When Satoshi Nakamoto threw us into a whole new, unknown and unchartered world of cryptocurrencies, we didn’t have much to tinker with concerning them. Enthusiasts took a plunge while the rest of the world watched from the sidelines. As the years went by, cryptocurrencies begun to take direction and dominance. Unlike what was initially intended by Nakamoto, cryptocurrencies departed from establishing themselves as a form of currency to being more of investment assets. Bitcoin set this precedence, and even as other altcoins such as Dash, GoByte, Stellar Lumens and others try to revive the initial agenda, we have a number of considerations to take in. Is e-commerce ready for cryptocurrencies as a means of payment? Are cryptos merely trying to mimic the existing monetary system? What issues can cryptocurrencies address to legitimately establish themselves as better means from what we currently have? If they can, how easy the adoption process will be and how much time will it take? There are several market indications to answer these questions.
Cryptocurrencies growth analysis
In July, hackernoon.com released its crypto growth analysis based on a three level categorization model to identify the most attractive crypto asset sectors, diversify one’s crypto portfolio, forecast macro developments based on historical trends and more. The data was compiled for a period of 3 years from July 2015 to July 2018. To capture a realistic picture, the study was indexed to September 2017. The choice was justified by the need to represent a recent stable market. There had been a consistent rise in the market with a steady and sustainable growth curve from 2015 leading up to September 2017.
The report revealed that cryptocurrencies that acted as Store of Value, Currency and Mode of payment accounted for 62% of the total Market Capitalization (MC). The category that listed 32 cryptocurrencies, had an unimpressive MC growth rate at +94%. This category housed the top two cryptocurrencies by share of MC. The two, Bitcoin and Ethereum, recorded the dismal performance with +84% and +76% MC growth rates respectively. In contrast, smaller cap cryptocurrencies cumulatively scored higher at +106% with a +167% on exclusion of Bitcoin and Ethereum in the general performance of the top 149 candidate assets. The analyzed cryptos (149) appeared in the top 95% of the cumulative Market Cap with notable recognition. This means that of 1620 coins considered for the research, only 9.2% were actively in use and reasonably accepted by the populace. This merited the cut point on the ability of the said cryptos to contribute meaningful data to the analysis.
The second level, Blockchain Infrastructure, picked at +134% with a 28% share of MC. 45 coins were sampled at this level. The largest grouping, focusing on Services Built on Blockchain with 67 assets, had the lowest share of MC at 6%. Its MC growth rate however ranked a close second at +133%. Of the 67, 30 were Financial Services cryptocurrencies with a +108% growth at 4.3% share of MC. The remaining 37 were Non-Financial Services with a 1.7% Share market cap. The sub sectors on Blockchain Infrastructure saw Non Ethereum Smart Contract Platforms grow at +602% compared to +495% when Ethereum and Ethereum Classic alongside Bitcoin and its hard forks were included. Their Enterprise Smart Contract Platforms counterparts enjoyed a +285%. Currency, at the high level crypto ranking had +94% growth with a further +129% without considering Bitcoin.
The second batch of data indexed to March 2018 reported that trends remained fairly the same with the exception of Asset Management in Financial Services that recorded +32% MC growth. Computation in Non-Financial Services managed +25%. The general impression from the compilation shows that Bitcoin and Ethereum no longer enjoy their past astronomical Market cap growth rates. Even with their alternatives taking a slow pace as well, they still performed better than the two.
Rejuvenation for the home run
The above statistics show how far off cryptocurrencies have wandered outside the scope they were initially intended for. Granted, this versatility will come handy in creating a whole round financial system capable of independence while giving interactive solutions. So far, cryptocurrencies enjoy a good share of awareness with notable progress in trading and exchanges. Understandably, cryptos have a number of limitations that do not favor their immediate adoption in transactions as envisioned by Nakamoto. Having experimented with the technology and made significant advancements, we are at a point where we can comfortably take the direction of employing them in daily payment systems as a priority.
As it is, low scalability limiting the number of transactions and slow executions make Blockchain transactions tedious to execute. Progressively, developments to tackle these issues are on course and crypto transactions may erupt in the foreseeable future. Lack of adaptation in payment systems has in part contributed to the decline in Bitcoin’s market cap growth rate. But the advancements in the SegWit transaction format through Bitcoin Lightning Network may see it spring back by leveraging its high market cap and huge trading volumes to easily penetrate the payment systems market. Having released its Mainnet, the network will resolve hitches that have since derailed Bitcoin’s extensive adoption. The Bitcoin Blockchain can only execute 7 transactions per second. This is a far cry from the thousands per second requirement to sustain a viable and vibrant ecosystem. The Lighting Network will also offer faster transactions by enabling direct transactions between users off-chain and doubling up the block size to 2MB . The P2P transactions may substantially cut down fees. Current high transaction costs on Bitcoin Blockchain of up to 30% are unfavorable to small scale purchases with the risk of transaction costs exceeding the product on purchase. Already, Bitcoin Core’s hard fork Bitcoin Cash (BCH), is doing well in scalability. With an 8 MB block size, it executes more and faster transactions per second. BCH has been considered a better improvement of Bitcoin.
