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Over the past decade, payment companies and ecommerce have revolutionized how individuals shop online. I do nearly all my shopping online, along with 263 million other Americans. For me, it’s the most convenient way to shop and sort through what I’m looking for without spending hours combing through racks of products.
While the experience of browsing online works generally well, when it comes time to check out, there are so many opportunities for technology to further enhance the experience for both consumers and merchants by integrating blockchain and digital asset payments.
Dollar digital assets: The building blocks for programmable money
Blockchain is a digital, decentralized, immutable record of transactions that utilizes smart-contract technology to create seamless, secure and automatic transactions directly between buyers and sellers. This technology enables the use of cryptocurrency, a digital asset and medium of exchange that uses cryptography for secure transactions. Some luxury brands, including Gucci, Off-White and Balenciaga, are already experimenting with digital assets as a form of payment.
However, digital assets like Bitcoin and Ethereum are subject to price volatility, making it risky for buyers to use them for payment, given the change in value over time. It can be difficult to cut through the hype around these companies adopting crypto payments. When it comes down to it, the transformative payments formula lies within dollar digital assets, or stablecoins.
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Dollar digital assets provide the building blocks for programmable money, enabling a world where value transfer looks like the internet, with the global, free exchange of value. Trusted stablecoins are essentially a digital version of a dollar — fully reserved by physical U.S. dollars in bank accounts, redeemable 1:1 for cash and available for use on blockchains. Dollar digital assets are in a unique position to power the revolution of digital asset payments, with the high-speed, low-cost, always-on perks but without the price volatility.
In a not-too-distant future, stablecoins can become the primary means for both online and in-person transactions. According to a June 2022 report from Deloitte, nearly 75% of surveyed merchants plan to accept digital asset payments within the next two years, and 83% expect consumer interest in digital assets to increase over the next year.
Shopping with stablecoins
The benefits are clear for merchants and consumers alike. For merchants big and small, accepting stablecoins from customers cuts transaction costs, eliminates middlemen and onboards new customers, who only need funds in a digital wallet to make purchases. Settling merchant payouts with stablecoins significantly improves payment flow, making it faster and cheaper. Like email communication, transacting with dollar digital assets is “always on,” so settlements and payouts can happen on weekends and holidays without any delays.
For consumers, getting up to type your credit or debit card number into a website or risking privacy to save the information will be an online shopping inconvenience of the past. With digital assets, users seamlessly connect their wallets to their browsers and can pay instantly with the available funds. Integrating digital asset payment options will make purchases a seamless extension of the online shopping experience. Even though I’m an avid online shopper, I’m not the best, so what excites me the most is the near-instant speed of transactions that will cut down on processing times for my returns.
While the adoption of stablecoins has rapidly increased within the crypto ecosystem for decentralized finance and capital markets, we’re still in the early stages of using dollar digital assets for everyday purchases. Hurdles to overcome before we see widespread merchant adoption include the need for clear regulation, increased awareness of the benefits of using stablecoins for payments, and most importantly, a more intuitive user experience.
As with all disruptive technologies, this will take time. Gradually, we will see more online storefronts integrate digital wallet options so customers can pay with stablecoins, leading us to a point where the experience is so seamless that we won’t think of it as crypto but as internet-native shopping.
Rachel Busch is communications manager at Circle, a global finance technology firm and operator of stablecoins USD Coin (USDC) and Euro Coin (EUROC).