Blockchain applications like cryptocurrency have really changed the financial playing field. Cryptocurrency adoption is at an all-time high worldwide with Statista reporting that more than 50 million blockchain wallet users were active by the end of this year’s Q2. More and more individuals and merchants are transacting with cryptocurrencies like Bitcoin due to it being versatile, easy-to-use, having a lower overall cost, the ability to secure sensitive data, and giving users better control over their funds.
However, we have yet to see a mainstream and mass adoption of this financial tech both across the globe and in Germany, despite German banks now able to manage cryptocurrencies for clients. In this post, we’ll take a deep dive at the current state of crypto and Bitcoin as a payment currency and modern uses of this blockchain application.
At the height of crypto-mania, one of the main reasons why people were interested in cryptocurrency was its decentralised nature. The blockchain is spread across different networks of computers, and allows every single user to become one of the network’s countless payment processors. This means that cryptocurrencies are free from institutional interference and government manipulation.
But while decentralisation opens up a lot of possibilities for cryptocurrency, the legality of crypto largely depends on who you are, where your location is, and how you plan on using the technology. Many businesses want to use crypto for different reasons — and of course, various countries also see cryptocurrencies differently. In fact, Bitcoin, the world’s most prominent cryptocurrency, is outright banned in some countries — despite the potential it and other cryptocurrencies have for finance.
Bitcoin - legal status in Germany, US and Co.
FXCM states that Bitcoin enjoys legal status in major economies like the US, China, Japan, Germany, and India. However, regulations can differ widely. For example, Bitcoin is not considered as legal tender in the US and instead is treated as property that can be traded, while in Japan, Bitcoin is officially considered as a legal payment method.
Here in Germany the first Bitcoin account was recognised in 2013, although any commercial use of it wasn’t able to receive tax exemptions. Today, crypto exchanges and custodians doing business in Germany had to have applied for a license from the German regulator the Federal Financial Supervisory Authority (BaFin) before 2020 began in order to do business this year. Accepting Bitcoin as a means of payment, for example for retail merchants, is not affected by these regulations and is therefore possible without any problems.
Crypto Companies Are Leading the Revolution
Despite banks and other financial institutions expressing apprehension with adopting cryptocurrency, crypto companies are going ahead and spearheading crypto as payment revolution through their own innovations. Most cryptocurrency transactions are being done online as e-wallets, mobile banking, and e-commerce continues to rise. In fact, London-based crypto firm Wirex has rolled out their own line of crypto debit cards. Through this, users can top up their debit cards through their bank account and load it as Bitcoin. Users can then use this to pay merchants that accept Bitcoin or convert it into another crypto or fiat currency.
Aside from the technology used by consumers, some crypto companies are also helping merchants adopt the technology. The key to widespread adoption is having a seamless merchant payment ecosystem. However, the problem of block times (the time required to create a new block in a Bitcoin chain) must first be solved, which BitBucks CEO Frank Meier believes is an inherent disadvantage for Bitcoin transactions at the POS. Fortunately, the crypto companies and wallet services contribute to the introduction of the technology and solve this problem in a unique way.
BitBucks and other Bitcoin Wallets for payments
Thankfully, crypto firms are doing their part to usher in the technology. For instance our own BitBucks Bitcoin Wallet. With the app for iOS and Android, customers can easily pay in retail for goods and services simply by scanning a store's QR code belonging to the merchants BitBucks-account within the app. The transaction will then be processed in Bitcoin, however to achieve a more user-friendly experience, all amounts are displayed in the respective fiat currency.
There are also other Crypto infrastructure platforms, such as Paytomat which enables merchants to access a crypto-to-fiat payment processing system or Cyclebit, that offers merchants to accept digital assets like cryptocurrencies wherever they are in the world.
As Bitcoin and cryptocurrency continues to be adopted by more and more individuals, we will certainly see the technology to take over our current payment systems. Laws and regulations will have to adapt to this financial technology and soon, even huge financial institutions won’t have a choice but to also accept and mass adopt crypto as payment.