We’re all on the seek for real use cases when it comes to blockchain. Thousands of startups are launching platforms that aim to disrupt industries while remaining decentralized, some people have become very wealthy thanks to it, but when it comes down to it, most of us are still buying our morning Starbucks using Visa or cash.
Cryptocurrencies, though demonstrably better than their government-backed counterparts, have yet to gain wide adoption. Vendors have little incentive to spend money on crypto payment solutions, especially considering how small a user base there is of people willing to use such a service.
Crypto is rarely accepted as a currency, despite earnest efforts from evangelists and business leaders. Attempts to integrate it with real-world products and services have fizzled; companies have issued crypto credit and debit cards, but enthusiasm evaporated once Visa announced they would no longer support those cards. Monero also has an XMR debit card. The desire to use something simple like a debit card is a reasonable one; people like what they’re familiar with.
Crypto holders are only a fraction of the population, therefore any crypto solution is limited by the size of the market and the desire of participants to spend their digital currency. Most crypto holders still treat their assets more as investments than as currencies – and while the market is quite large ($300 billion, give or take) there are relatively few active participants. For example, more than 70% of EOS (raised over $4 billion in an ongoing token sale) sits in just 100 accounts.
Volatility is also a risk: Why buy a coffee with Ether if the value could rise 10% in an hour? The coffee’s value certainly won’t, unless it’s a magical coffee.
To get answers to some of these questions, I sat with Guy Melamed, CEO of blockchain payment startup Zeex, since it lets people exchange their tokens for real-life gift cards, thus having the potential of becoming a use case. Vendors use the system because the gift cards are prepaid and breakage is high; consumers approach it because it lets brands such as Starbucks “accept” crypto.
MORE FROM FORBES
“You need to connect crypto holders directly to products and services, that’s the only way we’ll reach mass adoption,” Melamed tells me. “We use fraud prevention technology and smart contracts but that’s all behind the scenes. Users need a solution that looks more like Candy Crush than a cockpit. Increasing real-life crypto use will, in my opinion, help the market grow and grow more stable as well. As we expand further, we’ll enable vendors to issue their own blockchain-based gift cards so that everyone from writers to welders can pay and get paid.”
According to Melamed, rather than adding another step in the payment process and requiring users or vendors to deal with new systems, Zeex piggybacks on the existing, prepaid gift card infrastructure. They let users shop with brands such as Amazon, while maintaining anonymity. Another startup in the field would be “Payme,” and I would pay attention there as well.
We’re a long way from the euphoric highs of December 2017 when Bitcoin hit $19,000, but the big picture remains positive. While crypto isn’t going mainstream tomorrow, it’s carved out a niche that’s growing daily. Estimates of the industry’s future range from the tens of trillions of dollars (mostly from tokenized securities proponents) to $0, but even big names like JPMorgan’s Jamie Dimon are coming around.
What’s clear is that there’s a strong demand being throttled by inefficiency and poor user experience. The more companies solve it, the less we have to deal with questions such as, “Hey, but what’s the use case?”