Over the last few years, the use of cryptocurrencies around the globe has raised significantly. Some use cryptocurrencies as a payment method, others see them as a trading asset, while many see them as both.
As of 2022, around 4% of all consumers around the world hold cryptocurrencies (according to yahoo.com).
There are almost 90 million users of the famous Cryptocurrency trading platform Coinbase, more than the entire population of Germany. The global market size of the blockchain technology, on which cryptocurrencies are based, is currently 1.2 billion dollars (according to statista.com).
More and more companies have started to accept cryptocurrencies as payment methods in recent years. One of the first large companies to adopt cryptos back in 2014 was US technology corporation Microsoft after its leader Bill Gates stated that Bitcoin is better than traditional currency.
Currently, companies like payment service provider PayPal, coffee shop chain Starbucks and online marketplace Etsy, all accept Bitcoin (the most popular cryptocurrency) as a payment method and other companies are seriously considering doing the same thing.
One of such companies is eBay, one of the largest eCommerce platforms on the planet. The California-based company currently has 159 million active buyers worldwide and its gross merchandise volume is about 100 billion dollars. Every month, eBay’s website receives a staggering 1.7 billion visits.
The fact that such a giant seller is considering accepting cryptos as a payment method is great news for everybody who considers them a valid, decentralized alternative to traditional currencies.
Why Don’t All Companies Accept Cryptocurrencies as a Payment Method Yet?
Given the very high number of users and the high rate at which they increase, one has to wonder why all companies don’t accept cryptocurrencies as a payment method yet.
These reasons may differ from company to company but some of them seem to be the most prevalent.
The first one is currency fluctuations. Why all currencies fluctuate, cryptos tend to be subject to faster and more significant changes in value compared to, say, dollars or euros. This makes them less stable than traditional currencies, which may hold back certain companies from seeing them as a safe payment method.
Another reason for adoption reluctance is longer set-up times. It takes much less time for a business to set up traditional payment methods compared to cryptocurrencies. For example, an eCommerce website may need additional tools or plugins to allow for safe crypto payments. This may change in the future as businesses specializing in payment services try to make it easier for all types of businesses to use cryptos to pay for goods and services.
The third reason has to do with different regulations across countries. Different legal systems may have different requirements for businesses that want to adopt cryptocurrencies as a payment method, and some may have very heavy restrictions on cryptos in general. This is particularly bothersome for international companies that sell their goods and services internationally.
You also need to take into account that allowing cryptocurrencies as a payment method will increase the number of questions from customers, with a negative impact on customer support’s workload. That’s because many customers don’t fully understand how cryptos and blockchain technology work and will start sending a lot of new inquiries to customer support.
Finally, while the use of cryptos as a payment method is becoming more widespread, it’s still seen as a niche form of payment,and it may be less attractive for companies whose customer base doesn’t seem to include a high percentage of crypto users.
The Pros of Adopting Cryptocurrencies as a Payment Method
While the points listed until now tell us what the obstacles to cryptocurrency adoption by businesses are, there are also some very obvious benefits.
One of such benefits is that cryptocurrency transactions are processed much faster than many traditional transactions, which may require hours (if not more) to be completed.
Another positive aspect is that cryptocurrencies make it practically impossible for unwarranted chargeback requests to be processed thanks to cryptocurrency’s tracking system based on blockchain technology.
This is related to the general effectiveness of cryptocurrencies and blockchain technology in preventing fraud.
Another benefit is of course the possibility to attract certain customers who tend to favor businesses that offer the use of cryptocurrencies as a payment method.
Finally, there are lower transaction fees associated with crypto payments compared to payments in traditional currencies.
Cryptocurrencies as a Payment Method in eCommerce
As the interest in cryptos increases, so does the number of online marketplaces and branded websites that are willing to accept them as a payment method, with Bitcoin being of course the most adopted one.
The fastest method to add cryptos as a payment method to an eCommerce store is to use a payment processing service that includes this option. The payment will be processed the same way as payments with any other currency, but the transaction will be recorded on the blockchain (preventing frauds and illegitimate chargebacks, as we explained earlier).
Various businesses specialize in this process and act as cryptocurrency gateways. The list includes businesses like Coinbase Commerce and Bitpay.
eCommerce businesses that have already adopted cryptos as a payment method are usually of two kinds: those that have determined that the pros of adopting cryptos outweigh the benefits and those that are just hopping on the bandwagon.
According to an article posted on finextra.com, another reason may have to do with the demographics of those who use cryptocurrencies. They tend to be millennials with a higher average education level and with a higher average income. These customers are willing to spend twice more in comparison to those who mostly use credit cards.
Some eCommerce businesses may also believe that the overall percentage of people using cryptocurrencies as payment methods is destined to grow dramatically in the long term and thy don’t want to find themselves unprepared.
eBay Considers Accepting Cryptocurrencies
Most of the largest eCommerce marketplaces, including Amazon, eBay, and Walmart, currently don’t accept cryptocurrencies as a payment method.
