Soon, You Will Be Able To Pay for Your Dinner With Cryptocurrency
The demand for cryptocurrencies has grown dramatically this year. This is apparent in the tremendous increase in the prices of cryptocurrencies like bitcoin, ethereum, and litecoin, considering that their prices are mainly demand-driven.
But have you ever wondered why you can’t pay for your dinner at any restaurant with cryptocurrencies, especially after the increase in value they have enjoyed?
The simple answer is that most existing cryptocurrencies are not designed specifically for point-of-sale. Here’s why.
The Long Confirmation Time for Crypto Transactions Discourages Consumers
In the cryptocurrency world, confirmation incorporates the stages of authorization, authentication, clearing, and settlement that are involved in credit card payments. When you add up the time these stages take in a traditional credit card payment, you’re very likely to find that cryptocurrencies, say bitcoin, are faster. Bitcoin confirmation would usually happen in anywhere from 10 minutes to a few hours, while the entire process for a credit card usually takes a couple of days.
The shorter time for bitcoin is good for the merchant because they can access their funds faster, but it’s time wasted for consumers because they would, most of the time, have to wait out the entire confirmation period before receiving the value they seek. On the hand, with credit cards, consumers mostly only have to wait out the authentication and the authorization stages, which usually happen between seconds and a minute. At present, it’s simply a no-brainer for consumers to stick with credit card payments.
Using Cryptocurrency Is Expensive For Consumers
Here’s a line from Satoshi Nakamoto’s famous paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” that announced the launch of bitcoin:
“The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for nonreversible services.”
The high costs that are associated with the conventional payment systems are one of the things that bitcoin was supposed to tackle. The opposite is what is happening when it comes to using bitcoin as a regular currency. A journalist with the U.S. business news provider CNBC experimented with the use of bitcoin as a regular currency earlier this year. The journalist noted that “bitcoin transactions can get expensive,” saying that bitcoin transactions cost her 40 percent more than dollar or credit card transactions on average. She called out high exchange rates and transaction fees. Moreover, the fact that consumers pay the transaction fees as opposed to merchants in credit card payments discourages the mass adoption of bitcoin.
Put simply, as long as bitcoin takes so much time and money from consumers, it will find it very difficult to become a mainstream currency. Given that bitcoin has made the world realize that it needs a more flexible and efficient kind of money in the digital world, the cryptocurrencies that are built on blockchain networks and offer the flexibility, efficiency, and point-of-sale readiness have a good chance of going mainstream.
Cryptocurrencies like ripple, dash, and monero have been touted to have the potential to help solve the problem of high cost and transaction times. However, ripple isn’t a centralized cryptocurrency, which makes it less appealing to users that want third parties out of their transactions. In addition, even if transaction times improve, most cryptocurrencies see their transaction fees go up as the network of users becomes bigger. This, again, isn’t point-of-sale friendly.
The Graft Network, a global, open-sourced, blockchain-based, decentralized payment gateway, and processing platform is one of the blockchain projects looking to solve the problems of transaction costs and settlement times.
One thing that Graft has done that is not common amongst blockchain networks is that our transaction fees, like credit card payments, are proportional to the transaction size, as opposed to the network state and record size that dictate transaction fees for existing cryptocurrencies. Graft also encourages micropayments by making them incredibly cheap, as opposed to the Bitcoin network. Transaction fees for smaller payments range between 1-2 cents.
Graft offers a payment network that is compatible with major existing payment technologies. This allows merchants to accept both fiat and cryptocurrency payments, enjoy instant settlement, and have seamless access to their funds in their preferred currency. Such ease of use for both consumers and merchants will go a long way in ensuring that cryptocurrencies deliver on their promise of being a more efficient medium of exchange.
Simply put, Graft is building a blockchain network that would allow the average consumer to pay for their meals with cryptocurrencies.