The Digitec Galaxus Group, Switzerland’s first online retail store, announced today that its two web platforms would accept payments in cryptocurrencies. It concerns the popular bitcoin, but also half a dozen other cryptocurrencies, including ether, bitcoin cash, and litecoin.
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— digitec (@digitec_de) March 19, 2019
Customers of Digitec and Galaxus, read the announcement, will be able to pay for carts exceeding 200 francs through a third-party service, Coinify. The Denmark-startup would convert crypto payments to fiat in real-time, thereby protecting the merchants from cryptocurrencies’ notorious price volatility. That explains that Digitec and Galaxus will not hold cryptocurrencies themselves but would anyway enable users to spend them unobstructedly.
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Oliver Herren, the chief innovation officer at the Digitec Galaxus Group, confirmed that their group was more into testing the crypto-integration than becoming its flagbearer.
“By using Coinify, we are not running into the knife,” he said, adding: “It is still not clear to me how blockchain is any better than other database technologies. The transactions are so far more expensive and slower than a normal payment method. Decentralization brings only cumbersome improvements. None of the blockchains scale enough. But maybe I have not invested enough time and therefore understand too little how the blockchain ecosystem works.”
Merchant Adoption Slow
Herren’s statement followed a 14-month long bearish correction phase in the cryptocurrency market, in which all the assets combinedly lost 1/3rd of their valuation. While it hasn’t deterred investors entirely, for they continue to see potential institutional adoption into crypto as a gateway to profits, the new lows have inevitably deflected merchant community from adopting cryptos as payments.
For instance, in June 2018, travel portal Expedia quietly dropped bitcoin out of their checkout option. In March the same year, popular social media forum Reddit stopped accepting the cryptocurrency for its gold membership plans. Payment platform Stripe did the same in January 2018, calling bitcoin a killer app for ransomware not payments.
One can blame the narrative itself. In its early days, Bitcoin rose to fame as a cheaper alternative to expensive payment processors. By the time the bitcoin technology turned six, skeptics had started criticizing it for not able to process a higher number of transactions like a Visa, or a MasterCard. And now, online trend is projecting bitcoin as a store of value asset – like some digital gold – that could give birth to an altogether new asset derivative market, offering everything from futures to exchange-traded funds.
To Crypto or Not to Crypto?
Digitec Galaxus’ announcement somewhat revives the bitcoin-as-a-payment sentiment. However, whether or not traders, who mostly hold cryptos for speculation, would make any use of the online store’s new payment option is highly doubtful.
After all, when was the last time you had seen a top executive being so blunt about bitcoin, despite adding it as a payment option on their online shops. What do you think about this integration? Tell us in the comment box below.