Coffee Meets Crypto - How to Pay with Crypto

"Now Accepting Cryptocurrency"

Ever tried using bitcoin for your pizza night with Domino's?
With many people now holding Bitcoin, Ethereum, and other cryptocurrency coins, various merchants have started accepting cryptocurrency as payment. 

Starbucks

Yes, in case you have not heard, the 50-year-old business is now finding ways to incorporate the disruptive technology into its business. Starbucks' loyalty program, Rewards, saw a 28% increase from 2020-2021. Launched in 2009, the program encourages repeat purchases and has successfully done so with its latest quarter record of 24.8 million members in its loyalty program. 

Thanks to their partnership with digital wallet provider Bakkt, Starbucks now let customers pay directly with Bitcoin and customers can convert their crypto balances on PayPal to fiat currency before reloading their Starbucks apps. From a strategic perspective, this effort to reduce friction and make transactions effortless through digital experience is definitely an appealing point. 

Sotheby's

The renowned auction house first began accepting cryptocurrency as payment in late June. In July 2021, it accepted Bitcoin as payment for a rare 101 carat diamond which sold in July for $12.3 million - it became the most valuable item ever bought with cryptocurrency at an auction.

Advantages of Crypto Payments

Low Transaction Fees
Shopping with a debit or credit card is practical. One swipe is all we need to be on our way. However, this payment method can easily hide fees on each purchase since plenty of parties are involved in the transactions. Cryptocurrencies eliminates third-party intermediaries in transactions and hence make transaction fees lower.

Irreversible Transactions
Once transaction occurs, no one can undo it, and you are immediately entitled to the goods or services you have paid for.

Enhanced Stability
Volatile cryptocurrencies like Bitcoin can serve as reserve currencies in countries with low tolerance to inflation. Many governments are poorly managing their economies to the point that fiat currencies are rendered useless by hyperinflation. In Venezuela for example, inflation reached nearly one million percent.

Workers' wages were reduced to almost nothing, money quickly loses its value, and residents are converting the local currency to digital assets such as Bitcoin or USDC and USDT. This shows that cryptocurrencies can appreciate while also be used for day-to-day payments.

Disadvantages of Crypto Payments

Volatility
Known for their volatility, that is what makes cryptocurrencies so attractive as investments. Bitcoin's price can easily fluctuate between 15 to 30 percent in a single session. While this volatility might be attractive for those who actively trade, those who want to use it for payment might find it less appealing.

Imagine having one BTC. When you wake up in the morning, the price of BTC is $10,000 per unit, enough to get yourself a nice car. Yet in the afternoon, the price quickly drop 20 percent, and you can no longer afford that nice car you have been dreaming about.

Skepticism
Since digital currencies are not regulated or guaranteed by governments, a lot of people are inclined to stick with the traditional payment method. 

Illicit Activities
Some digital assets like Monero and zCash are used by criminals because they are easier to manipulate and hide. Just because Pablo Escobar ran a multi-million drug cartel, does not mean the dollar is a dirty currency, right?