The blockchain industry had a massive year, despite the health crisis that impacted the world’s economy. Bitcoin and all of the other digital coins plummeted alongside the stock market in the first week of March 2020 as panic set in. COVID-19 had been declared a pandemic, and most of the world was preparing for a weeks-long lockdown. But bitcoin then hit record highs, with many other cryptocurrencies reaching new all-time highs as well. Unlike the previous bull run driven by retail investors, the current bitcoin frenzy is also powered by institutions and companies investing copious amounts of money in digital currencies. Tesla became one of those bitcoin buyers a few weeks ago and announced just a few days ago that it would let customers buy cars with bitcoin.
The coronavirus pandemic forced governments to print new money via various stimulus packages meant to prop up the economy as the world weathers the health crisis. This new money, combined with rising fears of inflation, might spill into cryptos and stocks in the future. Add the recent NFT craze to the mix, and you end up with a variety of factors that could fuel growth. The crypto bull run is expected to continue for quite some time, according to analysts and pundits. Adapting to this increased interest in digital money are money processors Visa, Mastercard, and PayPal. In fact, Visa has already announced a pilot program to allow people to pay for goods using cryptocurrencies.
“We see increasing demand from consumers across the world to be able to access, hold and use digital currencies, and we’re seeing demand from our clients to be able to build products that provide that access for consumers,” Visa’s head of crypto Cuy Sheffield told Reuters.
The original dream for bitcoin was to replace fiat, although that never happened, and isn’t like to any time soon. But bitcoin is a store of value, drawing huge interest from investors and speculators. Other digital coins could, however, replace fiat in the future. Or, at least, replace some of the fiat transactions.
Visa is looking to capitalize on that, announcing on Monday that it will allow payment settlements using cryptocurrency. Visa has partnered with crypto exchange platform Crypto.com and digital asset bank Anchorage for the pilot. Crypto.com customers who have a prepaid Visa card from the exchange can use it to pay for goods after topping it up from their crypto balances. Before Visa’s decision to support settlements using cryptocurrency, the payment process would involve Crypto.com wiring fiat currency to Visa at the end of the day to settle any transactions processed.
Visa’s pilot will now use USD Coin (USDC) to settle those transactions. USDC is a so-called stablecoin cryptocurrency whose value is pegged to the dollar. Therefore $1 USDC will always equal $1 USD. Visa will now use the ethereum blockchain to settle the transactions. Fiat will be taken out of the process altogether, as Crypto.com will now have to send Visa USDC to settle transactions.
Users might not realize what’s happening, as the pilot doesn’t impact their ability to purchase goods using their crypto balance. But the program could speed up settlements and decrease costs for Crypto.com and Visa. It’s unclear how large the pilot program is and what sort of transaction volume the two companies anticipate handling via USDC. But Visa said it plans to add USDC settlement support to additional partners in the future.