In This Article
Ever since Bitcoin came into the world, it has forever altered the global financial world. While many doubted its viability of becoming a mainstream payment method, the world’s first cryptocurrency has come a long way and is now being used more than ever as an alternate payment method across various industries.
However, if Bitcoin were to actually become a mainstream payment option, what of the traditional payment systems we know so well? Among them, options like bank transfers, EFTs, and debit and credit card payments will still surely always have a place in the world. To gauge a potential answer to this question, let’s see how they stack up against Bitcoin as a more flexible payment method.
The Battle for Online Payment Supremacy
There’s no doubt that right now, Bitcoin and crypto lag far behind as a payment method of choice when it comes to online payments. This is significant as Bitcoin is a digital currency so is inherently better suited to this sector. It is true that it’s been gaining ground. In online industries like eCommerce, software services, and iGaming, Bitcoin continues to expand its use as an accepted payment method.
The latter example is particularly revealing when it comes to the gap Bitcoin still has to overcome before it can truly challenge traditional payment methods for online payment supremacy. That’s because the iGaming industry has been one of crypto’s biggest supporters as many modern online casino platforms now accept crypto as a payment method. In fact, many of them specialize in this and have been dubbed crypto casinos as a result.
Despite this, even among online casinos that accept crypto, options like Visa casinos are still more prevalent. This is because traditional payment methods like Visa cards have been a popular payment choice for decades before Bitcoin even existed. That kind of familiarity and the digital infrastructure that’s in place, as a result, gives options like Visa a massive head start in this industry.
However, at the same time, fast, secure, and cheap payment methods are one of the most desired traits for online casino players. Like other online industries, the ability to pay for services without delay is critical to their success. In that regard, while Bitcoin still doesn’t command anything close to the kind of market share that Visa has for online payments, the entire concept of cryptocurrency is predicated on it being a cheaper, faster, more flexible, and more secure option to traditional payment systems.
Is Crypto Actually a Better Option?
In theory, yes! The nature of Bitcoin and cryptocurrency payments means they operate as a decentralized payment option. This means there is no need for banks and other intermediaries, and no central authority that can ever fully regulate it. In that sense, crypto is actually more flexible and a better payment option.
However, despite this, Bitcoin still has some drawbacks that keep it from ever being able to fully replace traditional options—at least not any time soon. For one, Bitcoin’s value fluctuates. This can make it a risky proposition for business. However, it should be noted that despite well-known volatility, many analysts believe that Bitcoin has matured quite a lot over the years and become relatively more stable.
That being said, another problem is that crypto is still largely esoteric and only used among a minority of people. That’s because the way it works, its underlying blockchain technology, and the entire concept of it are still largely not fully understood by most consumers. Add in the fact that crypto payments currently require knowledge and use of crypto wallets and exchanges and it becomes clearer that it’s going to take some time for Bitcoin to fully catch on.
Hamstrung By Its Own Complexity
The fact that Bitcoin and crypto are still not understood by so many people effectively renders a lot of its best aspects a little toothless. That’s because if more people truly understood the potential crypto has to replace mainstream payments, it would probably be able to achieve this. That’s because crypto caters to transactions that are lightning-quick and can be more secure and resistant to record alteration and fraud of that type.
The Environmental Impact of Bitcoin vs. Traditional Payments
One of the most significant challenges Bitcoin faces in its quest to rival traditional payment methods lies in its environmental impact. Bitcoin mining, the process through which transactions are validated and new coins are created, requires immense computational power and, consequently, a massive amount of energy.
As a result, the crypto industry has a massive carbon footprint and is unsustainable unless proper solutions come about to address such issues. On the other hand, traditional payment systems like credit card networks and bank transfers consume far less energy. As these systems have been optimized over decades of use and evolution, they are inherently more environmentally efficient.
For instance, Visa has reported that its transactions consume just a fraction of the energy used by Bitcoin. From Bitcoin and crypto’s standpoint, as renewable energy becomes more widespread and efficient, mining techniques can be optimized too. There have been many gains across the crypto sector and it actually has begun ramping up the push for renewable energy out of necessity.
Until these solutions become widespread, however, the environmental concerns surrounding Bitcoin may limit its adoption as a mainstream payment method. As another significant drawback, as more people and industries become more environmentally conscious, this has the potential to push people away from crypto and derail its success before it ever reaches its full potential.
The Role of Policy and Regulation
One of the most significant factors that will ultimately decide if Bitcoin and crypto ever do become mainstream payment options is how the industry is regulated. As the entire point of cryptocurrency is that it falls outside of a central authority, over-regulation and paternalistic policy decisions can easily stifle or even kill the industry altogether.
On the other hand, pro-crypto policies and regulations can also set it free and create the regulatory environment needed for it to soar. As Donald Trump awaits his second inauguration as the US President, his second term could prove decisive for the fate of Bitcoin and crypto. Given his very pro-crypto stance leading up the election and the fact that he’s already begun formulating policy to potentially build a national crypto reserve, This year could be a major leap forward for the industry as a whole.
The Future of Payment Flexibility
What might be a more logical outcome in the future is that a hybrid system may take hold. In that sense, while traditional systems may still continue to play a major role in the global financial world, cryptocurrency payments may continue to grow in popularity until they become a more widely accepted alternative. In that scenario, the future of payments may wind up being a constant tug-of-war for market share.
At the moment, e-wallets and mobile payments have grown enormously and have carved out a share of the market for themselves. Whether crypto will ever meaningfully join them there in earnest remains to be seen.
Bitcoin’s decentralized nature, low transaction fees for cross-border payments, and potential for financial inclusion make it an attractive option in many scenarios. For instance, individuals in underbanked regions can use Bitcoin to access financial services without relying on traditional banks. Similarly, businesses conducting international trade can benefit from Bitcoin’s ability to bypass the fees and delays associated with currency conversion.
Conclusion
Bitcoin and the crypto industry certainly have more than enough potential to become a mainstream payment method. However, even if that is achieved, it’s unlikely that traditional payment systems will ever become obsolete. Whatever happens, traditional payment systems are far too widely integrated to be toppled by Bitcoin — or at least that’s true for now!