In a similar way, Ethereum’s Plasma Network is on course of implementation to increase its transaction capacity. Ethereum supports a mere 15 transactions per second. The Plasma network will increase the speeds to over and beyond that of credit cards providers that execute 2000 transactions per sec. Additionally, the network will enable users conduct transactions off-chain while incorporating the parent Ethereum Blockchain for security. Plasma will introduce ‘Child’ Blockchains attached to the main blockchain. These same Child Blockchains can further build other Child Blockchains. They are all linked to the main chain to enable them use Smart Contracts which are part of the protocol in the root chain. Once completed off-chain, transactions are broadcast on the improved ledger with large storage capacity.
A win for everyone
Cryptocurrencies could prove to be the deal for small scale businesses and consumers in multiple ways. Top on the list is the reliability nature of cryptos. They protect both merchants and consumers from loss of funds given that they are trustless. None of the participants in a transaction have to worry of the odd chance of dealing with unscrupulous actors.
Cryptos are borderless. This enables both conduct transactions from any part of the globe without attracting exchange fees. This coupled with zero or very low transaction fees on participating platforms, enables merchants increase revenue margins. More on fees, the irreversible nature of cryptocurrencies protects merchants from loses through chargebacks seen in fiat transactions that attract fees.
Since their invention, cryptocurrencies have shown a high affinity to news and trends. Small occurrences in the industry create a lot of buzz around them. This makes cryptocurrencies vehicles that can propel seemingly small businesses into a brands. People are always curious of crypto happenings, as such businesses get instant and widespread media coverage when they start accepting crypto payments.
Several crypto Payment gateways offer attractive reward systems. For consumers who like to save a dime here and another there, cryptos offers an easy way to do so. Also, customers do not give out data, thus protecting them from malicious third parties who defraud card holders. In the same privacy vein, there are no monthly transactional statements that violate one’s privacy as they could end up in unintended hands.
With the introduction of Proof of Stake consensus algorithms for blockchain verification and validation, merchants can take advantage of the low computing power to act as masternodes, earning passively from securing the network without breaking a sweat. This is further augmented by cryptos’ instant nature. Unlike bank based transactions, funds are credited into merchant accounts almost immediately. This creates liquidity and gives them control of their money, effectively allowing them to increase stakes easily.
Recently, there emerged crypto backed loans. This enables asset owners liquidate part of their cryptocurrencies to secure loans. Said loans are given according to assets owned. There are no tedious processes that involve checking user credit worth. They are also quickly processed with applications and fund disbarments done within 24 hours. Business owners can leverage on these loans to expand their businesses. importantly, all transactions are conducted on Blockchain and instantly recorded on the public ledger. This helps merchants create records and and keep inventories at no extra cost.
Much said, the e-commerce sector holds huge prospects for speedy development of cryptocurrencies. Case in point, GoByte is a cryptocurrency and Network deliberately created to offer easy to use, smart and powerful payment system. It has developed a platform for e-commerce websites and stores to provide a digital payment system to consumers. The platform is based on Dash (also a cryptocurrency and network), which borrowed its code from Bitcoin. To circumvent scalability, it uses what is referred to as a modular network. The network possesses a series of independent networks that execute separate inputs to complete sub tasks of the total task of the network. With its Masternode technology, it affords users almost instant transactions with 8 times transaction volume as of Bitcoin courtesy of GoByte’s 2 MB per block size compared to Bitcoins 1MB block size. This helps it solve Bitcoin’s long transaction time, effectively completing transactions instantly within 5 seconds through InstaSend technology. It also has a PrivateSend technology that mixes funds through master nodes to make them untraceable thus ensuring high privacy. To create a powerful network, GoByte uses open source tech, improving existing as well as creating new ones.
While many cryptocurrencies develop to introduce new solutions and innovations in industries, the e-commerce sector in itself has an existing gap that can easily and readily be filled. This will help spur crypto growth. With the breakthrough in technological scalability of Blockchains, opportunities for cryptos could be limitless.
Putting infrastructure for cryptocurrency payments is one of the many undertakings before we have robust working systems. In order to lay the ground for adoption, active steps have to be made to popularize the concept for both consumers and merchants. As cryptocurrencies seek to replace traditional systems, what better way to do so other than infiltrating the traditional systems with better offers? GoByte developers are pursuing this with calculated aggressive moves. Through partnerships with firmly established networks such as iVend with Point of Sale solutions, crypto developers make use of mutual partnerships. For instance, with iVend, they act as the base merchant groups in adopting crypto payments. In return, they receive retail percentages of retail charges. They also integrate with other ecosystems, Apps and markets. Additionally they avail open APIs to enable 3rd party developers create their own modules to upscale adoption. Coupled with heavy investment in business development, investor team and marketing, payment gateways can analyze data to understand the market and make relevant adjustments to campaigns. This way, they are able to focus on and channel resources to the working strategies.
Cryptocurrencies continue to thrive against backlash and negative sentiments, especially with the fall of Bitcoin after enjoying tremendous rise last year. With expected growth in infrastructure within the crypto space, and more mature adoption, cryptocurrencies could take major roots in the next few years. Together with institutional investors are taking serious notice of cryptocurrencies, enthusiasts can look forward to brilliant future in the crypto field.