Presenting crypto payments trends – a CoinsPaid perspective

CoinsPaid CEO and co-founder Max Krupyshev highlights the latest trends and developments in the crypto space.

Statista forecasts the market for crypto payments to grow at a CAGR (Compound Annual Growth Rate) of 17% by 2029. There's evident buzz around it, but it's not equally loud across all sectors.

Tech and ecommerce are strutting the crypto edge, offering crypto payments to achieve two goals in one fell swoop. First, they ensure they are aligned with the needs and wants of their core demographic, who have traditionally been tech-savvy. Second, many tech and ecommerce companies, known for their innovative spirit, are positioning themselves at the forefront of the financial revolution. For them, integrating crypto represents a strategic investment in their brand image.

On the flip side, industries that are tightly wound in regulatory tape, like finance and healthcare, face a steeper uphill climb. Regulation is a major concern. Legislative frameworks surrounding crypto are still evolving in many regions, and this ambiguity makes it difficult for businesses to understand the rules of the game and navigate compliance requirements. They're hesitant to invest in technology with unclear legal grounds.

The introduction of regulations like the Markets in Crypto Assets (MiCA) framework in the EU offers a glimmer of hope for those in regulated industries. MiCA establishes a clear legal framework for crypto assets, bringing much-needed clarity.

Stablecoins are becoming the on-ramp for traditional finance entering the crypto market. Unlike Bitcoin, whose price can swing dramatically, most popular stablecoins are pegged to real-world assets, offering a more or less stable price point.

This promise of stability is what unlocks the crypto market for traditional investors wary of traditional cryptocurrencies. Think of it this way: traditional finance investors are used to a certain degree of predictability. Stock prices may have ups and downs, but they don’t typically experience the jaw-dropping plunges that crypto can. Stablecoins offer a similar degree of predictability. This makes them a more attractive entry point for investors who are curious about the potential of crypto but are hesitant to jump into the deep end of a very volatile market.

This preference for stability is reflected in the data, too. At CryptoProcessing, we saw an increase in stablecoin transactions from 11% in January 2023 to 18% in December 2023. Bitcoin, on the other hand, starts at 72% in January and decreases each month, with some fluctuation, to 42% in December.

Stablecoins make up a significant and increasing portion of our total transaction volume, starting at 66% in January 2023 and growing to 78% by December 2023. Conversely, Bitcoin’s share of the total volume starts at 26% and decreases throughout the year to 12% by December.

Predicting the exact trajectory of Bitcoin can be tricky, but several factors are shaping its course.

First, the recent approval of Bitcoin ETFs opened a broad new avenue for safe and compliant access to cryptocurrency. Since then, US ETFs alone have attracted inflows of around USD 19 billion, and a large bulk of these inflows has come from institutional investors.

This has implications for Bitcoin’s attractiveness. Institutional investors are less likely to panic-sell during market corrections. While they do rebalance their portfolios, they are less affected by short-term fluctuations. In that sense, the arrival of institutions may potentially dampen Bitcoin’s price swings.

Secondly, the substantial inflows have triggered a supply and demand imbalance, pushing Bitcoin’s price upwards. The upcoming halving, which will cut the number of new Bitcoins generated in half, could further fuel this rise, acting as a psychological catalyst. But the halving's immediate impact remains uncertain.

Bitcoin halvings have a track record of boosting the price. Historically, they've been a bullish signal for investors. This price movement stems from a few factors. The reduced supply emphasises Bitcoin's scarcity, which can fuel demand. Additionally, the halving events shine a spotlight on the crypto world, drawing in new investors.

Still, while past halvings have led to price increases, the scale of those gains may be less dramatic with each subsequent event.

Cryptocurrencies are generating a lot of buzz, but their adoption as an everyday means of payment is still not mainstream.

One major obstacle is volatility. Imagine you pay for a cup of coffee with Bitcoin, only to see its value plummet by the time you finish your drink. This scenario, though a bit extreme, captures the general sentiment customers might have towards crypto. People treat it more as an investment rather than something to pay with. In reality, crypto payment gateways automatically convert crypto assets into fiat currency like USD or EUR during a purchase. This protects both merchants and customers from price swings. Stablecoins, another type of crypto, can further smooth out the payment experience.

Beyond volatility, many regions are still lacking regulatory clarity around cryptocurrencies. This makes both customers and businesses take a wait-and-see stance until the uncertainty clears out. Systemic efforts like Markets in Crypto-Assets (MiCA) can provide a solution by assisting crypto payment service providers in meeting the merchants’ demands for wider jurisdictional coverage.

The technical side of things adds another layer of complexity. Setting up a cryptocurrency payment system takes time and effort when done right. Also, the current financial infrastructure isn’t exactly crypto-friendly, which makes integration even more difficult.

Despite these challenges, the scene for crypto payments is evolving. There's a growing number of crypto-friendly businesses and eager consumers. This rise is fuelled by the advantages crypto offers across the ecosystem. Businesses can benefit from lower fees, faster settlements, and access to a wider customer base. Consumers, on the other hand, gain from faster and cheaper international payments, potential financial inclusion, and more control over their finances.

Cryptocurrency hacks resulted in over USD 3.8 billion stolen from users in 2022 alone, making it the worst year in history in terms of crypto theft. In 2023, the amount of funds stolen decreased by 54.3% to USD 1.7 billion, but the issue is still profound. Beyond that, hackers are constantly developing new methods to exploit vulnerabilities in crypto exchanges and wallets. Examples like the 2021 data breach at Coinbase, exposing personal information and cryptocurrency steal of at least 6,000 users, or the multi-million dollar hack of Wormhole Bridge serve as stark reminders of the vulnerabilities in the sector. This means crypto companies must be vigilant and invest in security measures to stay ahead of the ever-evolving threats.

Thus, it is crucial for crypto businesses to prioritise security. At CoinsPaid, we doubled down our security efforts, fully updating system protection mechanisms and focusing on educating our employees on the most effective hacker-protection tactics. We have also partnered with Chainalysis, a frontrunner among crypto analytic tools, ensuring a high level of transaction monitoring.

In 2024, our focus is on staying ahead of the curve in crypto payments. We are refining our product to make it even more attractive to merchants — a process that will continue throughout the year. We also know that efficiency is key, so we’re actively working to boost the transaction speed by integrating faster and more cost-effective blockchains.

Beyond the product, we will also foster relationships. We value our existing customers and want to keep growing. We'll keep attracting new clients while strengthening relationships with the existing ones through strategic partnerships and initiatives.

Last but not least, planning our entry into the US market is a critical element of our 2024 goals. This expansion will significantly increase our reach and customer potential, strengthening our position as one of the global leaders in crypto payments.

About Max Krupyshev

Max Krupyshev is the CEO and co-founder of CoinsPaid, a crypto payment solution for businesses registered in Estonia. Having entered the crypto world in 2013, Max stood at the origins of this market in Ukraine, launching a Bitcoin foundation to promote crypto adoption in the country. As the CEO of CoinsPaid, he sets the goal for the company to become the connecting link between crypto and traditional businesses.

About CoinsPaid

CoinsPaid is a crypto payment gateway with a vast product offering for the B2B audience, and 800+ merchants across various sectors, from iGaming to Real Estate and Luxury. It allows businesses to accept cryptocurrencies from their clients in a legal cost-efficient way. Since 2019, CoinsPaid has operated in Estonia under Dream Finance OÜ, registered and licensed as a provider of virtual currency services.