5 challenges that need to be addressed for widespread merchant cryptocurrency adoption

Many investors consider cryptocurrencies like Bitcoin as good investment options, given how their prices have evolved and their tremendous popularity. However, only a few large companies regard them as helpful payment solutions since the traditional financial system has served their needs well, and cryptocurrencies are in their formative stages.

During their existence, they have become reliable alternatives for decentralized finance and changed how many merchants, customers, and stakeholders perceive payments. However, despite their revolutionary impact on industries, the prospects of their mainstream adoption remain elusive.

There are many benefits to implementing cryptocurrency payment gateways and permitting customers to fund their acquisitions with digital money. But for cryptocurrencies to become viable payment options in the eyes of sellers, some obstacles must be removed and problems solved.

Here are the five main hurdles and struggles encountered in the cryptocurrency sphere that prevent the average business from taking advantage of this new form of technology.

Scalability

The higher the popularity surrounding cryptocurrencies, the more solicited networks are, leading to scalability issues that make transactions take longer to effectuate. There are scalability problems with digital currencies due to the high network traffic, which boosts the confirmation period and increases transaction fees. For the power of example, you can think of driving down a congested road during rush hour. The more vehicles gathered and the lower the efficiency of traffic management, the longer it takes for drivers to arrive at their destination. Crypto networks function similarly; the more activity encountered, the slower it becomes to conduct transactions.

Another outcome is rising transaction costs. Participants struggle to have their transactions introduced to the next block, and the system prioritizes those paying the highest fees.

Ethereum is a platform with tremendous potential to achieve mainstream payment adoption. However, its co-founder, Vitalik Buterin, made public a report showing where it struggles and suggesting that scalability is a significant obstacle to gaining traction among businesses. According to the famous developer, congestion on the network is an issue that requires immediate action, and the more successful Ethereum becomes, the more complex the strain is on users.

There are a few potential solutions to remove this barrier, namely three technical transformations related to wallet safety, layer-2 scaling, and privacy. It’s also anticipated that the Surge, the Verge, and the Purge will improve the Ethereum infrastructure and roadmap since they can undergo modifications depending on the updates encountered.

Transaction irreversibility

Among the many advantages of cryptocurrency is that it makes payments impossible to alter or reverse. Users cannot get their digital funds back once they have approved a transaction and sent their tokens to a wallet. This key feature of blockchain boosts the security of payments in several ways, with sellers’ protection against scams being among the most considerable advantages. In the traditional financial world, the possibility of receiving funds back from the used credit card company after a successful dispute creates room for chargeback fraud. Scammers take advantage of this possibility to take back their money after paying. With Ethereum and cryptocurrency in general, scams are impossible since the transaction is pseudonymous and irrevocable, shielding sellers from dishonest fund return attempts.

However, despite the evident benefits of transaction irreversibility for merchant security, many still argue that this feature is a disadvantage. The reasons behind their belief are apparent, though, as any customer wants to ensure they can be refunded when they’re entitled to.

In several cases, however, transactions may be reversible if several conditions are met. This happy outcome involves contacting the company and coming to an agreement with it to have your money redirected into your wallet. Still, the likelihood of this scenario happening is pretty low.

Trust

While increasingly more individuals have become knowledgeable of the benefits of digital currencies, a significant portion is still hesitant or prefers to sit on the fence regarding implementing this alternative payment method. This withholding is mainly associated with the merchant’s insufficient knowledge about crypto’s underlying technology and lack of trust in its security or that of other network participants.

To encourage those interested in crypto usage but encountering fears and doubts about using cryptocurrency confidently, developers should focus on strengthening the security measures and making utilizing digital money more user-friendly. Plus, governments worldwide should keep their regulatory focus in order to improve security and reliability for every party involved in business transactions.

With enough public awareness and ongoing efforts to educate on the matter, cryptocurrencies may achieve what now remains a hypothesis, becoming more widespread in future-oriented businesses.

Blockchain fees

Among the various disadvantages of the best blockchain networks is scalability. In times of bull markets and when the demand on crypto platforms grows, fees rise to rates that most businesses and consumers aren’t comfortable with. Cryptocurrencies have been in the winter so far as prices hit bottom and fluctuated enormously, but they’ve entered the year on the right foot, and their trajectory has improved. This means scalability issues will become more potent as more users join the network due to bettering crypto prices.

However, implementing crypto payments can prove advantageous for businesses to introduce these methods, as it will enable them to serve a broader category of customers and gain recognition as an enterprise that encourages development.  

Traditional financial institutions

Digital currencies bring many advantages and solve the limitations of the traditional financial system, offering users a more secure, transparent, and reliable payment. However, these exact features attract a lot of criticism from conventional financial institutions like banks, whose status quo is challenged by the new type of technology. This resistance might take the form of lesser financial services provided to crypto-related businesses, more stringent laws, or badmouthing cryptocurrencies.

However, introducing this alternative payment method necessitates much research and understanding of regulatory oversight. Only with a solid knowledge base of crypto payments can a business be prepared to get the most out of this technology.

Despite the many challenges that the cryptocurrency system needs to overcome, there are chances that it’ll grow to become a reliable payment option. Businesses must keep an eye on regulatory oversight in order to gain a better understanding of how they should approach this matter.