What’s the importance of cryptocurrency payments going mainstream?

What’s the importance of cryptocurrency payments going mainstream?

A sign of the growing mainstream acceptance of cryptocurrency came recently with the announcement that US-based cinema chain AMC will soon be accepting cryptocurrency payments. It comes just a few months after PayPal decided to allow US consumers to use crypto to make purchases, and news that Mastercard would be supporting cryptocurrency payments across its network. The question is though, while use of crypto for financial transactions may makes sense, is buying your movie tickets and popcorn with Bitcoin worth the bother?

In August, AMC announced that it would for the first time accept Bitcoin as payment. This was followed by news that moviegoers could also pay for tickets online with Ethereum, Litecoin, and Bitcoin Cash. AMC’s CEO Adam Aron tweeted: “Cryptocurrency enthusiasts: you likely know @AMCTheatres has announced we will accept Bitcoin for online ticket and concession payments by year-end 2021. I can confirm today that when we do so, we also expect that we similarly will accept Ethereum, Litecoin and Bitcoin Cash.” One unexpected reaction to the news came from the Dogecoin community on Twitter, who see the meme coin as a more natural crypto payment coin.

Top DogeCoin YouTuber @Mark Wallace tweeted in reply to Aron: “You could have effortlessly had millions of new supporters by accepting #Dogecoin. No reason not to when you literally accept Litecoin which is also based off BTC. Selling all my AMC stock to buy more $Doge. Ridiculous.” The strength of reaction is perhaps not surprising considering that Shark Tank star and billionaire owner of the NBA team Dallas Mavericks, Mark Cuban, told US-broadcaster CNBC recently that not only is Dogecoin “a medium that can be used for the acquisition of goods and services,” but that also “the community for doge is the strongest when it comes to using it as a medium of exchange”.

Certainly, BigONE believes that mainstream cryptocurrency adoption is a key driver in the price of digital currencies earlier this year. This belief is supported by global finance executives polled by ‘Big Four’ auditors Deloitte. In Deloitte’s 2021 Global Blockchain Survey, 81% of the financial services executives believe that blockchain technology is “broadly scalable” and has achieved mainstream adoption. In the retail sector, Walmart and Amazon’s crypto recruitment announcements have raised awareness that these retail behemoths may be planning to open their doors to cryptocurrencies. It maybe a little ambitious to believe the giant online retailer Amazon will go as far as implementing Dogecoin for payment purposes, but that hasn’t stopped a petition titled ‘Doge4Amazon’ from picking up strong community support in 2021. Started three years ago with 20k supporters, in a sign if then times in the last 6 months its jumped from 75k, to 100k, and now to close to 250K signatures. Consumers can already use cryptocurrency to pay at other retailers such as Overstock, Best Buy, and Starbucks via third-party apps.

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What’s the importance of cryptocurrency payments?

When Bitcoin was first introduced in January 2009, it promised to be the world’s first digital currency that did not require the support of a bank or government, its supporters claiming it promised a decentralized payment method that would change the world’s economic structure. With the emergence of more and more cryptocurrencies, the total market value has surpassed $2 trillion. Although blockchain technology is transforming many industries, cryptocurrency has yet to reach its full potential as a payment method.

One of the main factors influencing the adoption of cryptocurrency by both businesses and consumers as a payment method is its volatility. While Bitcoin’s price has risen by more than 50 million percent since its inception at $0.08, it has experience d many peaks and troughs in value along the way, making people wary of using it for consumption. For example, by the end of 2013, bitcoin had reached a fresh new high of US$1,164. But before reaching its 2021 peak, Bitcoin moved much lower before going higher — between 2014 and 2015, stagnation and volatility chipped away at the crypto’s value, reducing it to US$245 by October 2015, according to an analysis in Blockchain Investing News.

While there are certainly challenges in accepting Bitcoin for payments, especially when the price volatility is factored in, more and more merchants are looking to add crypto purchasing to their business. According to a survey last year by BitPay, “up to 40% of customers that pay with crypto are new to the merchant. Second, purchase amounts are twice that of credit card purchases. Third, crypto is less expensive than card cards, and lastly, there are no fraud-related chargebacks”.

