Buying your coffee at the biggest coffee chain in the world is now only possible in your local currency, or maybe using the companies prepaid system in its mobile app. For bitcoin and cryptocurrencies in general it’s important to reach mainstream adoption, and what’s a more mainstream goal than to buy your coffee at Starbucks using bitcoin? That’s the ultimate goal, and we might be getting their in the next few years.
Bitcoin millionaire Tim Draper invested $1.25 million in a blockchain fintech startup called OpenNode. Draper and lots of ‘Bitcoin believers’ think that BTC will hit $100.000 or more in the next three to five years. Draper is investing in initiatives that can help speed-up the process of bitcoin adoption. OpenNode is one of those projects.
OpenNode is aimed at enabling cryptocurrency payments at existing companies. Ideally this would mean that companies like Starbucks, Subway, Amazon, McDonalds and your local liquor store will start accepting crypto payments. OpenNode isn’t the only company invested in this field, but more about that in a bit.
The way OpenNode works is very much comparable with credit card payments. However, the retailer only needs to deal with a 1% fee (or less), while credit card companies often have a fee around 2 percent. This gives crypto an advantage over the established payment systems.
The payment system makes use of Bitcoin’s Lightning network. This makes transaction fees almost non-existent. Making a five dollar payment on the traditional bitcoin network requires a $0.06 fee on top of the price for your coffee. Using the Lightning network these transactions are basically free, $0.00001 per transaction. This makes the system suitable for microtransactions in video games, on websites and at small businesses around the world.
OpenNode immediately converts bitcoin payments into a local currency. It supports the US Dollar, Euro, British Pound, Australian Dollar, Mexican Peso, Brazilian Real and the troubled Venezuelan Bolivar. The company already build plugins for existing online commerce platforms like WooCommerce and OpenCart. Withdrawing money can be done through wire transfer and zero-fee bitcoin transfers.
So far, I’ve been talking mainly about bitcoin. Simply because that’s the currency Tim Draper is aiming for. But in my opinion it might as well be another coin, Litecoin, Tron, or Binance’s BNB token. For now Bitcoin is still the leading figure, but during 2017 we saw that the leading position of BTC was shaking on its foundations. It dropped from 85% in March 2017 towards a bottom of 34% in January 2018. In recent months the dominance of bitcoin is around 53~54%.
It’s likely that a new bull run is capable is stirring things up. Ethereum already lost its second position to Ripple. With new technologies being invented and adoption of cryptocurrency across the world increasing, we can only speculate on the position of bitcoin in the next five to ten years. Without a doubt bitcoin will be a part of the future of crypto, but whether it will have the liquidity, demand and usability that’s needed to be an integral part of our lives… that’s something that remains to be seen.
Initiatives like OpenNode are one step in that direction, but there are multiple roads leading to Rome, and that city wasn’t build in one day. PundiX – also known for their blockchain smartphone – is also working on using crypto as an everyday payment option. They already did tests at major EDM festivals and even have POS devices on the market for use in shops. While Kyber Network wants to integrate every ERC-20 token as a possible payment option, even though this would be mainly aimed at online retailers and services.
However, there’s still a point to be made in favor of Tim Draper’s ideas. Despite the bear market and the incredible drop in value, the amount of bitcoin ATMs doubles worldwide. There are now over 4000 machines worldwide, and today it was announced that seven bitcoin ATMs will be placed in Argentina. There are some concerns in regards to their security, but the amount of crypto money dispensers is clearly on the rise.
Besides that, there are multiple projects on the market trying to tie cryptocurrencies to a debit card. The UK-based fintech Wirex offers a Wirex Visa debit card that users need to charge online with some cryptocurrency and which can then be used like a regular Visa card. For each transaction you do with your Wirex card, you’ll even get 0.5% back in bitcoin.
The strength of OpenNode is that it does not affect the retailer negatively. There’s a low entry barrier involving an application on a phone and setting up an account. OpenNode automatically converts cryptocurrencies to a local fiat, and transfers the money on request or scheduled to the retailer’s account. That’s a huge benefit for commerce, and something the crypto companies need to focus on: the payment process needs to be easy for the consumer, but just as easy for the retailer.
In online retail we’ve seen a variety of services that are offering payment options for e-commerce. WooCommerce is a popular payment system that offers the ability to accept several cryptocurrencies in your online store. Bitpay is another example of a very influential company specialized in crypto payments. They are already working together with the state of Ohio to offer people the option to pay their taxes in crypto. At the same time some parliament members in the UK want the same thing.
If retailers can clearly save money and time when accepting cryptocurrencies, we’ll see an increase in the use of cryptocurrencies in the next few years. This will be Bitcoin and its lightning network, but also other currencies that serve a payment purpose. It’s very likely we’ll be using a variety of cryptocurrencies depending on the company, country, and circumstances. What’s important is that the retailer has a clear overview, easy access, lower costs and no increased workload on dealing with all these changes in their financial system.
Let’s BUIDL towards this together!
Also published on Medium.