3 pillars for crypto payments adoption

Pre-history

I was born in Ukraine, a country with an amazing local banking system, yet extremely poor international payment system. Paypal, Stripe, Revolut, N26 or any other major player is simply not accessible to us. Having the brightest IT specialists in the world require gateways to EU or US bank accounts but that’s quite a tough challenge for those who are living here. Payoneer seems to be the only option but it’s quite expensive based on what I’ve heard from people who are using it.

Bitcoin, on the other side, is one of the best alternatives I stumbled upon that solves all of this. I bought the idea after sending $1 worth of Bitcoin to my friend in Dubai. It was almost free, instant, and didn’t require any permissions from financial institutions. It felt great.

In 2016 I had this big dream to travel around the globe and share this amazing technology. Luckily, I joined the company that had the same goal and was partially living that dream. Lots of conferences, business trips, public demonstrations. The best part is that we had a working product, and people loved it.

After a while though, the market started to calm down and people stopped being interested in crypto as a payment method anymore. It seemed like the price was the only indicator of people’s excitement. Evidently, it’s not as appealing to pay with something that depreciates continuously, it has to be stable or at least go up. This makes a lot of sense but we all know that’s not how this industry works.

Despite all of this, I kept my eyes on the radar and started to follow traditional financial companies and their methods to attract new customers. I started to learn the history of different payment networks and test local wallets while traveling the world. Gradually I’ve collected a set of 3 core things that we lack to achieve true cryptocurrency adoption. It’s a long read so make sure to grab a cup of coffee.

1. Scalable integrations

A lot of approaches have been tested by different companies to expand the acceptance of crypto. Some were offering half-working apps, the others were selling expensive hardware. But in the end, they were pushing crypto from one merchant to another. You don’t have to be super smart to understand that this is not a scalable model but people still use it as their primary option.

1.1 Point of Sale systems

Early on our team discovered a solution that we thought could cover hundreds or even thousands of businesses with one integration only. We were using something that you might not even be paying attention to, a little black box called Point of Sale (POS) system. This is something that managers and waiters use for creating bills and keeping track of the orders. Most of the time, nobody replaces the hardware, nor the software of such systems. I’ve seen the same software UI pretty much everywhere I landed and heard the same complaints from dozens of employees working with this UI.

The good news is that integration with one of these POS providers gives you immense leverage and coverage across not one but several cities, sometimes even countries. The bad news is that crypto remains in the gray area, thus each country requires a unique legal framework for this approach to work. Even if the integration itself is as easy, as updating the merchant’s software, the fiat settlement and contract signing became a real nightmare for us.

Unfortunately, 98% of the merchants don’t care and don’t need crypto at the moment. Instead, they need cash to pay manufacturers and their employees. I still haven’t figured out the best way to solve this issue but I think integration with accounting systems can be a good start. This model becomes popular with Bitpay, GoCrypto and many more. It works.

1.2 Payment gateways

Some integrations seem not so intuitive and can be explored through networking only. For example, during the acceleration program in Malaysia, I tried to sign up for one of the biggest e-commerce players in Asia, Shoppy. I didn’t do it of course but that person gave me an excellent hint.

Turned out, it’s a very difficult and long process to add any payment method to an e-commerce platform. The way that can work however is to integrate with existing payment gateway this particular platform is already using. Typically, such gateways are quite big and serve a great number of clients. This is a win-win.

1.3 E-wallets and mobile QR-code systems

If you’ve ever been to Asia, you would notice something very common, multiple QR codes in every shop. Here’s a list I’ve personally encountered:

• China - WeChat, Alipay
• Souuth Korea - Naver Pay, Kakao Pay, Zero Pay
• Malaysia - Fave Pay, Boost, Maybank QR Pay
• Thailand - Promptpay, True Money
• Vietnam - Zalo Pay, Grab Pay, Air Pay, VN Pay

It’s a very big market and people are eager to pay via QR codes. That’s how they do it right now in any case. So the approach that we can use here is to make an app or preferably partner with the cryptocurrency exchange app and create a solution that will allow scanning a QR code of this particular payment system. Then you simply pay with crypto and exchange does the settlement for you via the payment system/gateway to the merchant directly. This sounds like too much, I know. I’m not even sure if it’s legal but somehow ZCoin has done it. It doesn’t work across 5 million merchants apparently but who would think it would work in the first place, right?

1.4 Games

The gaming industry has been in favor of crypto since its inception. Dogecoin is probably the biggest one that for some reason people got attracted to till this very day. The reason why is because it’s so hard to move the value of your character and your pro-rated account into actual money. You can exchange it into internal tokens but the withdrawal solutions are very limited. I’m not a gamer myself but I know how big the industry is, and that’s why we have to bet on it too.

