Payment methods have evolved over time. Barter, coins, paper banknotes, credit cards, digital wallets, shells and cryptocurrencies are just a few options that have been or are still being used to purchase goods and services.
Now, cryptos are the hot shot, with more and more companies betting on the solution as a new means of payment. PayPal, Binance and Visa are just some of the examples of companies that are providing their customers with ways to use assets as a form of payment on websites and stores, as well as credit cards.
One of the most recent examples was Argentina’s Mercado Livre, which announced in April 2021 the launch of an exclusive section on its platform dedicated to real estate trading using Bitcoin as a means of payment.
Another example is Tesla, which in February of this year started to accept the most well-known cryptocurrency in the world for the acquisition of the automaker’s vehicles. However, CEO Elon Musk backtracked and the company stopped accepting Bitcoin as a means of payment. In July, the executive said the company would likely return to accepting BTC for payments at some point in the future.
Given that many cryptocurrencies, especially Bitcoin (created in 2008 with the intention of being a decentralized, end-to-end payment method), suffer large price fluctuations on a daily basis, is it a good idea to use them as a way to day to day payment?
Means of payment or investment?
Cazou Vilela, CMO at Zro Bank, is adamant that it makes no sense to use cryptocurrencies as a means of payment. “Although Bitcoin was born with this currency purpose, it is still not one. Today, when we look at the BTC, we see volatility many times greater than what you would like to price with it. So, with this concept, it no longer makes sense to spend your cryptos to buy”, he says.
If the problem is volatility, stablecoins are there to avoid these large price variations, as they were created to be backed by some physical currency, such as the dollar. This is the case of Tether (USDT), USDC and DAI.
However, Fabrício Tota, director of new business at Mercado Bitcoin, a brokerage firm specializing in cryptoactives, explains that although stablecoins solve the problem of price fluctuations, they have another point of attention. “Transactions are still not that cheap.” , says Tota.
To get an idea of the fees paid to complete a transaction to send 15 DAI, equivalent to US$15, the lowest possible fee was US$13.92 and the highest US$17.40. The difference between them is the speed at which they are committed: the higher the rate, the faster the transaction is carried out.
“The way I see the potential of this market, I see that spending cryptocurrencies from a personal point of view is a somewhat bad decision if you are looking for the long term of your position”, says André Franco, specialist in cryptocurrencies at Empircus Research.
For Franco, it’s more interesting to enjoy his own earnings. If a person has been accumulating cryptocurrencies for some time, simply selling the asset and putting the value in his pocket, making the payment he wants with profit, for example, is healthier for life as an investor.
Alex Buelau, partner at Parfin, a platform for consolidating investments in cryptoactives for institutional investors, goes along the same lines and says that he always recommends taking a little profit if he has been successful with his investments. “This brings satisfaction, reduces your exposure to short-term risks and makes the gains more real. Just keep an eye on taxes so you don’t get caught by surprise in the future,” says Buelau.