Crypto companies struggle to find the right recipe

Four years ago, fried chicken chain KFC tweeted from its Canadian account that it would accept bitcoin as payment for its “bucket.”

The company told AFP that its scam campaign — “Digital Giving of Chicken Chips” — sold out within an hour, and the chain has not accepted crypto payments since, but online articles regularly recycle the claim that KFC “accepts” bitcoin. .

Several other companies tried to exploit crypto payments before abandoning their efforts, including Tesla and Dell.

Bitcoin will almost certainly never be practical for daily purchases because its value fluctuates greatly and each transaction is very expensive, takes a lot of energy and takes at least half an hour.

“No one is going to a KFC to buy a chicken burger and then has to wait 30 minutes for a payment,” Andre Crone, a South African developer and crypto expert, told AFP.

But there are now thousands of smaller cryptocurrencies with faster processing times and more stable prices.

Analysts say that the total market capitalization of cryptocurrencies has now exceeded $2 trillion, with nearly half of that in bitcoin.

Companies are rushing to get involved, and developers like Cronje are building the infrastructure to allow virtual currencies to be used to pay for everyday items.

But public buying is crucial, and companies seem to be struggling to find the perfect formula.

– ‘Look at the knight’ –

Microsoft exemplifies the emerging model for large companies entering the crypto space.

First rule: keep it away from the main business.

The tech giant stressed that shareholders will not be exposed to the rise and fall of cryptocurrency prices.

PayPal and Apple, two other crypto-curious companies, have made similar promises to their shareholders.

To keep crypto off its balance sheet, Microsoft has partnered with a company called Bakkt that allows customers to convert crypto assets into products like gift cards for Xbox, or charge their Starbucks payment card.

Bakkt, which received investment from Microsoft’s M12 venture capital fund, went public last year and a flurry of announcements of major partnerships with Mastercard sent its stock price soaring.

But then came the nosedive when it announced increasing losses and brought its activities under scrutiny.

The company had said it expected to have nine million customers by the end of 2021, but its executives provided a figure of 1.7 million transaction accounts at the end of last year.

Meanwhile, PayPal has gained a lot of publicity for its “Pay with Cryptocurrency” feature that was launched in the US and UK last year.

PayPal converts users’ crypto assets into cash before sending payments to sellers.

But it’s unclear how popular these services are – neither company has responded to AFP’s requests for details about use.

Market watchers say it is too early to tell how these forays into cryptocurrency will end.

“My point is to not get too excited just yet, just watch the rider,” said CFRA Research Analyst John Freeman, agreeing that the hot air makes it hard to predict what will happen next.

– ‘When, not if’ –

The barriers to widespread adoption of direct crypto payments for everyday things are significant, if not impossible.

Developer Cronje said it works largely without the need for cash or regular banks that use services like BitPay and BitRefill, which allow crypto spending anywhere from Amazon to Uber.

But he agreed that his less technically savvy friends would “fall apart very quickly” if they tried to rely on blockchain, the technology that underpins cryptocurrencies.

Instead, he envisions a future where people will continue to use credit cards and banks, but back-end tasks will be largely automated on the blockchain.

“This is a technology that will save them, conservatively, between 20 and 25 percent of their overhead and costs,” he said.

“So it’s not about whether it’s about a date.”

Meanwhile, non-financial companies will continue to venture into the crypto space, often to appear a little wiser but not richer.

For example, hotel chain Pavilions partnered with a payments company last year to allow guests to use cryptocurrency, but found that it didn’t make much difference to its business.

“It turns out that no one likes to spend their bitcoins, even on vacation!” Wing spokesman Tim Sargent told AFP in an email.

“It showed us that bitcoin is more of an investment tool than something that people want to give up in exchange for payment.”

jxb / lth / rl / jfx

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