{"id":5954,"date":"2020-08-03T13:33:26","date_gmt":"2020-08-03T17:33:26","guid":{"rendered":"https:\/\/cointelegraph.com\/magazine\/?p=5954"},"modified":"2020-08-03T13:33:26","modified_gmt":"2020-08-03T17:33:26","slug":"crypto-meet-fiat-coffee","status":"publish","type":"post","link":"https:\/\/cointelegraph.com\/magazine\/2020\/08\/03\/crypto-meet-fiat-coffee","title":{"rendered":"Crypto, Meet Fiat. You Two Should Get A Coffee Sometime"},"content":{"rendered":"

\u201cWe accept Bitcoin here\u201d signs remain few and far between, even online.<\/strong> A handful of studies suggest merchants would be happy to accept digital currencies due to the lower transaction fees involved. But volatility is a major concern, and judging by another wild week in crypto it will continue to be so.<\/span><\/p>\n

Commerce is fiat-denominated and will likely remain that way for the foreseeable future.<\/span><\/p>\n

So it\u2019s no surprise that crypto media outlets <\/span>herald<\/span><\/a> the news when major merchants add Bitcoin to their list of accepted currencies. In July, for instance, Travala brought Expedia under the \u201cWe accept Bitcoin here\u201d umbrella \u2014 another sign that crypto payments are, business-by-business, slowly becoming more widely accepted.<\/span><\/p>\n

The mainstream adoption narrative as legitimacy<\/span><\/h4>\n

The mainstream adoption of cryptocurrency, in particular Bitcoin, has long been touted as proof of legitimacy for the cryptocurrency movement. Easily buying a cup of coffee with Bitcoin is widely regarded as a measure of success for the blockchain-based, non-government issued currency experiment that began with Satoshi\u2019s whitepaper.<\/span><\/p>\n

Of course, for long-term holders, that goal has been accompanied by the belief that if crypto is widely used by consumers and equally widely accepted by merchants, the growing demand coupled with its fixed supply would force its price up. There is a certain level of prestige associated with seeing a trend before it becomes popularized (not to mention the obvious financial rewards for cashing in on it).<\/span><\/p>\n

A shift to a currency not issued by a national government is not a fairy tale. The Euro was introduced to the European Union in 2002, and is now the official currency of 19 of its 27 member states, replacing the storied German Mark and French Franc within three months.<\/span><\/p>\n

And the period of westward migration in the United States saw the rise of the Free Banking Era, in which private banks, municipalities, and even railroad companies and stores could issue currencies.\u00a0<\/span><\/p>\n

Even countries who suffer from hyperinflation can revert to dollarization, as Zimbabwe did in 2008.<\/span><\/p>\n

But cryptocurrency is different for a number of reasons than any of those moves away from nationally printed fiat money. The Euro was imposed by Eurozone member states, giving citizens no option but to accept it. A dollarization program has the intention of stabilizing economies susceptible to free fall.\u00a0<\/span><\/p>\n

The American Frontier of the late 19th century was characterized by isolated communities for whom privately issued money made intuitive sense \u2014 until forcibly ended by the National Banking Acts.\u00a0<\/span><\/p>\n

Cryptocurrency is global in reach, being native to the Internet. As Jack Dorsey told Quartz:<\/span><\/p>\n

\u201cIf you consider the internet to be the equivalent to a nation state, it will have a currency native to itself.\u201d<\/span><\/p><\/blockquote>\n

Crypto was designed for the digital world in which we live, and mainstream adoption is a naturally aligned goal. But crypto purism has the potential to make a perfect enemy of the common good. So maybe it’s time for fiat and crypto to put aside some differences… and just get along?<\/span><\/p>\n

In a fiat world, off-ramps remain key for crypto<\/span><\/h4>\n

Just as Bitcoin could not exist without the Internet, its currency (if you\u2019ll excuse the pun) is particularly ingrained in digital nativism. Glaring generational divides show that cryptocurrency is very much a \u201cdemographic mega-trend\u201d.\u00a0<\/span><\/p>\n

The Harris Poll, on behalf of Blockchain Capital, conducted a survey in April last year and found that less than 10% of older Americans were likely to buy Bitcoin. While that figure was double the findings of 2017, it pales into insignificance against the 42% figure for 18-34 year-olds and 35% among 35-44 year-olds.<\/span><\/p>\n

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\"PropensityCourtesy <\/span><\/i>Blockchain Capital Blog<\/span><\/i><\/a>, Propensity to purchase Bitcoin by age group<\/span><\/i><\/p>\n

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Less than 1% of over 65 year-olds owned Bitcoin, according to the same study.<\/span><\/p>\n

It is against this backdrop of sluggish consumer adoption and merchant acceptance that a number of crypto entities have chosen paths of least resistance to bring crypto into use. These bridging services between the crypto and fiat worlds may be anathema to crypto purists, but are essential steps to getting crypto into the hands of a wider set of users.<\/span><\/p>\n

Crypto-native and digital asset-friendly neobanking companies have played a substantial role in building those bridges.\u00a0<\/span><\/p>\n

For example, Nexo and Mastercard have partnered to allow crypto holders to spend crypto at Mastercard-accepting merchants. Crypto.com has partnered with Visa. Revolut has joined forces with Mastercard, as well as both Apple Pay and Google Pay.\u00a0<\/span><\/p>\n

As Zac Prince, founder and CEO of BlockFi argued:<\/span><\/p>\n

\u201cCrypto is making strides in mainstream adoption, but if it\u2019s truly going to work for everyday people, it needs to fit into the customary channels they already know and understand. These are things like credit and debit cards, personal finance and banking apps \u2014 even gift cards. People want to use things that feel familiar to them, and that\u2019s especially true when it\u2019s something as sensitive as personal finance. We just recently launched our mobile app and we\u2019re working on new products like a premium consumer credit card with crypto rewards.\u201d\u00a0<\/span><\/p>\n

Of course, the involvement of the major payment processors undoes many of the advantages crypto has to offer in terms of low fees for both buyers and sellers. But it offers a bridge that remains important when significant segments of the population are accustomed to buying with existing payment methods, and when merchants have difficulties off-ramping from crypto.<\/span><\/p>\n

For users eager to spend crypto with merchants reluctant and\/or unable to accept them, the off-ramp bridging service is critical. Crypto, in this case, isn\u2019t replacing the existing fiat-based infrastructure, but being woven into it.<\/span><\/p>\n

Payment processors may be considered layer two solutions on top of the legacy banking infrastructure. There is no reason not to adopt them as layer two solutions complementing blockchain networks, too.<\/span><\/p>\n

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