Part 3 of 3 in the Digital Gold on the Blockchain series

From the CMC editorial desk: Continuing where we left off in the second post, we explore the potential of cryptocurrencies in day-to-day life.

Cryptocurrencies were launched into the global spotlight when the value of bitcoin skyrocketed in 2017, drawing an influx of consumer and corporate interest to the nascent market. Since then, the concept of digital money and its potential applications have been the topic of ongoing discussion and debate as traditional financial institutions face the disruptive nature of decentralized payments and digital transactions. However, despite sustained interest in cryptocurrency applications, the majority of activity in the space has been limited to peer-to-peer trading and using digital assets as an investment mechanism. They have yet to break into the mainstream payments market or make themselves felt in the daily lives of consumers.

With thousands of crypto transactions taking place every day, it is clear that there is a sizeable user base for cryptocurrencies already. This user base may well serve as a foundation for bringing this revolutionary technology into our everyday lives, particularly as the applications of cryptocurrencies beyond trading become more and more apparent. Going from a somewhat insulated trading tool to a functional currency is the next big step for crypto. While this may sound like a distant future development, cryptocurrencies present many benefits and will likely achieve mainstream adoption.

With blockchain technology still very much in its infancy, cryptocurrencies are often thought of as high-risk investments for adventurous digital natives, Silicon Valley insiders, and Wall Street traders. However, despite their appeal as an investment vehicle, most digital currencies are built to perform unique functions, with a growing range of use cases. Digital money is poised to not only expand global commerce and promote financial inclusion, but will also transform even the most banal aspects of daily life: from the way we shop and save, to the way we do business.

Presently, cryptocurrency ATMs and crypto-friendly vendors do exist – however, they are often limited to a small number crypto hubs and we have yet to see the same level of market penetration as enjoyed by more entrenched payment methods such as VISA and Mastercard, or QR code payments like WeChat Pay.  There are still a number of barriers to the widespread adoption of cryptocurrencies as a mainstream of exchange and payment to overcome but the potential benefits are exciting.

It’s no secret that blockchain technology, which underlies cryptocurrencies, is making itself known in almost every industry. The diverse nature of companies and industries investigating blockchain integration is testament to the transformative benefits it can present to global commerce and enterprise. The international payments sector is just one of a number of industries in which blockchain technology is poised to impact the day-to-day life of consumers.

It’s no secret that blockchain technology, which underlies cryptocurrencies, is making itself known in almost every industry. The diverse nature of companies and industries investigating blockchain integration is testament to the transformative benefits it can present to global commerce and enterprise. The international payments sector is just one of a number of industries in which blockchain technology is poised to impact the day-to-day life of consumers.

Aside from reduced transaction costs for consumers and vendors alike, cryptocurrencies present faster settlements and a borderless network of payment.

One of the key benefits of cryptocurrency adoption is the reduction in transaction fees for retailers and consumers. Today, bank accounts, debit cards, and credit cards have all sorts of fees associated with them, including merchant fees, overdraft fees, foreign transaction fees, and minimum balance fees, to name but a few. Credit card companies can charge upwards of 3% in processing fees. These costs easily add up over time and create considerable inefficiencies within popular contemporary payment mechanisms. By contrast, popular bitcoin payment provider, BitPay, takes a flat 1% settlement charge for bitcoin payments. In most cases, a cryptocurrency “account” in the form of a digital wallet is entirely free and using cryptocurrencies costs absolutely nothing, aside from the transaction fee.

For digital currencies to work as a viable means of transacting among mainstream users, the speed of each transaction is paramount. Cryptocurrencies like XRP are challenging the transaction speeds of the leading payment solutions deployed by banks today, many of which fall short due to the time it takes to review and authorize transaction payments, particularly if payments are cross-border.

The decentralized nature of the blockchain allows the distributed ledger technology to log payments efficiently and accurately without the need for an intermediary. As blockchain-based networks continue to mature, higher transaction speeds will follow, and the benefits of this technology over current methods will become clearer.

With the rise of the “cashless society,” electronic transactions serve as a far more convenient alternative to cash payments. Studies show that up to 75% of people prefer to use credit and debit cards to fiat currencies, compared to cash, to pay for goods and services. The use of cryptocurrencies can take this experience to the next level, allowing for more cost-effective and significantly faster international transactions.

Cryptocurrencies and digital payments solutions also provide a more accessible financial solution compared to traditional frameworks, allowing access to secure financial services without requiring an ID, a bank account, or credit cards. This benefits everyday consumers, those travelling internationally, as well as those without access to traditional banking services in developing or unstable economies.

As we begin to witness an update in crypto as a payment method due to lower transaction fees, faster settlement times, and ease of international transactions, one particular class of cryptocurrencies — asset-backed tokens — could push the case for crypto payments one step further.

For us, democratizing access to gold through tokenization has the potential to bring about a practical use for the historically price-stable metal as a form of payment. Using one’s physical gold for payments would have otherwise been a long and tedious process with lots of steps in between. For example, those who own physical gold would first have to exchange it for cash with a buyer before merchants are willing to accept it as payment.

Through the use of gold-backed tokens, such as DGX, users have greater access to gold, making it a far more convenient way of using gold for everyday payments. By partnering with digital currency cards, users will be able to use their tokens for payments and other transactions at any time of the day, with far fewer steps needed. This ease of access to one’s investments means that users will no longer have to take an exit position and liquidate their physical gold. Gold inventory can also be easily tracked through our asset explorer, a registry that provides all information about the physical assets that we store in our vault in the course of the supply chain custody, further adding to the credibility of the asset-backed token.

Asset-backed tokens merge the credible real-world value of tangible assets with the benefits of transacting cryptocurrencies as payments, holding great potential to accelerate the mainstream adoption of cryptocurrencies.

It has been estimated that some 20 million people worldwide own cryptocurrency. And as cryptocurrency gains prominence and becomes more widely used, it is essential that we develop the systems and infrastructure necessary to bring it from the fringes of the financial and payments sectors to the mainstream.  This way, consumers all over the world over can enjoy the benefits which they provide over fiat currencies and other traditional payment methods.

While we may still be in the early stages of using cryptocurrency in everyday transactions, the future holds a lot of promise. Interest in cryptocurrencies continues to grow, and their potential applications and the number of vendors accepting them multiply daily. We are on the cusp of a new financial future, one where everyone will have access  to the seamless exchange of digital assets and the benefits that cryptocurrencies provide.

The post Life After Trading: Cryptocurrencies In Everyday Life appeared first on CoinMarketCap.

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