Blockchain and blockchain-enabled payments are the future of transactions, but there are several issues that need to be resolved first.
Ever since the idea of blockchain and cryptographically secured currency entered the marketplace, the benefits of widespread adoption have been discussed and analyzed at great length. Despite this engagement, however, the utilization of cryptocurrency as a legitimate fiat alternative, i.e., using crypto as money, remains something of an oddity, with only a relatively small percentage of cryptocurrencies being used as a medium of exchange.
Despite the rolling out of blockchain at some of the largest organizations in the world, the actual usage of cryptocurrencies as a payment vehicle has lagged. While there are numerous iterations of blockchains that have been developed and on-boarded, cryptocurrencies and cryptocurrency utilization seem to be lagging behind what would be expected.
Why is this? Let’s take a look at some of the reasons why, and a few considerations that need to be taken into account for any business seeking to participate in the crypto economy.
Taxes. Taxes are an unavoidable part of conducting any business transaction and exchange of value. Under current regulatory guidance, however, the tax policies and reporting of tax information are ambiguous at best. In order for crypto, and blockchain at large, to become part of the mainstream financial conversation, taxation and other tax related issues are going to have to be resolved. In the face of no authoritative guidance on the subject, organizations and service providers must be able to provide an easy-to-use reporting and tax platform.
Fortunately there are numerous organizations tackling this exact issue, including firms like Lukka, Verady, and TokenTax specializing in improving the tax, accounting, and reporting around cryptoassets.
Interoperability. Blockchain is a technology tool, and like any other technology tool it will need to work with existing technology platforms. An underlying issue with blockchain and crypto platforms is that some platforms are not intuitive to use, and might not work seamlessly with other existing technology tools. This is not something unique to blockchain, but if blockchain is to serve as the payment infrastructure of the future, it must be able to communicate seamlessly with other tools.
Organizations have invested time and money into getting existing technology platforms to function as advertised, and if blockchain/crypto are to become part of the mainstream payment process, these tools and applications must be able to communicate information to other technology solutions.
Complexity. A simple, yet infrequently discussed, reality of the blockchain and cryptoasset ecosystem is the fact that many of these applications and tools can be complicated and difficult to use for some individuals. Related to the concerns around interoperability, the complexity and multi-faceted nature of some blockchain and crypto applications can, and do, discourage novice and other new users from embracing the technology.
Collaborations such as the recent partnership between Samsung and Gemini are indicative of the priority now being placed on creating an easy-to-use crypto experience.
Cryptocurrencies and actually using cryptocurrencies as a medium of exchange do seem to be the future of how financial transactions will occur. Cost savings, increased transparency, and the ability to conduct transactions with nearly instantaneous settlement time would lead most to believe that crypto adoption would be assured. These future benefits, however, are offset by the issues outlined above that continue to forestall wider utilization.
Technical components and operations are fine, but usability must take a front seat if crypto is to ever achieve mainstream adoption. Addressing these issues and, frankly, making crypto easier to use and understand, are necessary steps to see crypto realize its potential.