Cryptoverse: Bitcoin is moving towards Satoshi’s payment dream

Feb 28 (Reuters) – Satoshi Nakamoto would be proud. Bitcoin’s youth may finally be repaying the faith of its creator.

The 15-year-old cryptocurrency has fulfilled many functions – from the basis of speculation to a hedge against inflation – but has struggled to find its true origins. Now there are signs of growth facing its purpose: payment.

Richard Mico, CEO of Banxa USA, a provider of payment and regulatory infrastructure, said: volatility in the larger market.”

The amount of bitcoin stored on the Lightning network — a payment protocol on top of the blockchain — jumped by two-thirds in the past year to a record high of 5,580 coins, according to crypto data firm The Block. .

Crypto payment experts have also seen strong numbers.

US-based BitPay said its transaction volume rose 18% last year compared to 2021. CoinsPaid said the number in the fourth quarter of 2022 rose 32% compared to the previous year.

BITCOIN AND BRAZIL

So why has crypto failed to fulfill the dream of its anonymous inventor Nakamoto, written in his famous 2008 white paper titled “Bitcoin: A Peer-to-Peer Financial System”?

Price volatility, regulatory delays and regulatory uncertainty are among the factors that make cryptocurrencies weak as a means of payment. Few traders are good at prices or services in crypto.

However, advocates say that bitcoin offers lower transaction costs and faster transactions than traditional currencies, especially for cross-border transactions.

In addition to bitcoin, other cryptocurrencies including statscoins, which are pegged to traditional currencies, have emerged as popular options, especially for cross-border payments, tolls, and emerging markets where the value of local currencies is challenged. inflation.

Stellar, a blockchain that enables cross-border payments, saw the number of transactions on its platform increase to 103.4 million last month from 50.6 million in January 2022.

The exchange rate between bitcoin and the Turkish lira and the Brazilian real increased by 232% and 72%, respectively, according to CryptoCompare data.

CAN YOU SOLVE THE PROBLEM?

It’s not all smooth sailing for the widespread adoption of crypto for payments; For one thing, there is the question of whether blockchains are ready to handle the problems of managing thousands of transactions at the same time, especially without simultaneous jumps in transaction fees.

Efforts by some of the world’s major economies, including Japan, China and India, to create their own digital currencies (CBDCs) could stifle the growth of cryptocurrencies, some traders say. For some, though, the growing interest in CBDCs is evidence that blockchain payment technology is here to stay.

Traditional financial institutions that are looking to embrace crypto payments have also ignored the recent market change. One, Visa (VN) is inking a deal this month with crypto firm WireX to offer debit and prepaid cards directly.

“Crypto is becoming a viable alternative for many people around the world,” said Mico a Banxa.

Lisa Pauline Mattackal and Medha Singh report in Bengaluru; Edited by Tom Wilson and Pravin Char

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