Multis' take on e-commerce and crypto adoption

Ania Atek
August 28, 2020

Key take-aways

  1. We believe that for long-term crypto adoption stable-coins are the answer because it just makes sense business-wise. However, we will have to be patient as most of their use-cases lie in DeFi today.
  2. There is a long way to go to educate the market on crypto and stablecoins, from the merchants and end-customers part. For most merchants, easy integrations with payment widgets and the trendiness of bitcoin are mainly why they choose to offer crypto as an extra means of payment.
  3. Even if leveraging crypto might gain larger traction soon in the global e-commerce scene, the challenge for companies like Multis in targeting this huge market ($3.5 trillion) is to understand what those e-merchants actually do with their cryptocurrencies.

At Multis, we are bullish on stablecoins and believe it would solve many problems for businesses in the space as well as push crypto adoption, either as a back-end infrastructure or as a new and widely accepted currency. However, right now BTC seems to still be dominating the space. To draw our own conclusions on the state of crypto in global commerce, we reached out to 200 e-merchants to conduct customer discovery research. Now, we want to share our findings with the community! So first...

...Let's talk numbers

According to Coindesk, in March 2020 Coinbase Commerce registered $200M in total transactions processed for 8 000 integrated retailers, with Bitcoin taking up the largest share of these transactions.

In the meantime, stablecoins have reached a $15 billion capitalization. USDT is the one leading in volume with 50 000 daily active addresses and has reached a market cap of $+10bn. USDC status as the regulated, fully-backed stablecoin with smooth fiat on-off ramps helped it achieve a $1.3 bn market cap. Additionally, stablecoins relatively reached 40% of bitcoin and ethereum's daily value transferred in the ecosystem.

So why are we bullish on stable-coins?

Bitcoin and Ethereum are known for high short term fluctuation—a nightmare to manage a company's treasury. That's where stablecoins like DAI come in handy. With rates pegged to the USD, they are a game-changer for business: they're still permissionless, borderless, time and cost-efficient payment rails — but they're no longer volatile.

Bitcoin is still king in retail

Stablecoins' inherently more business-friendly nature should put them ahead of the game in terms of digital spending currencies. However, Bitcoin is still the most widely used crypto in the retail scene; and it still has room to grow with crypto giants like Bitpay and Coinbase Commerce now integrating directly with e-shop platforms such as Shopify or Woocommerce.

The underlying question for bitcoin is, now that it has pretty much established itself as a store of value - the new "digital gold" - will there be an incentive for people to spend their bitcoin? As its price stabilizes, one can assume its appeal as a speculative asset will decline as well leading people to use it for spending. On the contrary, some people believe that stablecoins are probably the best option going forward. It is important to watch out for initiatives like Facebook's Libra who has an unparalleled global network to leverage.

Let's not forget the never-ending question of regulation as well. The global regulatory framework for crypto is still very much uncertain and it is unclear whether stablecoins - in particular - should be regulated as currencies or securities.

Stablecoins vs Bitcoin, the debate is still open...

Cut the bull$hit, what are e-merchants actually doing?

Multis has been conducting customer discovery to better understand the evolution of crypto in the global commerce scene and here are some insights we would like to share:

There are 3 categories of e-merchants accepting crypto-payments:

1. Big corporations

Some big corporations have started to hop on the crypto bandwagon and integrated crypto payments even though it represents only a very minimal amount of their transactions.

There is an interesting case that emerges in Asia: Terra. The stablecoin is specifically designed to be integrated with e-commerce shops and has established partnerships with big legacy players in the APAC region. Launched by the founder of Tmon (Ticket Monster) a leader in e-commerce in Korea, the region that is already advanced in mobile payments and integrated shopping could be pioneering in crypto-ecommerce.

2. Crypto-native companies

What we call crypto-native companies here are companies that build on the blockchain or are fervent supporters and accept payments in crypto de facto. For example, we had very interesting exchanges with Rob Paone — CEO of Proof of Talent, a technical recruiting firm focused exclusively on the blockchain and cryptocurrency industry — on his interest in DeFi to manage treasury versus legacy banks; and Ivan Liljeqvist — founder of the Ivan on Tech blockchain academy — on his pain-points running a business on crypto.

3. Companies accepting crypto as an additional payment option

This category encompasses mainstream e-shops that want to appeal to crypto-users and extend their payment solutions. They usually integrate crypto payments directly from platforms such as Shopify.

Most of the e-merchants we talked to - in all three categories - have low volumes in crypto mainly because it is still a niche market where they are not visible enough. Volatility, regulation concerns, and a lack of education of their customers base on cryptocurrencies are also very restrictive.

Our conclusions

The facts

Even if there are big hopes for crypto in general to revolutionize the global commerce scene (because using crypto just makes sense!); let's face it, there is still a very long way until mass adoption with a lot of market education ahead. For example, for e-merchants to benefit from stablecoins payments, their customers need to hold stablecoins and be incentivized to spend them. The thing is, right now, on-ramp fees (e.g. coinbase fees) and check-out processes are still creating a lot of frictions, presenting a significant barrier to mass adoption.

The data is attractive: $200M processed in crypto transaction by Coinbase Commerce in 2020, but compare it with how much Paypal processes - $220bn in Q2 2020 - and it helps put things in perspective.

The uncertainty

So whether crypto will be the next standard for online payments, just like Paypal, in a few years is a strategic BET to make.

If you believe in that bet the question of timing is up to debate, it could be in 2 years, it could be in 10, it could be never...

In the meantime

Multis is working hard on bringing crypto more to the mainstream by alleviating crypto-related frictions with our UX. We are building a convenient crypto-first business bank account that allows companies to make the most of their treasury. It offers must-have features for crypto-friendly businesses: sending money abroad instantly almost for free, token and fiat exchanges and interest-bearing accounts for idle cash. Most importantly we allow our customers to streamline their accounting and run payroll. Also, we subsidize gas fees!


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