Bitcoin has received a lot of attention as a store of value, which is why people like Mark Cuban consider it digital gold. Unfortunately, the use of cryptocurrency in daily payments has been hampered by high transaction fees and relatively slow transaction speeds. BigONE believes that now that AMC has decided to accept Litecoin, Bitcoin Cash, and Ethereum, the use of crypto will become more attractive to businesses. With Litecoin and Bitcoin Cash are designed to be faster and cheaper versions of Bitcoin, they could be better suited for digital payments going forward.

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That said, the recent legalization of Bitcoin in El Salvador shows that adoption of BTC for payments can come from unexpected quarters. As reported in Cointelegraph the recognition of Bitcoin (BTC) as legal tender has opened up new payment options for its citizens, with fast-food empire McDonald’s accepting payments in the cryptocurrency through the Lightning Network. “Lightning Network will likely prove invaluable if El Salvador hopes to achieve the mass adoption of Bitcoin payments. Beyond immediate transactions, however, El Salvador’s Bitcoin gambit could prove successful by streamlining global remittances, increasing the wealth of its citizens and attracting crypto-focused entrepreneurs to the country,” the report concluded.

Is it worth using crypto to buy movie tickets?

Popular cryptocurrencies including Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, are all available for purchased on the BigONE Exchange. The question is whether these are better suited for long term investment, than for everyday payment purposes? On the other hand, cryptocurrencies are not company stocks; some were intended to be used as a payment method from the outset. Therefore, improving the cryptocurrency industry’s practicality and adoption rate will be critical to its success in this regard. However, to use your digital currencies as a regular payment method, you should always consider transaction fees and cryptocurrency volatility.

A clear use case for cryptocurrency comes with international money transfers, for example, with low transfer fees and fast transfer speeds, and anyone can use it. “However, Bitcoin has become less attractive for remittances due to the increasing cost of Bitcoin transactions. Some competing cryptocurrencies, such as Ripple and Dash, are also targeting the remittance market with substantially lower fees,” suggested a recent report in Investopedia.

Another critical factor to consider in crypto payments is taxation. Many countries worldwide require cryptocurrencies to be taxed as property. In addition, the holder must report the cryptocurrency’s time of use and purchase and may be subject to capital gains tax. Thus, using your cryptocurrency is the same as selling it to the US tax authority, the IRS. Recording transactions may work for large purchases, but it could prove difficult and expensive for small payments, such as movie tickets. As reported in Forbes, this is because in the US crypto taxes are based on a 2014 ruling that determined cryptocurrency should be treated as a capital asset, rather than a currency like dollars or euros: “Let’s say you bought $20 worth of Bitcoin and held it as it rose in value to $200. If you used the bitcoin to buy $200 worth of groceries, you’d owe capital gains taxes on the $180 in profit you’d realized — even though it seems as if you spent the Bitcoin, rather than sold it. For the IRS, it’s the same thing.”

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In simple terms how you use cryptocurrency depends on why you hold cryptocurrency in the first place. For example, if you believe in the wider benefits of decentralization, you are more likely to take advantage of AMC’s new payment option, to pay in crypto for the latest movies. However, you should also regard cryptocurrency as a long-term investment. Indeed, whether AMC’s move will be copied by its competitors remains to be seen. There’s also plenty of support on Twitter in response to the tweeted announcement. Twitter user @SackarisJames and self-proclaimed AMC stockholder posted: “Here come all the ‘why would I spend Bitcoin on movie tickets’ people but in the next breath ‘we need more places to accept crypto, so it becomes a form of currency’”.

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Shorten version can be found at: https://hackernoon.com/are-crypto-payments-going-mainstream-with-amc-news

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”. Currently, he is appointed as Chairman, Asia for BigONE Exchange and Chief Digital Advisor, Mongolia Productivity Organisation. Anndy is part of the Gyeongsangbuk-do Blockchain Special Committee, Government of Republic Korea, together with industry experts such as Brock Pierce. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region and was previously the Advisory Board Member of Hyundai DAC Technology.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

You can read more about Anndy’s work at www.anndy.com

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