In 2017, the Long Island Iced Tea Corp. increased its stock price by nearly 300% in a single day. The popular beverage company didn’t release a new product or announce record sales. In fact, the company changed almost nothing about its operations or product offerings.
Instead, it changed its name. On December 21, 2017, the Long Island Iced Tea Corp. became Long Blockchain Corp. The name change was part of a broad trend of companies capitalizing on the popularity of blockchain technology and digital currencies to advance their businesses.
Many decried the event as a gimmick, noting their lack of actual investment or usability in the blockchain or the digital currencies that it fueled. Indeed, for business, cryptocurrencies have mostly been unusable, serving almost exclusively as a digital, speculative asset that’s more akin to gold than cash.
To be sure, some businesses are making an effort. Overstock.com, an online discount retailer, was one of the first companies to accept Bitcoin at checkout, and they’ve even paid some of their taxes in cryptocurrency. At the same time, Facebook is developing a digital currency for use on its WhatsApp messaging application, something that could prove to be a model for tech companies looking to find practical applications for cryptocurrencies.
However, these companies are clearly outliers. For most businesses, cryptocurrencies in their current form are not a real option. Their values are too erratic, the regulatory atmosphere is too uncertain, and broad acceptance is too distant.
In short, before cryptocurrency will be a real option for business, changes need to be made. Fortunately, those things may not be as far off as it seems.
Before businesses can accept Bitcoin or other digital currencies at checkout, they need to become more stable. Throughout its rise in popularity, Bitcoin has demonstrated erratic price behaviors, and it’s not uncommon for its value to rise or fall by double digits in a single day or even within an hour.
For those hoping to use this rapidly fluctuating currency to make purchases, Bitcoin Pizza Day serves as an ominous reminder that making purchases in crypto is risky.
Indeed, the number of merchants receiving Bitcoin at checkout has fallen precipitously since the token’s 2017 peak. In comments to Bloomberg, crypto-advocate Graham Tonkin notes, “I don’t believe [Bitcoin] fits the characteristics of money very well.”
In response, so-called asset-backed tokens like Tether have emerged in an attempt to provide a more stable buying experience. Although the token claims to be backed 1:1 by dollars in the company’s bank account, Tether has been mired in numerous controversies.
However, stability is the goal, and Xank’s free-floating stable coin bridges the gap between the unpredictability of Bitcoin and the ineptitude of Tether by. The digital currency has an investment component, but it also makes cryptocurrencies a real option for businesses by providing a stable asset that can be used to fuel the digital economy.
Cryptocurrencies are a uniquely global phenomenon that is comprised of communities from around the world. While this is a tremendous asset, it also makes the regulatory landscape perilous at best.
Accordingly, a recent report by the Brookings Institute concludes that, among other things, additional crypto regulation will “further the development of new technologies, curtail the use of crypto-assets used for illicit payments.”
Before businesses can be expected to embrace crypto as a mainstream payment methodology, these measures need to be put in place. Fortunately, in a recent speech at the SEC Speaks conference, chairman Jay Clayton acknowledged cryptocurrencies’ place on the agency’s Examination Priorities for 2019 list.
Crypto regulation always feels like it’s just around the corner, but it may finally be close, and that would make digital currencies a more practical option for businesses.
Value stability and regulatory approval are tangible requirements for crypto usability, but they aren’t the only demand. Even after several years of popular accent, Bitcoin and other digital currencies are still outliers in the financial system.
In most crypto-friendly countries, only a small percentage of people own digital currencies, and many still see them as speculative assets rather than usable tender to buy goods and services.
Of course, trends beget change, and the numbers are becoming more favorable each month. By virtually every measure – from the number of people with crypto wallets to the amount of crypto being exchanged – crypto’s notoriety is growing. It seems evident that sooner rather than later these assets will reach a popular tipping point that will make them a natural payment method of businesses and retailers.
Until then, the original intention of cryptocurrencies, to create a borderless currency for facilitating transactions, remains mired in a speculative limbo. However, as cryptocurrencies offer more stable solutions within a regulatory frame and that are supported by popular demand, they will become an inevitable and real option for many businesses.145