How does cryptocurrency affect the retail industry?
The rise of cryptocurrency has caught a lot of people off guard, not least central banks and politicians who have traditionally sat at the top of the financial eco-system and kept control of the way money flows through the economy.
Whether you were a veteran trader who knows your way around a forex contract size or an eager millennial intoxicated by the potential riches to be had, you can’t ignore cryptocurrencies.
While the rise of Bitcoin sparked frenzied headlines, it has also posed a dilemma for retailers too. With more and more people snapping up cryptocurrencies, should they offer this as a payment method?
After all, retailers have always had to be flexible to cater to the changing tastes of their consumers.
But retailers might – as some investors – be a little nervous about dipping their toes into these waters. While cryptocurrencies have attracted headlines as a volatile asset capable of eye-popping price movements, some worry about how to safely use this.
That’s not least because we’re yet to correctly understand how cryptocurrencies will be used. For some, this is an asset to be treated in the same way as gold and isn’t really a currency in the traditional sense.
The next stage of development in the technology and digital infrastructure – new payment platforms, wallets, and ATMs – will be key to transforming this into usable currency.
A Retailer’s Guide To Digital Currencies
It’s understandable that some businesses might want to be at the head of the queue, not only as a way to cater for the tastes of their customers – particularly if they deal with customers who have bought in to cryptocurrencies – but also so that they can get a reputational boost, showing themselves to be forward thinking pioneers. There are some early adopters – including Microsoft and Expedia – but anyone accepting crypto payments now, particularly as a smaller retailer, would be ahead of the vast majority of the crowd.
There’s also the chance open up a potential customer base of ‘unbanked’ people. There are 2.5 billion people across the planet who don’t have access to the financial system, including one in 12 people in America. They only need a smartphone to access this form of payment, making this a natural way to lower the barriers for entry.
Similarly, the barriers for accepting payments as a retailer, as Forbes notes, aren’t high. In essence, it’s just a case of setting up a crypto-wallet and then promoting the address for this by using a QR code (either on invoices or point of sale).
However, while retailers wrestle with a dilemma or whether or not to accept cryptocurrencies, the world’s biggest firms have their eyes on an even bigger prize.
There have been a host of rumours about Amazon’s involvement in cryptocurrencies. If the retailer, a dominant player in online sales, were to accept this as a payment method then it would be a huge sign of the mainstream arrival of this payment method. However, its ambitions may lay beyond merely accepting cryptocurrencies for payments. In October, its legal team acquired AmazonEthereum.com, AmazonCryptocurrency.com, and AmazonCryptocurrencies.com. Could Amazon really launch its own currency – to be used across its suite of services and reliant on a private blockchain? It’s the sort of big scale, joined up thinking that maybe only Amazon could pull off.
While retailers consider how to cater for cryptocurrencies, Amazon looks how it could ‘own’ this space. One things for certain, the growth of this sector makes it difficult to ignore for long for retailers right across the spectrum.
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