Cryptocurrencies have been around for the last ten years. During this time, they proved highly beneficial in the financial sector. Whether as a medium of exchange or as a store of value, cryptocurrencies have appealed to all those who believe in the underlying blockchain technology and who would rather be free from the shackles of centralization. Some even predicted that cryptocurrencies will eventually overtake fiat money and traditional remittance.
Proponents of the traditional financial sector argue that this isn’t going to be possible because blockchains were not created to scale massively. Recently though, MoffettNathanson Analyst, Lisa Ellis, said that the threat cryptocurrencies pose to payment systems is more serious than anyone thought. She said systems like PayPal, Visa, and Mastercard need to recognize this imminent threat.
Traditional Payment Systems Vs Cryptocurrency-based Systems
The tech analyst noted that the threat from cryptocurrencies will ripple into something significant in the next few years. Even if the price of Bitcoin and other cryptocurrencies have fallen significantly since they reached their all-time highs, many true believes still use it as a store of value and a medium of exchange. Some are holding steadfastly, hoping for a sudden bullish outbreak. The price dump hasn’t hindered developmental growth. Cryptocurrency networks have been improving their experience and this makes them even greater threats to the traditional payment systems. Lisa Ellis said:
“Why would I ever buy coffee with bitcoin?” Ellis said, first reported by financial newswire Bloomberg. But it could eventually happen, “as ludicrous as it may sound.”
Ellis said that the philosophy that is giving cryptocurrency an edge over traditional payment option is “freedom of money” which is impeded in the core of cryptocurrencies. She said:
“Cryptocurrency systems (e.g. bitcoin, ethereum, ripple) are potentially disruptive to private payment systems. Their core design characteristics—which are aimed at enabling ‘freedom of money’—are in direct contrast to the characteristics of most traditional, private payment systems.”
Ellis advised banks and other payment processors to offset the risk by adopting cryptocurrencies. A typical example of a bank that is already doing this is JPMorgan Chase. The United States giant, last month, announced that it would be launching a cryptocurrency known as the JPM Coin.
Mainstream Adoption Of BTC Could Fuel A Bull Run
Since the price of BTC started falling against the USD, it’s been unable to make sustainable gains. Over the last twelve months, Bitcoin and many other cryptocurrencies have fallen by more than 80% against the USD. Even with this price struggles, many well-known people like Elon Musk, Jack Dorsey, and Steve Wozniak have praised Bitcoin and blockchain technology. They say that the price volatility is due to the immaturity of the space as it is still in its formative years.
Bitcoin (BTC) Price Today – BTC / USD
If mainstream adoption is achieved, the result will be spectacular. They have been some rumors that e-commerce and tech giant, Amazon is planning to start accepting BTC and other cryptocurrencies as a method of payment. If this is true, it will spark a strong bull run. This may give cryptocurrencies the push they need to face traditional systems toe to toe.
Do you agree with Lisa Ellis? Will cryptocurrencies pose a significant risk to traditional payment systems in the future? Share your thoughts in the comment section.