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When (if Ever) Will We Use Crypto for Payments?

Last Updated December 31, 2023 5:27 PM
Josh Adams
Last Updated December 31, 2023 5:27 PM
Key Takeaways
  • Since the earliest days of Bitcoin, hardcore fans have wondered when crypto will be used for payments.
  • While some businesses do accept cryptocurrency, the numbers are incredibly low.
  • CCN asked several industry experts on what we can expect over the coming years.

Cryptocurrencies have come a long way since the early days of Bitcoin (BTC). What started as an experimental digital currency is nearly a two-trillion dollar asset  class with growing mainstream adoption. But when it comes to using crypto for everyday retail purchases like buying coffee or clothes, there are still some key obstacles standing in the way.

CCN spoke with several crypto experts to get their take on the barriers preventing wider retail adoption and when they think crypto payments could realistically become commonplace for daily transactions.

Merchants Lack Legal Clarity Around Crypto

Currently, less than 3,000 businesses in the US accept cryptocurrency for payments, and fewer than 16,000 globally (although these are estimates). One major roadblock many pointed to is lack of clear regulations around cryptocurrencies.

Different countries, and even areas within countries, can have widely varying rules. Even in places where rules are ostensibly clear, like the United States, the industry disagrees with regulators on the clarity. As a result, it is fighting for a new rulebook that engages with crypto as a new kind of asset class.

Tayler McCracken, Editor-in-Chief at digital asset educational platform Coin Bureau, said: “The primary hurdle is regulatory uncertainty, particularly in the U.S., where the classification and taxation of digital assets remain ambiguous.

“This uncertainty makes merchants hesitant to adopt crypto payments.”

Petr Kozyakov, CEO of crypto payments company Mercuryo, agreed regulatory clarity is essential. He said: “All stakeholders, including payment systems, regulators, end-users, and financial partners, need a shared understanding of the safety measures in place to ensure that risks are effectively mitigated.”

Technical Limitations of Blockchains

Beyond regulations, most experts cited technical limitations of blockchain networks and the volatility of cryptocurrency prices as additional barriers.

Max Smotritskiy, Co-Founder of the CryptoOracle Collective, said: “Currently, the processing times on these networks are too long, and the cost per transaction is too high. That is why level 2 networks have been developed on Ethereum to provide faster transactions/lower costs.

“However, Bitcoin, in my opinion, will never be the transaction layer for retail.”

What infrastructure is already there is arguably not best placed  for retail transactions, at least at the moment. The Bitcoin Lightning Network, aimed at boosting Bitcoin’s scalability and speed, has failed to significantly cut Bitcoin’s transaction fees, as these depend on various factors beyond just network congestion. 

Moreover, users face extra costs for setting up and maintaining Lightning Network channels. The network’s requirement for continuous online nodes exposes it to security risks, including potential coin theft and fraudulent channel closures when offline. Bitcoin’s high volatility—an upside for day traders—also doesn’t help things.

Crypto and Adoption: A Chicken and Egg Scenario

One of the big barriers to vendors and customers transacting in cryptocurrency is the fact that, presently, neither party is likely to own much cryptocurrency – if any. In fact, crypto adoption is down in compared to the highs of 2021, according to Chainalysis . Contrast that with fiat currency which, almost by definition, virtually everyone uses.

Crypto adoption, according to Chainalysis.
Crypto adoption across the globe, according to Chainalysis.

Kozyakov added: “The main challenge, of course, lies in the uncommon nature of cryptocurrency acceptance.

“Currently, customers cannot easily walk into any store and make purchases or order services using crypto. The anecdotal thrill of crypto enthusiasts discovering specific locations in certain countries that embrace crypto is a real-life illustration of the rarity of such cases.”

For many vendors, whose first priority is running their business, jumping through the technical hoops to enable payments in crypto is far down their list of priorities. Essentially, when none of your income is at risk by not adopting crypto for payments, why bother? 

Crypto investments across the world.
Distribution of consumers worldwide who invest in cryptocurrency from 2008 to 2022, by starting year of their first ever investment. Source: Statistica

Three to Five Years?

So, when can we realistically expect to use Bitcoin (BTC) or Ethereum (ETH) instead of a credit card at the coffee shop? The consensus seems to that it could become a much more common option in the next five years.

McCracken said: “We anticipate that within the next five years, crypto payments will become mainstream in Western nations, following the resolution of regulatory uncertainties.

In his view, cryptocurrencies offer “numerous advantages” over traditional payment methods, including transparency, the elimination of third-parties, and instant settlements.

Kozyakov suggested it may happen even sooner if crypto companies can effectively integrate with existing payments infrastructure. The first step would be to integrate crypto with widely used platforms like Visa and Mastercard. After that further integration with local payment rails could take place.

He said: “Over the next three years, we can anticipate the development of this interoperability as the main trend in the crypto and retail space.”

Not all experts are convinced widespread retail adoption will happen that quickly. Jake Hunsbusher of the crypto lending platform Kinetic is confident that customers swapping debit cards for DOGE won’t happen overnight. He said: “While it’s feasible, the industry at large will need to remedy mainstream concerns head-on and embrace the slow roll of mass adoption.”

That, among other things, means fixing poor UX. This is a significant hurdle for consumers who prize efficiency and ease-of-use over the promises of decentralization.

Security, or Not a Security?

When asked about the importance of designating crypto assets as securities, as the United States Securities and Exchange Commission(SEC) has done, most respondents felt it was not a critical factor for retail payments. 

As Tadeo, Developer Relations Lead at Spark, put it: “I don’t see users sending and paying with securities. It’s always a delicate balance between allowing innovation to flourish and protecting the consumer from harm.”

However, Kozyakov said everyone needs to draw a line between crypto securities and other kinds of crypto asset. He said: “It becomes evident that a clear distinction should be drawn between crypto as an investment asset and crypto as a method of payment.

“This differentiation underscores the multifaceted role that crypto plays, acknowledging its diverse applications beyond merely being an investment vehicle.”

So, while regulations continue taking shape and blockchain technology evolves, expect to keep using old-fashioned cash or cards for your skinny vanilla latte for a little while longer. 


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