Crypto payments: how close are we to mass adoption?

As we move further into the web3 world, more and more people see the benefits of crypto payments, especially when it comes to Real-World Assets (RWA) acquisition. But are we ready for mass adoption?

Crypto payments are becoming more attractive to on-chain holders who wish to effectively use their assets in their daily lives, as opposed to only applying them to build a diversified portfolio or betting on crypto as a savings method. As of 2023, the Crypto Payment Gateways Market size was valued at USD 1.2 billion and is estimated to register a CAGR of over 15% between 2024 and 2032, according to a study by Global Market Insights. While impressive, it's worth noting that the global traditional payments market was valued at approximately USD 1.6 trillion in 2022, highlighting the immense growth potential for crypto ​(BCG Global).

In several panel discussions during the European Blockchain Convention, we were able to take the temperature on crypto market adoption and how different players, from web3 startups to institutional banks, are approaching this new, decentralized economic system.

We heard from European banks, such as Hauck Aufhauser Lampe, Groupe Caisse des Depots, and Norges Bank, that tokenization is still a long way from reality for the institutional players, and that 2025 won’t be the year for massive tokenization of funds, as many people in this industry would hope. However, there's optimism about stablecoin adoption accelerating in 2025, which many view as a key step towards tokenizing funds in the future.

Another critical point of numerous discussions is regulation, which affects both established banking structures and new payment provider startups. With all eyes on MiCA, as it will be effectively applied in December 2024, regulation is nothing new for the banking sector, but it can be a massive breaking point or entry barrier for new projects that wish to disrupt the money industry.

As many speakers pointed out during the event, we are in the early days of crypto. Every new invention and market disruption has had to go through several iterations and pivots before massive market adoption. Even contactless payment systems took 12 years to perfect and create the unique user experience we all know and love today. 

All this to say, experts in the European Blockchain Convention firmly believe that mass adoption is not yet near. We must polish the system before introducing it to the general public, which is generally less informed, more susceptible to scams, and wants a seamless experience and intuitive navigation with a flawless design.

How can we move forward?

The future looks bright, but it might take a bit longer than what crypto projects would like to.

As we absorbed all the different points of view from speakers and event attendees during the two-day conference in Barcelona, it became clearer what needs to be improved to make crypto payments mass adoption a reality.

1. Infrastructure

Creating a robust on-chain infrastructure is essential. This includes the development of faster, more scalable blockchain networks that can handle high transaction volumes without compromising speed, security, or efficiency. Additionally, integrating payment processors that can seamlessly convert cryptocurrencies into fiat currencies will enhance usability for both businesses and consumers, catering to both sides of the market. Furthermore, investing in cross-border payment solutions that leverage blockchain technology could further reduce costs and transaction times, making crypto a more viable option for everyday operations.

2. Compliance

Achieving regulatory compliance is critical to the widespread adoption of crypto payments, both from a civilian and business standpoint. This includes banks and governments, which tend to regulate products fairly well before recommending them to the general public. The on-chain system, characterized by its uncertainty for businesses and consumers, is not, as of now, recommended as a sound, stable system for sovereign states and geographies. Clear, consistent, and globally recognized regulations can help build trust in the crypto ecosystem and accelerate widespread adoption. Collaborations between crypto companies and regulators can foster a trustworthy environment that encourages innovation while ensuring consumer protection, thereby paving the way for mainstream adoption.

3. Privacy

Since all on-chain transactions are registered on blockchain networks and accessible to everyone, it brings up a double-edged issue: while it ensures transparency, it can also compromise users’ privacy and personal data. Current solutions often compromise user anonymity, generating a concern for potential new adopters. Enhancing privacy features without sacrificing compliance or security is paramount. This could include implementing privacy-centric technologies, such as zero-knowledge proofs, allowing transactions to be validated without revealing sensitive information. Balancing privacy with regulatory demands will build trust and encourage more users to embrace crypto payments.

4. Security

As with any financial system, security is fundamental to the adoption of crypto payments. Anonymous wallets have a downside: if you make an error with the receivers’ address, there is no way to retrieve or cancel the transaction, as it usually goes through a non-custodial payment platform, which has no power over the assets being moved. High-profile hacks and fraud cases have also left many wary of using cryptocurrencies for daily payments. To bolster security, advances in cryptographic techniques and multi-signature wallets are essential. Regular audits, bug bounty programs, and transparent security protocols can help reassure users about the safety of their transactions. Moreover, educating users about secure practices when handling crypto assets will further reduce the risk of theft or loss.

5. Leaner KYC

Streamlining Know Your Customer (KYC) and Know Your Business (KYB) processes can significantly enhance the user experience while ensuring regulatory compliance. Current KYC requirements can be cumbersome and fastidious, discouraging users from adopting crypto payments. Implementing lean KYC processes that balance mandatory legal requirements with user convenience, such as the use of automated identity verification tools, can simplify onboarding. This approach will facilitate broader crypto adoption.

6. Better UX

User experience (UX) is a critical factor in the mass adoption of any platform in any industry, and Web3 is no different. Many current solutions can be confusing and intimidating to non-technical users, with a very raw and “code-like” aspect. Improving the UX through intuitive interfaces, straightforward navigation, and simplified transaction processes can make crypto payments more accessible to the average consumer, inciting their enthusiasm for broader use. A clear set of crypto functionalities, brought to the customers through user-friendly design and navigation, will demystify the technology, encouraging more people to engage with it on a daily basis.

7. Reduce risk

Reducing the perceived risks associated with crypto payments, especially by established players such as banks and other economic operators, is vital to wider acceptance. Fluctuating cryptocurrency values can deter businesses and customers alike from using them for everyday transactions. Developing stablecoins or adopting mechanisms that allow for value pegging can mitigate volatility concerns and is a key first step towards massive adoption. Additionally, offering insurance or guarantees against loss can provide peace of mind for users. Addressing these risk factors can foster confidence in crypto as a reliable payment option, encouraging more widespread use.

8. Education

Increasing public awareness and understanding of cryptocurrencies is essential for every user to understand how this new decentralized system works, the risks, and how to detect and avoid fraud and scams. Initiatives to educate the public about crypto payments' risks and practical uses can demystify the technology and showcase its advantages, outweighing the fear of the new and unknown. Collaborations with educational institutions, online courses, and community workshops can help disseminate crucial information. However, mainstream media, influencers, and regular shows also play a role in spreading the right message out to the general public. By empowering consumers with in-depth knowledge, we can create a more informed user base willing to embrace crypto payments.

At Skyline Digital, we are excited about the future! Our solution is an alternative to traditional banking systems, and it addresses all the aspects previously mentioned in this article.

Our focus is now on use cases such as Real-World Assets acquisition, real estate purchases, payroll and vendor payments, Treasury Bills, and capital raising for startups, among others (you can check out our more common use cases in this article).

If you’d like to be part of the early adopters wave, get in touch with us!