order to promote equality. So since the market value of most cryptos are lacking stability, making it a medium of payment won't be as effective as the functionality of usd and other regular currencies.

[jatoman]

The global economy is nearly 80 trillion USD per year.  Payments using any type of cryptocurrency as a medium of payment is a tiny fraction of this total.

What are some of the reasons preventing cryptocurrency from being more successful as a medium of payment?

Probably, the problem is the market volatility of cryptocurrencies. Fiat as a medium is having a stable market value which us an important aspect in order to promote equality. So since the market value of most cryptos are lacking stability, making it a medium of payment won't be as effective as the functionality of usd and other regular currencies.

No doubt, extreme price volatility is a significant obstacle.

All fiat currencies are volatile in that their values change constantly.  Very few fiat currencies experience extreme price volatility.

So, for a cryptocurrency to be widely used it must avoid having extreme price volatility.

[kunpeter]

I strongly believe cryptocurrency will reach that land mark. We shouldn't forget that these technology's is in its infant stage. Cryptocurrency is coming out strong. Crypto is going mainstream

[torrantz]

The global economy is nearly 80 trillion USD per year.  Payments using any type of cryptocurrency as a medium of payment is a tiny fraction of this total.

What are some of the reasons preventing cryptocurrency from being more successful as a medium of payment?

Probably, the problem is the market volatility of cryptocurrencies. Fiat as a medium is having a stable market value which us an important aspect in order to promote equality. So since the market value of most cryptos are lacking stability, making it a medium of payment won't be as effective as the functionality of usd and other regular currencies.

No doubt, extreme price volatility is a significant obstacle.

All fiat currencies are volatile in that their values change constantly.  Very few fiat currencies experience extreme price volatility.

So, for a cryptocurrency to be widely used it must avoid having extreme price volatility.

And it can be avoided through use the blockchain with the best scalability ever. It will be easy to liquidaty if the blockchain can deliver it in a second without a lot of requirements. It cna be done easily to avoid the extreme volatility in the xrypto market.

[Bromote]

They are fluctuational by nature and I think that makes business kind of nervous, and with a reason, they may sell a product and by the next day the payment could be worth nothing; I think in the future cryptocurrencies will definitely play a big role in mainstream payments, once it get stabilized.

[robaya]

I don't think it has worked, it doesn't mean it doesn't work. we know that market movements are very fast affecting the value of the crypto aser. I think this makes crypto unable to be used as a payment instrument. but there are some that have implemented it, maybe new bitcoin and ethereum are accepted.

[jatoman]

The global economy is nearly 80 trillion USD per year.  Payments using any type of cryptocurrency as a medium of payment is a tiny fraction of this total.

What are some of the reasons preventing cryptocurrency from being more successful as a medium of payment?

Probably, the problem is the market volatility of cryptocurrencies. Fiat as a medium is having a stable market value which us an important aspect in order to promote equality. So since the market value of most cryptos are lacking stability, making it a medium of payment won't be as effective as the functionality of usd and other regular currencies.

No doubt, extreme price volatility is a significant obstacle.

All fiat currencies are volatile in that their values change constantly.  Very few fiat currencies experience extreme price volatility.

So, for a cryptocurrency to be widely used it must avoid having extreme price volatility.

And it can be avoided through use the blockchain with the best scalability ever. It will be easy to liquidaty if the blockchain can deliver it in a second without a lot of requirements. It cna be done easily to avoid the extreme volatility in the xrypto market.

I agree that the best tactic to avoid exposure to extreme price volatility is a cryptocurrency payment application capable of converting from fiat currency to crypto and from crypto to fiat currency in just a few seconds.

Consider an application that works like this.

1. There is a smartphone application that is a closed-loop payment system.
2. Like all closed-loop payment systems, consumers upload fiat currency from their bank accounts or credit cards to this smartphone application.
3. The smartphone application holds this fiat currency until consumers are ready to buy something from a merchant that accepts a specified cryptocurrency.
4. When it is time to make a purchase the smartphone application converts the fiat currency into the cryptocurrency.
5. At the point of sale (POS), consumers use the smartphone application to display QR Code (or, barcode) that the merchants' POS systems can read.
6. The POS system registers the sale and accepts a crypto payment from the consumers.
7. Merchants now have cryptocurrency they can spend.
8. Or, merchants can convert this cryptocurrency into fiat currency

The amount of time between #4 and #8 can be a few seconds.  The result is neither consumers nor merchants are exposed to price volatility.

[poodle63]

I don't think it has worked, it doesn't mean it doesn't work. we know that market movements are very fast affecting the value of the crypto aser. I think this makes crypto unable to be used as a payment instrument. but there are some that have implemented it, maybe new bitcoin and ethereum are accepted.

There's some payment gateway out there that gives the fixed rate when the client is about to purchase with bitcoin therefore preventing fluctuation that could happen when the transaction was made.
the money then will be sent to the seller's account in form of USD not cryptocurrency anymore, guess that solve the problem.

[Ruby_Official]

The global economy is nearly 80 trillion USD per year.  Payments using any type of cryptocurrency as a medium of payment is a tiny fraction of this total.

What are some of the reasons preventing cryptocurrency from being more successful as a medium of payment?

Ruby Exchange is planning to develop an advanced mobile trading platform and launch its Mastercard/NFC service.
Hopefully, in few years, you can use RBY tokens just like cash!

[jatoman]

I don't think it has worked, it doesn't mean it doesn't work. we know that market movements are very fast affecting the value of the crypto aser. I think this makes crypto unable to be used as a payment instrument. but there are some that have implemented it, maybe new bitcoin and ethereum are accepted.

There's some payment gateway out there that gives the fixed rate when the client is about to purchase with bitcoin therefore preventing fluctuation that could happen when the transaction was made.
the money then will be sent to the seller's account in form of USD not cryptocurrency anymore, guess that solve the problem.

Yes, ideas like this help address the price volatility problem.

[Valzador]

be sent to the seller's account in form of USD not cryptocurrency anymore, guess that solve the problem.
Yes, ideas like this help address the price volatility problem.

Fixed payments will indeed overcome the problem of volatility but people need certain regulations, crypto does not have that.

[humber1]

I think there are many factors, and the most important thing is that the volatility of the cryptocurrency price is unstable and the legal currency is relatively stable. The government's support and promotion is also one of the most important factors.

[Dcoollakky247]

This could be as a result of the vulnerability in cryptocurrency which I don't see as an excuse. The vulnerability is due to the lack of policies put in place to check and balance the system.

[Veter2000]

The two main reasons are the unregulated status of cryptocurrency at the state level or at least one large state. For example, PayPal may not be recognized in any country, but its recognition in the United States allows sellers to accept payments to PayPal.
In the second reason of course this is a small prevalence and as a consequence of this high volatility relative to the US dollar.

[jatoman]

be sent to the seller's account in form of USD not cryptocurrency anymore, guess that solve the problem.
Yes, ideas like this help address the price volatility problem.

Fixed payments will indeed overcome the problem of volatility but people need certain regulations, crypto does not have that.

Collaborating with regulators will result in a design for a cryptocurrency that meets the needs of regulators.