Yet Generation Z and millennials are two of the main demographics that such eCommerce giants target. Given the positive inclination of these customer groups towards the use of more modern payment methods, including cryptos, it makes sense that eBay is considering accepting cryptocurrencies for the purchase of goods and services.
The company has only recently started to accept Google Pay and Apple Pay as payment systems and its executives have said that they are open to accepting new methods in the future.
When interviewed by CNBC, eBay’s CEO Jamie Iannone specifically said that the company considered virtual currency payments as a possible option for the future.
The Growing Market for Non-Fungible Tokens.
Non-fungible tokens (or simply NFTs) are another financial asset that is based on blockchain technology. Each of these cryptographic tokens has a unique identification code that makes it distinguishable from any other NFTs.
They allow people to “tokenize” things like artworks and real estate (real or virtual), drastically reducing the risk of fraud and giving owners very strong proof that they indeed own that property.
To make a long story short, an NFT is basically a deed of ownership to a digital or real asset.
The key difference with cryptocurrencies is explained by their name. Cryptos are “fungible” by nature, meaning that the value of a Bitcoin (or Ethereum) equals the value of another Bitcoin (or Ethereum) the same way the value of a dollar banknote equals the value of another dollar banknote.
This equivalence doesn’t exist for NFTs, which are, as the name suggests “non-fungible”, meaning that each NFT is unique and it’s not the equivalent of any other NFT. In other words, each NFT is “non-replaceable”.
An NFT could, theoretically, be everything. This unique article could be turned into an NFT, a unique piece of digital art could be turned into an NFT, and a domain name could be turned into an NFT. Thanks to blockchain technology, the ownership of that NFT becomes unmistakable and it can be sold at any price that a buyer is willing to pay.
Sure, people can make copies of those NFTS but there is only one original one with one owner, the same way people can make copies of the Mona Lisa painting but there is only one true Mona Lisa and it’s owned by the French Republic.
Somebody could make a screenshot of this article or download it on his/her computer, but if this article is an NFT, then it has only one proprietor, whose ownership can be unmistakably verified thanks to blockchain technology.
Certain NFTs representing pieces of digital art have already been sold for tens of millions of dollars and there are now people who specialize in collecting NFTs the same way there are people who collect paintings, sculptures, or any other item.
NFTs were barely known until the beginning of 2021, the year during which their popularity suddenly exploded, and they generated an outstanding $23 billion in trading volume over the 12 months of 2021.
While this sudden growth may be the result of the initial hype surrounding NFTs, we may also be witnessing the beginning of a stable long-term growth based on reliable fundamentals, which would make NFTs a good investment option.
People Are Already Using eBay to Buy and Sell NFTs
Many marketplaces specialize in the buying and selling of NFTs. Some of these marketplaces are Decentraland, Axie Infinity, and Mintable. Yet NFTs can be traded anywhere a buyer and a seller can meet, and eBay is currently the second-largest online marketplace and the largest auction website on the planet.
Early this year, eBay’s CEO stated that even though the company hadn’t made any announcement related to NFTs yet, transactions involving these assets were already taking place on the famous online marketplace.
He added that eBay changed its policy in 2021, allowing NFT transactions to allow on eBay and people started using the platform to buy and sell NFTs even without an official announcement by the company.
A More Official Debut
More recently, eBay has made its first official entry on the NFT scene through a partnership with OneOf, a web3 NFT platform, and the launch of various limited-edition collectibles.
eBay wants to capitalize on the fact that it is already a reference point for everyday collectors who buy and sells their items around the world.
For this reason, eBay’s NFT offer is aimed at common customers rather than at super-wealthy collectors of very expensive NFTs.
According to an article on entrepreneur.com, eBay’s vice-president said that their goal is to make NFTs more accessible to young collectors anywhere, challenging the idea that buying and selling NFTs are just a luxury for the super-rich.
Of course, those who buy and sell NFTs also do it in the hope that their value may increase over time and not just for the pleasure of collecting things.
The first NFT collection to ever be sold on eBay comes in four different tiers and features Wayne Gretzky, a Canadian hockey player who won four Stanley Cups and is loved by Hockey fans around the world. Prices start at $10, representing the high accessibility of eBay’s NFT strategy.
Partnering with OneOf and Addressing Environmental Concerns.
One of the reasons why eBay chose OneOf as its main cryptocurrency partner is the fact that this company is particularly concerned with the amount of energy used in the blockchain mining process and it has consistently shown a commitment to a sustainable blockchain future where people can take advantage of the benefits of this technology while minimizing its negative effects.
One of the main concerns surrounding blockchain is that it may have a negative impact on the environment.
According to Digiconomist, each year the Bitcoin network alone is responsible for releasing 114 million tons of carbon dioxide into the atmosphere, which is higher than the amount that certain countries generate.
Looking at eBay’s environmental footprint we can get a glimpse of how seriously the company takes the topic of sustainable commerce.
That’s what made OneOf the obvious choice in selecting an NFT partner. By using a “proof of stake” network instead of a “proof of work” network, OneOf is able to use 2 million times less energy.