What Services Will Be Paid for With Crypto the Most and Why?
2020 is a special year for the crypto industry as a whole. We’ve gone through a bit of turbulence during these past two years, but even after all that time crypto still has not achieved mass adoption (an explanation for this is here). So now it’s time to pause and reflect on where we are now, how crypto payments (the major part of an industry) are used, and what will be the result at the end of the year.
Which is why I talked with business founders who deliver their products on a daily basis and feel the coming trends at their fingertips.
Just to get a clearer picture of what real crypto payment usage looks like, we selected a broad array of industries ranging from infrastructure to financial services. Here is the full list of the founders who participated in our survey. When reading their predictions, feel free to read about the company themselves to better understand the reasoning behind their predictions.
*None of what is written in this article is financial advice. Crypto is a high-risk asset, and you need to do your own research before making any decisions regarding crypto.
- Alvin Reyes, Co-Founder and Chief Technology Officer of ProximaX – A decentralized technology stack (blockchain, storage, streaming, and smart contracts) for building the next generation of data privacy-centric applications.
- Ken Sangha CEO of Open Platform – Develops tools and infrastructure for traditional developers to tap into new and exciting decentralized technologies.
- Matthew Niemerg from Alephzero.org – A novel DAG protocol that aims to solve known blockchain issues.
Social and games:
- Tony Tran, Founder of Alfa Enzo — A marketplace that lets anyone buy and sell attention.
- Alexander Palmer, Editor in Chief of CasinosRealMoney.com – In-depth casino reviews to help players make better and safer choices.
- Ivan Chebotaev СEO of Betmatch – Transparent betting platform using blockchain.
- Dave Waslen is CEO/Co-Founder of HedgeTrade – A blockchain-based social trading platform and predictions marketplace.
- Nemr Hallak, from Volentix.io – Cross-chain decentralized exchange.
- Brian Kerr CEO of Kava.io – A multi-chain DeFi platform for lending.
Business & Educational Services:
- Jan Sammut CEO at ICO Launch Malta and IBIS Brokers – Full-service ICO and security token offering (STO) platform that will manage every aspect of your ICO project.
- Brandon Elliott, CEO of Neosys – Provides secure solutions for today’s up-and-coming pioneers.
Let’s see what each founder predicted – each answer we tried to support with the current statistics.
DeFi will be the fastest growing sector in 2020
Decentralized borrowing, lending, and trading has been a hot topic for the past year. It started from ~$240 million in January 2019 (based on defipulse.com) and jumped to ~$700 million at the end of 2019 – 3x growth through the year.
Matthew Niemerg from alephzero.org expects 100% growth at the end of 2020:
“Be on the lookout for an increase in trading volume of the decentralized exchanges and derivatives markets as well as collateral locked in DeFi-lending protocols. In 2020, we’ll see further advancements in these three components with an emphasis on financial privacy, such as by using Dark Pools. Overall, we might end up with 100% growth in the DeFi sector.”
When you stocked up a huge amount of crypto after the hype of 2017 (when everyone operated a fund and you just need to hodl crypto and still receive the profit), you certainly wanted to find another way to increase the capital – DEFI is great for that.
Just lock your ether to one of the platforms and earn 3-13% per month (here is a simple income calculator: https://defipulse.com/income). It sounds like a really good opportunity.
Stablecoins payments will growth in high-risk niches
Global online payments are estimated to have 400-600 billion transactions per year. While crypto takes less than 2% of this volume. It is still too early to compare it to credit cards, which took more than 10 years to achieve mass adoption.
One of the problems with crypto is volatility. That’s why the amount of stablecoins continues to increase. The current amount of USDT transactions is about 10,000 per day (at the beginning of 2020, the same as it was at the beginning of 2019, based on: tokenview).
Brian Kerr CEO of Kava.io predicts that once stablecoins will have enough liquidity, it will dramatically improve the crypto payment experience:
“New stablecoins have the potential to really improve the crypto-payment experience; however, there needs to be sufficient liquidity built into them before we can see any real adoption. My guess is that we won’t see that in 2020 and we will all need to wait until 2021 when crypto has deeper adoption, liquidity, and a more open regulatory landscape for crypto payments to truly flourish.”
