Commentary: Is using cryptocurrency for payment overrated?

As cryptocurrency increases in popularity for use as an online currency, companies are now seriously considering it as an official form of payment. Tesla is said to be “very likely” in resuming Bitcoin as a payment method, especially when it becomes more eco-friendly.

In spite of the trend, major e-commerce platform Amazon debunked the rumour of plans to soon feature crypto as a form of payment. Apart from the benefits that cryptocurrency offers, there are many factors to consider before accepting it for online payments.

High volatility affects spending power

Cryptocurrencies usually have high volatility, meaning their value sees unpredictably large movements through a short span of time, which many investors see as a high reward investment opportunity. Meanwhile, fiat currencies (e.g. SGD, USD, etc.) do not experience such drastic changes in value.

When it was first speculated that Amazon would start accepting Bitcoin, the price of a Bitcoin surged to US$39,000 at its peak and quickly plummeted below US$37,000 after Amazon’s denial of such plans. In future similar scenarios, overnight gains and losses might severely impact your spending power especially if you are looking to use Bitcoin for your day-to-day expenses.

Privacy can be achieved through one-time credit cards

Being highlighted as “decentralised digital currency without intermediaries”, cryptocurrency is often used for private transactions with connections to the dark web or other illicit transactions.

For most users who value an extra level of privacy over their usual credit card, using a virtual credit card will eliminate most privacy-related qualms – each transaction will only show up as a top-up to the said card.

Transactional fees might be your concern

Depending on the payment methods, either the merchant or the consumer will be subjected to a transaction fee, which can add 3% or more to your total expenditure. The latter might matter for some customers, especially if the merchant passes on any transaction fees to its customers.

In events where the supported payment methods require transactional fees (especially in huge amounts), consumers might benefit from the nature of this currency. Customers who appreciate top-tier security will also be able to justify the approach.

Everyday consumers may not benefit from cryptocurrency payments

Unless you frequent the deep web, paying with cryptocurrency does nothing to benefit the transactions. Some may still find cryptocurrency justified for payments when they wish to avoid huge transaction fees when there are no other peer-to-peer digital payment methods.

If you are looking for a way to improve your privacy while spending, virtual credit cards are your best bet without relying on cryptocurrencies. Read this article to find out all you need to know when paying with virtual credit cards.