Interest in cryptocurrencies is on the rise, with new VC funds, ETFs and legislation hitting the market. And if that isn’t enough, Bitcoin’s 54.88% rise in the year to March 21 is an indicator of the crypto asset’s renewed popularity.
According to Crypto.com, the number of people owning cryptocurrencies rose by 34% in 2023, to 580m users worldwide.
Analysis from CoinLedger, a crypto tax software startup, also found there are now 76 retail and ecommerce companies that accept crypto — more than in any other industry — including Etsy, Adidas and H&M.
With more people than ever jumping on the crypto bandwagon, is it time for every ecommerce company to start accepting crypto payments?
Do people want to shop with crypto?
Right now, most people buy cryptocurrencies hoping they can make money from them — not because they want to shop with them. But interest is growing.
Demand is increasing because the number of users [of cryptocurrencies] is growing.
“People tend to see them more like a stock or bond — a thing to invest in rather than spend on groceries,” says Max Krupyshev, cofounder CEO of crypto payments company CoinsPaid. “And let’s not overlook the knowledge gap. A lot of people still don’t get how crypto works.”
Olivier Blazy, professor and researcher in cryptography at École Polytechnique, agrees, adding: “Some consumers might be interested to use this kind of payment, but it’s not necessarily something that will benefit a huge share of the market.”
However, Jaunius Danielius, director of product at ecommerce marketing company Omnisend, is much more bullish, saying that as more people own crypto, more people want to use it.
“Six years ago, when I was working for one of the largest ecommerce stores in the Baltic states, we were getting requests from customers that wanted to be able to pay with cryptos,” he says. “This demand is increasing because the number of users [of cryptocurrencies] is growing.”
Finding new customers through crypto
Reflecting this trend, more companies are offering this payment method at checkout.
Practical benefits include reduced fees (while a platform like Stripe or Square might charge an ecommerce brand 3-5% on transactions, cryptocurrency fees can be lower than 1%) and an ability to reach customers in markets that are underserved by traditional payment providers.
It’s a magnet for those who are all about the latest tech, slicing through transaction fees and operational costs.
“I used to live in Africa and we couldn’t use some of the payment [providers], for example Stripe,” says Danielius. “Crypto solves that problem — it enables ecommerce brands to reach global audiences.”
While venture funding for crypto startups plummeted following the collapse of FTX in late 2022, deals are now on the rise again. According to Dealroom, there have been 36 funding deals for blockchain companies in the first quarter of 2024, up from 16 in Q4 2023. Pitchbook data, meanwhile, shows that funding in Q4 2024 was up 2.5% quarter-on-quarter, at $1.9bn.
Countries that rank top for crypto investments per capita are India, Nigeria and Vietnam, while Ukraine is also in the top 10.
It’s also a marketing tool that can be used to win over new types of customer profiles.
“It’s a magnet for those who are all about the latest tech, slicing through transaction fees and operational costs while strutting their innovative edge,” says Krupyshev.
Regulations, rug pulls and volatility
Crypto payment providers and exchanges have made it easier for ecommerce brands to plug digital currencies into their checkouts. But uncertainty about regulations, as well as their associations with scams, hacks and illegality, have so far prevented some businesses from fully embracing cryptocurrency.
The past year has been a game-changer for crypto.
“Setting up a crypto payment system isn’t exactly plug-and-play, it takes time and effort if done legally,” says Krupyshev.
Blazy advises companies to do a risk analysis and says they may need special insurance for cryptocurrencies.
“If there’s a problem with the transaction, what do you do? With cryptocurrencies, there’s no controlling authority,” says Blazy. “It’s part of the risk analysis you should do.”
A more robust regulatory environment for crypto, however, could encourage more ecommerce companies to take the leap — and make customers feel more at ease.
Last June, a new regulatory framework for crypto assets was introduced in the EU. The Markets in Crypto-Assets Regulation (also known as MiCAR) brings a variety of crypto assets into regulation, meaning consumers are better protected against fraud while companies can also begin using them with legal certainty.
“Before MiCA, the rules for crypto payments were incoherent in the EU, making it a headache for payment providers to expand,” says Krupyshev. “This newfound trust is nudging more businesses to accept crypto, aiming to stay ahead of the curve.”
Even tech giants like Visa and Mastercard now feel certain enough about the industry to have launched their crypto cards.
“The past year has been a game-changer for crypto, with big moves in regulation, tech and big players stepping into the arena,” concludes Krupyshev.
