Four years ago, fried chicken chain KFC tweeted from its Canadian account that it would accept bitcoin as payment for its “buckets”.
The company told AFP that its tongue-in-cheek campaign — “the digital tender for chicken fillets” — sold out within an hour and the chain hasn’t been accepting crypto payments since. but articles online regularly recycle the claim that KFC “accepts” bitcoin. .
Many other companies attempted to exploit crypto payments before abandoning their efforts, including Tesla and Dell.
Bitcoin will almost certainly never be practical for everyday purchases because its value fluctuates wildly and each transaction is expensive, energy-intensive and takes at least half an hour.
“No one will walk into a KFC to buy a chicken burger and then have to wait 30 minutes for a payment,” Andre Cronje, a South African developer and cryptography expert, told AFP.
But now there are thousands of smaller cryptocurrencies with faster processing times and more stable prices.
Analysts say the total market value of cryptocurrencies has now exceeded $2 trillion, about half of which is in bitcoin.
Businesses are rushing to get in on the act, and developers like Cronje are building the infrastructure to allow virtual coins to be used to pay for everyday items.
But public buy-in is crucial, and companies seem to be struggling to find the perfect formula.
– ‘Look at the jockey’ –
Microsoft typifies the emerging model of large companies getting into crypto.
First rule: keep it away from the core business.
The tech giant stressed that shareholders would not be exposed to the ups and downs of crypto prices.
PayPal and Apple, two other crypto-curious companies, made similar promises to their shareholders.
To keep crypto off its balance sheet, Microsoft has partnered with a company called Bakkt that lets customers convert crypto assets into products like gift cards for Xbox, or charge their Starbucks payment card.
Bakkt, which received investment from Microsoft’s venture capital fund M12, went public last year and a flurry of announcements of major partnerships with Mastercard sent its stock price soaring.
But then came the nose drop as she announced mounting losses and her activities came under scrutiny.
The company had said it expected to have nine million customers by the end of 2021, but its executives gave a figure of 1.7 million transaction accounts at the end of last year.
PayPal, meanwhile, has garnered a lot of publicity for a “pay with crypto” feature launched in the US and UK last year.
PayPal’s system converts users’ crypto-assets into cash before transmitting payment to sellers.
But it’s unclear how popular these services are – neither company responded to requests from AFP for usage details.
Market watchers say it is too early to tell how these forays into crypto will play out.
“My view is not to get too excited yet, just watch the jockey,” said CFRA research analyst John Freeman, agreeing that the hot air makes it difficult to predict what happens next. .
– ‘When, not if’ –
The barriers to the widespread adoption of direct crypto payments for everyday objects are significant, if not insurmountable.
Developer Cronje said it works largely without the need for cash or regular banks using services like BitPay and BitRefill, which allow crypto to be spent anywhere from Amazon to Uber.
But he accepted that his less tech-savvy friends would “go broke real quick” 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, conservatively, is going to save them 20-25% of their overhead and costs,” he said.
“So it’s not a matter of if, it’s a matter of when.”
Meanwhile, non-financial companies will continue to throw themselves into the crypto space, often only to emerge a bit wiser but not richer.
Hotel chain Pavilions, for example, partnered with a payments company last year to allow guests to use crypto, but found it made little difference to its business.
“It turns out that no one likes to spend their bitcoins, even on vacation!” Pavilion spokesman Tim Sargeant told AFP in an email.
“It showed us that bitcoin is more of an investment tool than something people want to part with for a payment.”