Today, the total market capitalization of all cryptocurrencies totals $2.19 trillion, making the asset class the world’s 8th largest economy by gross domestic product. However, at the same time cryptocurrency remains strangely invisible from consumers’ day-to-day lives, remaining the preserve of speculators and bitcoin miners. However, this may be about to change.
One of the key barriers to integrating cryptocurrency into the mainstream has been technological – the majority of businesses have lacked the tools to engage with digital currencies. At Nium, as we launch our own crypto-as-a-service platform to help businesses to buy, sell, and hold the most popular digital assets, we examine how embedded finance is steering the future of cryptocurrency.
While interest in alternative currencies is growing, it currently functions more as an investment opportunity for those in the know, rather than an everyday alternative to traditional forms of centralised currency. Key barriers to mainstream adoption include:
For developers and merchants, these issues can become a circular barrier to adoption – there is less incentive to solve these issues as there isn’t mainstream demand, at the same time these are the same issues that prevent that demand. The first step to increasing mainstream adoption must be around improving access to cryptocurrency-based financial services in a way that:
For consumers to access cryptocurrency in their day to day lives, financial providers need to integrate it into their existing offerings. Currently, the vast majority of businesses rely on traditional lenders for their retail banking, however many of these institutions lack the technological capacity to accept, hold and transfer cryptocurrencies.
Embedded finance has the potential to change this, with third-party crypto-as-a-service platforms creating flexible solutions that can integrate with banks and retailers alike. By making cryptocurrency accessible to more financial and non-financial partners, consumers can start integrating it into their everyday financial lives, including:
These services have the potential to move cryptocurrency beyond an niche investment tool and unlock its real world benefits such as:
One of the main challenges for incumbent financial providers will be catching up. Many traditional institutions have been slow to enter space due to the perceived risk and cost of implementing new systems. However, as digital currencies become more mainstream, legacy players will need to adapt to meet customer demand and strengthen their competitive position against more established crypto firms.
In creating the systems of the future, connectivity will be key. The crypto market is decentralised and flexible by design, which will need to be reflected in systems and technology. This will require extensive investment, and also time. As with most types of digital transformation, incumbents have the options to build or buy solutions to add the necessary functionality to their offerings.
Businesses that can use available technology to create new, more convenient and secure customer experiences have the potential to take the lead in cryptocurrency adoption. While companies wait for mainstream financial services providers to catch up, they can choose to build their own crypto-ready tech stack or partner with a plug-and-play solution that integrates with their existing systems.
Nium’s crypto-as-a-service platform was created with innovative businesses in mind to help them take full advantage of the cryptocurrency market. With our simple API, businesses can integrate popular crypto capabilities into their financial applications, including the ability to buy, sell, and hold the most popular digital assets, with future service elements allowing for stablecoin wallets, as well as crypto acceptance.
To find out how you can prepare your business for the future of decentralised finance, get in touch with our team today for a free crypto-consultation.