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Crypto: Towards a Mainstream Currency?

With the emergence of internet banking, the role of intermediaries has decreased. The customer has more power and control over how they manage their money and payment methods; however, with increasing interest in cryptocurrencies and widespread adoption of popular coins, data shows people’s will to gain back their ‘financial freedom’.

Every year, new crypto-services are implemented to ensure that digital coins will soon be a mainstream currency.

The Boom of Crypto in The UK

A cryptocurrency is a decentralised digital or virtual financial asset (currency) that uses advanced cryptography technologies to ensure secure, fast and third-parties free transactions.

Crypto attracts more people every year because it offers easy, fast and cheap peer-to-peer payment options with no intermediaries and long-term investment options. In the UK, the number of crypto owners has seen a six-fold increase since 2018.

Four years ago, there were only 1.5 million crypto investors; in 2021, that number increased to more than 9.5 million. Crypto awareness and interest have skyrocketed, with two-thirds of the British adults familiar with the digital asset, making the UK the second-largest country with the most crypto owners in Europe. This increase shows how crypto disrupts the financial market globally.   

In 2021, the United Kingdom emerged as the leading country in Europe for crypto transactions, with over £123bn worth of deals last year. It’s part of the world’s biggest cryptocurrency economy with other central, northern, and Western European countries. Bitcoin represented 27% of the crypto transactions and ETH and Wrapped Ethereum 40% in the UK last year. Overall cryptocurrency adoption rose by 881% between 2020 and 2021.

Financial Firms Pushing Crypto to The Main Stage

Revolut, PayPal, Amazon & Visa are all jumping into the digital coins bandwagon. The financial and technology companies certainly don’t want to miss the boom and the craze around crypto. Knowing that crypto communities are gradually taking ample space online, they have to stay up to the trends to satisfy the existing customers and attract prospective new ones.

Revolut & Crypto

In 2018, the Fintech company Revolut started to offer Bitcoin (BTC) buying services to its customers. The company was a pioneer, and as one of the largest mobile financial services providers, this action had a significant impact on crypto transactions. However, the options were limited as the users couldn’t transfer their holdings and use them outside the platform; this issue was fixed in early 2021. The brand waived the policy as it was ‘’against the decentralised, open principles which underline crypto’’ according to AltFi. The decision also came as the firm plans to add other virtual coins to its catalogue in the near future.

PayPal & Crypto

PayPal allows you to invest as little as £1 in Bitcoin through your account. The service arrived in the UK last summer. Customers can buy, sell (Bitcoin, ETH, Litecoin) and use crypto to make payments to merchants (only available in the US). The platform will automatically convert crypto holdings into fiat currencies (government-issued currency) when checking out.

The company holds and stores the buyers’ private keys in this system. It is an IOU system, similar to the traditional banking system. This option is more dedicated to people looking for safe ways to store their holdings.

Mastercard & Visa Invest in The Digital Economy

The two market leaders, Mastercard and Visa, both collaborated with crypto firms to launch crypto debit or credit cards. The companies aim to ‘‘help customers and merchants move into the digital economy’’ with fiat (government-issued currency) or cryptocurrencies.

Mastercard partnered with three Asian Pacific digital currency companies to create a crypto-funded card to make physical and digital transactions using virtual coins.
Visa has recorded £2.5bn in payment transactions using its crypto-linked cards, proving that people ‘’find utility’’ in using a card that allows them to make payments using their crypto wallets. The two companies offer low fees (from $0) and the same rewards as traditional debit and credit cards, convincing the crypto savvy to adopt their payment methods.

To go even further, Crypto.com, a startup that supports digital coins transaction created a debit card in collaboration with Visa. The card is compatible with more than 90 cryptocurrencies, making it the most accessible crypto card on the market. The customers can also withdraw money at the ATMs with no fees.

Amazon Moves Into Crypto

Amazon has already been working with crypto companies. With its cloud-based infrastructure platform Amazon Web Services (AWS), the firm supports 52% of Ethereum (the second largest cryptocurrency) workloads. However, the company is looking to launch its own digital tokens to make transactions on the Amazon website. Amazon CEO, Andy Jassy, recently said that they may authorize the users to sell NFTs on their eCommerce platform.

The Future of Crypto

Integrating crypto payment options into the most prominent mainstream financial companies shows how virtual currencies rapidly gained popularity. Indeed, a range of new services making the daily use of crypto easier appear. Things like debit or credit cards linked to wallets and dedicated ATMs facilitate crypto’s introduction to the masses. It will not be surprising to see more and more businesses and commerces accepting these digital coins as a payment method in the following years.

Governments worldwide are also looking into digital currencies to regulate or invest in them. The US Federal Government wants to create its own virtual blockchain fiat currency called Central Bank Digital Currency (CBDC). They want to have more control over the evolution of blockchain and its impact on the financial system.

The main obstacle to the democratisation of cryptocurrencies is the lack of knowledge. Many people still don’t know or understand what crypto is and how they can benefit from it. However, massive firms offering crypto services should boost the global adoption of digital coins.

Sources

https://www.cnbc.com/2021/05/05/investing-in-bitcoin-with-paypal-what-you-should-know.html#:~:text=In%20the%20%E2%80%9CCrypto,for%20your%20bitcoin
https://coinmarketcap.com/alexandria/glossary#:~:text=C%2B%2B,services%20using%20cryptocurrencies.
https://cointelegraph.com/news/it-s-time-for-the-philanthropic-sector-to-embrace-digital-currencies
https://bitcoinmagazine.com/business/revolut-to-allow-bitcoin-withdrawals
https://www.cnbc.com/2021/03/30/paypal-launches-crypto-checkout-service.html
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https://www.mastercard.com/news/perspectives/2021/why-mastercard-is-bringing-crypto-onto-our-network/
https://www.mastercard.com/news/ap/en/newsroom/press-releases/en/2021/november/mastercard-partners-with-leading-digital-currency-companies-across-asia-pacific-to-launch-the-region-s-first-crypto-linked-payment-cards/
https://www.cnbc.com/2022/01/28/visa-says-crypto-linked-card-usage-hit-2point5-billion-in-its-first-quarter.html
https://www.zdnet.com/article/best-crypto-credit-card/
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https://cointelegraph.com/news/lack-of-knowledge-is-main-barrier-to-crypto-adoption-new-survey-says

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