Gambling, in particular, became the biggest use case in crypto payments. If you check websites that monitor dapps, you would notice that the top volume and engagement are concentrated there. Why? Gambling was and will always be forbidden worldwide, thus it works so well with crypto. Nobody can track you and the rewards distribution is an instant thing. Such people don’t need fiat, they need a fair system that can allow them to play and exchange funds easily without any questions from their bank or a credit card company.

On top of that, games gather professionals and form big communities, and communities are the basis for network effects. Every big player can bring thousands of fans who are not even playing these games but would like to learn more about crypto. Thus, I think both online and offline games, especially e-sports competitions, can give great exposure to a general audience about Bitcoin and altcoins.

2. Exceptional usability and performance

After establishing great strategies, it’s time to focus on the product itself. There are several things to keep in mind while building any app related to crypto, so let’s dive in.

2.1 Use UI that works

I was always struggling to understand why blockchain-based apps use such weird and uncommon UI. I mean, it’s 2020 now but people still haven’t figured out that it’s a bad practice to have lots of text on a single screen or to switch red and green colors, or even to show cryptographic hashes. Sometimes it seems that developers don’t even use apps outside of the blockchain ecosystem. What is worse, I’ve seen teams who create everything from scratch without conducting any research on existing or potential competitors.

UI matters and we have to adjust to what already works, despite how special our industry is. It took almost two decades to teach people certain rules and standards of how to use certain applications. People will not change because they don’t want and don’t need to. Nobody’s forcing them to try this new software because it’s too complicated and requires 10 steps before even start working with it. 5 years ago I created a habit that I’ve seen a lot of people are using as well - when I open the app and I can’t figure out how it works without a manual, I remove it immediately. It usually takes 30 seconds or so. Therefore, usability matters a lot but people neglect it.

2.2 Automatic but secure backups

The only thing that we have to do properly is backups. It’s a very important process that nobody loves to do, thus it has to be automated from the very beginning. Automation can be a bit risky, so I guess some new secure method has to be invented. Maybe some form of distributed cloud storage will work but we have to see what the industry has to offer. Otherwise, people will continue to lose seed phrases, break or lose their phones and as a result their funds. It’s a serious issue that is not addressed enough in our space.

2.3 Scalable infrastructure

Lastly, we need to have an infrastructure that can handle the demands for billions of users, who by the way can be both people and machines. It’s quite challenging to deliver products for masses if we can’t rely on such basic things, as real-time communication, instant payments, and low latency data synchronization. I think scalability should be a default feature of each blockchain to make it all work.

Along with great technology, there should come great docs. It’s not a secret that developers are not super excited about it, so make sure to have at least one tech writer on your team if you’re building a solid product that requires integrations with external businesses.

In fact, the developer portal should be treated as a separate product itself. If you think about it, you’re building something that your clients might use in the future. If you have incomplete or inconsistent docs, don’t be surprised about bad reviews. Usability goes further than you think.

3. Targeted audience

The third major pillar towards cryptocurrency acceptance relies on defining the right audience. This is the biggest mistake that so many startups are doing. They want to go everywhere and onboard everyone. Shooting in the blind never works in the long term, thus we need to know who to approach first. Unfortunately or fortunately the audience can be also divided into different types.

3.1 Generation

Generation Z and millennials are a lot more acceptable and adaptable in terms of new things, as opposed to Baby Boomers. Within this group, I would bet on tech-oriented people. They were the first to discover, improve and shape the early apps on the internet. The older generation will pick it up eventually when they won’t have other choices.

3.2 Culture

This one I’ve learned through the ambassador program we were running for almost 3 years. Turns out, each country, sometimes even a particular city, can have cultural differences in terms of payments and even business operations. For example, in Venezuela, in Caracas specifically, it’s very unsafe to carry around smartphones due to often robberies. At the same time, Dash dominated that place. How? SMS. I know, it’s kind of like going back in time but sometimes you don’t have too many options.

3.3 Location

On top of all that, we need to think about which areas to target first. There are only two options at the moment: highly-inflated (e.g. Latin America, Africa) and crypto-friendly (e.g. Malta, Portugal, South Korea, US) regions. Once you’ve defined that, a nice strategy that I’ve seen to be working is to pick one central spot. Start small, from one city, and expand from there. Depending on your goal, you might want to adjust and go big in multiple regions simultaneously but the best practices that scale typically start from a single location.

3.4 Industry

Choosing the right industry can be just as critical, as choosing your sales strategy. The golden rule is to go for what people use often: food, transport, tickets, utilities. In general, the travel industry seems to be working perfectly. Hotels, flights, rentals are a sweet spot for international currency. But I’m pretty sure there are things I haven’t even thought of.

Anyways, I didn’t have the intention of creating such a long post but I wanted to share everything that I’ve learned and have seen over the years in this crypto payments maze.