Everyday Bitcoin: Morgan Stanley: Cryptocurrencies Could Increasingly Replace Conventional Currencies | news

Cycle of increasing stability and popularity
Can you pay taxes in Bitcoin?
Cryptocurrencies as a means of payment for everyday goods

In Morgan Stanley’s “Thoughts on the Market” podcast, Sheena Shah, senior crypto strategist at Morgan Stanley Research, notes that as businesses and consumers become more interested in using crypto assets for trading , “a cycle of increasing stability and popularity has begun”. But the question is how long will the cycle last. Stability can be achieved if crypto assets are used as a means of payment. Now that bitcoin and other cyber-currencies are accepted as a means of payment in various places, the virtuous circle is set in motion.

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Daily use of bitcoin

According to Sheena Shah’s study, the currently high transaction costs and the limited number of merchants who accept Bitcoin & Co. as payment are the two major “pushbacks” for cryptocurrencies. But there could soon be movement here.

During the Bitcoin 2022 conference, Jack Mallers, CEO of payment processor Strike, announced a collaboration with Shopify. “We are proud to partner with Shopify to provide merchants with a cheaper and faster way to accept US dollars using bitcoin technology,” reads businesswire’s press release. The Lightning Network used by Strike enables approximately 1.7 million Shopify retailers to reduce costs and increase transaction speeds. BTC payments are converted to US dollars as part of the transaction, so merchants themselves are not “faced” with Bitcoin.
The collaboration with point-of-sale provider NCR and payment company Blackhawk Network is another important step in Strike’s strategy to expand the spread of Bitcoin into online businesses and major retail stores. This means that in the near future, it may be possible to pay with Bitcoin in many US stores and restaurants, since large chains such as McDonalds and Walmart are among NCR’s customers.

Acceptance and proliferation of cryptocurrencies

As an example, Sheena Shah asks, “Did you really buy the house with cryptocurrencies, or did you sell your cryptocurrencies for US dollars to buy the house?”. Because that’s exactly the difference: when cryptocurrencies are used not just as an asset, but for daily (and not quite daily) purchase transactions, volatility decreases and therefore consumer confidence and businesses in cryptocurrencies is increasing. Two conditions are attached to this: firstly, the payment process must be simple and cheap, secondly, payment with crypto assets must also be accepted by the state (e.g. taxes).

Many (federal) states pursue their own crypto strategies. El Salvador became the first country to accept Bitcoin as a form of payment in September last year. Other countries could follow, especially emerging and developing countries, because, like El Salvador, they face high costs in cross-border payments. Other examples include Rio de Janeiro, which aims to be the first city in Brazil where taxes can be paid in crypto. The Swiss cities of Zug (“Crypto Valley”) and Lugano are pursuing their own crypto strategies. According to the media, Lugano wants to become a blockchain center with the help of the company Tether and allow private sector and city fees, services and goods to be entirely in cryptocurrencies. So far, Bitcoin, Tether and the Luga city stablecoin have been approved. In the United States, two states, Colorado and Florida, are considering allowing cryptocurrencies for the payment of taxes, despite constitutional headwinds.

There are now more than 50 crypto cards issued by companies and exchanges connected to the Visa or MasterCard payment network. It is already possible to pay anywhere in the world with a crypto card. Visa has enabled payments with the stablecoin USD Coin since March 2021. Since transactions were first converted into US dollars and deposited into a bank account, transaction costs were relatively high at first. In Q4 2021, Visa processed just under 1% of crypto card transactions, a volume of $2.5 billion in a growing market.

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