The Rise and Rise of Digital Currencies around the World

Digital Currencies in Payments

For many years now, people have turned to crypto as a way to facilitate their everyday transactions, such as paying for services or even moving funds between people or businesses. These transactions often rely on stablecoins, such as USDC, as these coins are tied to major currencies and are thus relatively safe from significant price swings. Regulation for these types of payments comes in the form of their built-in frameworks. Additionally, where businesses are using crypto for payments, they screen transactions and verify data to comply with the regulations to which they are subject. Over time, we have seen more businesses adopt consumer protection strategies such as disclosures and dispute processing to make these payment options more attractive to their clients.

So, why do people turn to crypto for payments so much so that even businesses are adopting it as mainstays?

• Affordability. Since these transactions bypass intermediaries like banks, they are often much cheaper than traditional payments.
• Speed. Payments are often instantaneous as there are no holds or clearing processes run by third parties.
• Inclusion. These payments are available to anyone who can open a wallet on their smartphone, unlike traditional payments that can be exclusive, such as banks that require opening balances.

People get to enjoy 24/7 access to fast and affordable payment options, which also offer them a great deal of transparency. But even with all these benefits, crypto payments come encumbered with the risk of volatility, especially for the non-stable assets. Additionally, the reliance on tech can intimidate people who are new to digital wallets and who may not understand aspects such as seed phrases, gas fees, and more.

Fortunately, these barriers have not deterred people from using these currencies, given that their benefits outweigh these risks. As such, businesses have simplified these payment options by turning to stablecoins, being open about their fees and settlement times, and also setting up systems that automatically convert the crypto to fiat currencies so as to minimize their risk exposure. At the same time, governments have stepped in with clearer guidelines on stablecoins to offer businesses and individuals more clarity as to the legality of these payments while also providing oversight to ensure consumers are safe. The community has also played a significant role in educating both consumers and businesses about the responsible and safe use of cryptocurrencies to foster trust in these payments while also helping people avoid scams.

Digital Currencies in Remittances

It’s always been the norm for people to send money across borders to their friends and families. For example, migrant workers often send money back home to their families through remittance services, especially where the recipients do not have access to reliable banking services. But while this allows them to provide for their loved ones, this reliance on remittance services is not only time-consuming but also costly. Cryptocurrencies have introduced a faster and easier way to send money abroad. For instance, the same migrant workers can now instantly transfer stablecoins or other forms of crypto to their families, who can then cash out in their local currencies within minutes.

These crypto remittances are governed by the same consumer safeguards that apply to traditional remittance services, such as meeting the financial checks and having enough disclosures. Additionally, while these crypto remittance services are able to provide senders with data protection, they are still required to maintain auditable ledgers for compliance with current government policies.

Just like with crypto payments, crypto remittances come with the benefits of affordability, high-speed transfers, 24/7 access, and transparency. What’s more, they are highly inclusive as they allow people in rural areas and informal economies to have access to money even where typical financial institutions are few and far between. But is it all sunshine and rainbows? Not quite. The adoption of crypto remittances highly depends on the recipients’ proximity to cash-out points or agents. Where these services are far or offer poor conversion rates, then the attractiveness of crypto payments dims. There is also the issue of unfamiliarity. Crypto is still in its early adoption stages, and there are many people who are still skeptical about it. So, in cases where the recipients do not trust this form of remittance, they may choose to stick with the traditional remittance services even where this comes with the cost of low speed and high costs.

Crypto remittances are addressing these concerns by offering guaranteed payouts that foster trust in their services. It also helps that many governments have supported this new form of remittance and have gone as far as encouraging the growth of cash-out networks, more so in rural areas. This competition has played a big part in increasing the transparency and fairness in the payouts. As for familiarity and trust, much work has been taking place within the communities where people are not only educating each other on scams but also on how to verify rates, check transactions, and find trustworthy cash-outs. The more that people at the grassroots levels are embracing these remittances, the more they are becoming commonplace.

Digital Currencies in Commerce

In our modern world, people have become accustomed to the convenience of making purchases at the tap of a button without ever visiting the actual store to review the goods or services in their carts. In fact, e-commerce has become so common that many merchants have fully migrated to online stores, while others have scaled back on their physical stores and invested more in their online sales through their website stores and social media. For the most part, these online transactions have been facilitated through online payment options, such as card payments and e-wallet transfers, while other stores have accepted wire transfers. But now, crypto has become another popular option and not just for facilitating payments but also for creating an entire ecosystem where merchants are able to integrate everything from loyalty points, refunds, memberships, and even payouts to their suppliers. For example, an online store can accept crypto as payment and offer its customers reward points in the form of tokens, which they can trade in for discounts.

But how do businesses stay on top of compliance when accepting crypto? They must keep clear receipts that are auditable and that contain enough customer data for tax purposes. They are also required to create systems centered on consumer rights, such as processing refunds and returns, and must be honest about their store policies. Overall, these crypto stores are subject to the same criteria that apply to other stores, with the additional nuances that apply to crypto payments in terms of privacy and transparency.

As you would expect, crypto commerce has been beneficial to both the merchants and their customers. Businesses are able to sell to more customers as crypto opens them up to people who may not have access to traditional payment methods or may not want to use them. Additionally, since crypto relies on push payments governed by smart contracts, businesses enjoy fewer cases of fraud and chargebacks, which is beneficial for their trust ratings. And as the cherry on top, businesses rely on the same systems to pay their suppliers, which allows them to cut back on delays and improve their relationships with their key partners.

However, we would be painting one part of the picture if we did not talk about the barriers that businesses face with these payments. The biggest of these would be the checkout issues, such as network fees and confirmations, which negatively impact conversions. On top of this, it takes time to come up with payment systems that match the required accounting and tax regulations, and this can be a hurdle for new businesses. They have not allowed these issues to get in the way and have found practical workarounds such as training their support teams, integrating crypto with their accounting systems, and starting with stablecoins before accepting other coins. Their emphasis on transparency has also encouraged more consumers to use crypto in these stores. Governments have come in with detailed tax guidelines and consumer protection requirements, which have allowed merchants to understand their obligations to all their stakeholders. And the community at large has been a big part of this evolution. With more people sharing their expertise and experiences with crypto commerce, it has become easier for merchants and consumers to familiarize themselves with safe and efficient checkout practices.

Digital Currencies in Emerging Economies

Emerging economies refer to financial systems that are highly fragile due to reasons such as limited banking options, high inflation, and so on. In such situations, people do not have access to reliable forms of currency, and this negatively impacts their lives. But with crypto, people in these economies are now enjoying safer and more stable alternatives to receive and spend their money. For example, people living in countries with high rates of inflation are moving to stablecoins as their preferred methods of savings and investments, as these are less volatile compared to the fiat currencies in these regions.

Many people in these emerging economies praise crypto for its ability to buffer them against the instability of their own currencies, thus helping them protect their own purchasing power in lieu of inflation and other factors. Others rely on these payments as a way to receive money for services they have provided across borders. And others use these payments to facilitate savings and investment groups, which offer their members clarity as to the current capital. However, emerging economies face unique challenges such as poor connectivity, limited access to smart devices, volatility in regulations, and crypto scams. Governments are combating these issues by coming up with crypto policies and working with local communities to train people on how crypto works so they can be more aware of the benefits and risks of these payments.