Another application of stablecoins are high-risk sectors, where payment gateways take increased commissions for operations (2x compared to “white” niches). And the problem is not only with commissions but with bank account management as well.
“Crypto is still in too early a stage for it to make a noticeable impact on the global online payments market. I would envisage, however, a growing market in stablecoin payments for high-risk sectors (2% penetration), as in these instances the discounts over card payments a merchant would be in a position to offer to their users would justify the effort required to switch over to a paying cryptocurrency.”
Big players invest a lot in merchant services
The big players on the market continue to increase their investments in merchant solutions, which will make it easier for merchants to accept crypto and apply it to real business reality.
Ecommerce and gambling are the biggest consumers of crypto, and there are some big moves made last year that confirm this trend:
- In a recent shareholder letter from Square, they said that it received around half of its revenue from crypto payments.
- Coinbase started active growth in the second half of 2019.
The most of founders agree that the ecommerce, gambling, and gaming industries will be the major niches in terms of crypto payment growth in 2020:
Ken Sangha, CEO of Open Platform
Given the recent challenges the industry has been facing, we can assume the share growth would be minimal from what it is currently, increasing 1-2% at the end of 2020, which is not a significant amount and this growth would still mainly be centered around ecommerce transactions and digital products.
Alvin Reyes, Co-Founder and Chief Technology Officer of ProximaX
Virtual assets, such as those in gaming or VR, can easily be tied to crypto payments. Gaming (stream or play) seems to be gaining some traction with more and more games using blockchain to create ivirtual in-game currency, which can drive crypto payment adoption. One of ProximaX’s partners, Xarcade.io, provides a way for game developers to create virtual tokens that can be used for their game’s economy.
Alexander Palmer, Editor in Chief of CasinosRealMoney.com
With an average growth rate of 13.2%, the global gambling market is expected to grow to $94 billion by 2024, thanks in part to the increased adoption of cryptocurrency as demonstrated by the growing number of new Bitcoin casinos being added regularly.
Dave Waslen, CEO/Co-Founder of HedgeTrade
We’re witnessing a phenomenal shift in online payments, with massive growth in crypto wallets and services, plus a rapid rise in mobile payments. Ecommerce consumers and merchants want cheaper, faster, and more secure transactions, with crypto payments filling that need 24/7. Factor in Coinbase and Square investing heavily in crypto-merchant services, and crypto could eat up close to 10% of the online payments market share in 2020 – not to mention if Libra or a central bank stablecoin rolls out in that time.
Nemr Hallak, from volentix.io
Staking, lending, and other fascinating decentralized finance (DeFi) services are popping up every day, and digital entertainment companies are growing exponentially, propagating digital assets to millions of users every day.
I believe that most of this growth will come from the gaming and entertainment sectors that are promoting crypto to the youth as non-fungible tokens and mined or minted coins used to access games; these users represent the majority of the new adopters.
Ivan Chebotaev, СEO of Betmatch
The crypto payments share of online services will grow for sure. There was a 5.7% crypto from PayPal share during Q4 2019. My prediction is x2 growth till the end of the year for all crypto payments.
Products still suck – there will not be growth until we build real products
Not all were optimistic about the current state of the payment solutions products. And we need time to develop a better experience for the user.
Tony Tran, Founder of Alfa Enzo
The A-Team believes that crypto projects and related services will continue to be the principal backbone of all transactions worldwide. Enzo (NZO), the time-based currency native to Alfa may tip the scale toward the end of 2020 with the launch of our global marketplace.
Brandon Elliott, CEO of Neosys
I still firmly believe that no good solution exists for consumers to buy, sell, and pay using cryptocurrencies. Without a major disruption this year, consumers making real-world purchases or cross-border payments using crypto will remain below 0.01% throughout 2020. With a proper disruption, such as Javvy’s upcoming wallet release, we could achieve 1% in 2020, a 1,000-fold increase from now.
The crypto-payments industry is, of course, still in its early stage – we need more time before users start using it on a daily basis.
Let’s come back to all these predictions at the end of 2020 and we’ll see who was right. Bookmark this article so you can compare predictions and the actual results in December 2020.
|Writer: Kirill Shilov
Bio: Blockchain enthusiast developer