Cryptocurious Companies Struggling to Find the Right Recipe

Cryptocurious Companies Struggling to Find the Right Recipe

Four years ago, fried chicken restaurant chain KFC tweeted from its Canadian account that it would accept bitcoin as payment for its buckets.

The company told AFP that its tongue-in-cheek campaign — a “digital chicken fillet tender” — sold out within an hour, and since then the network has not accepted crypto payments, but online articles regularly repeat the claim that KFC “accepts” bitcoin. .

Many other companies tried using crypto payments before abandoning their efforts, including Tesla and Dell.

Bitcoin will almost certainly never be practical for everyday purchases because its value fluctuates wildly and each transaction is expensive, energy intensive and takes at least half an hour.

“No one will go to KFC to buy a chickenburger and then wait 30 minutes to get paid,” Andre Cronje, a South African developer and crypto expert, told AFP.

But now there are thousands of smaller cryptocurrencies with faster processing times and more stable prices.

Analysts say that the total market value of cryptocurrencies is currently over $2 trillion, about half of which is Bitcoin.

Companies are rushing to get involved, and developers like Cronje are building the infrastructure to use virtual coins to pay for everyday goods.

But public support is critical, and companies seem to be struggling to find the perfect formula.

– “Look at the jockey” –

Microsoft is typifying the new model of large crypto companies.

First rule: keep it away from the main business.

The tech giant stressed that shareholders will not be exposed to the ups and downs of cryptocurrency prices.

PayPal and Apple, two other crypto companies, have made similar promises to their shareholders.

To help keep crypto on balance, Microsoft has partnered with Bakkt, which allows customers to convert crypto assets into products like Xbox gift cards or charge their Starbucks payment card.

Backed by Microsoft’s M12 venture capital fund, Bakkt went public last year, and a flurry of announcements of major partnerships with Mastercard sent its share price skyrocketing.

But then came the fall, when she posted mounting losses, and her performance came under scrutiny.

The company said it would have nine million customers by the end of 2021, but its executives put the figure at 1.7 million transactional accounts at the end of last year.

PayPal, meanwhile, received a lot of publicity thanks to its “pay with crypto” feature launched in the US and UK last year.

PayPal converts users’ crypto assets into cash before transferring payment to merchants.

But it’s not clear how popular these services are – neither company responded to AFP’s inquiries for usage details.

Market watchers say it’s too early to tell what these forays into cryptocurrencies will turn out to be.

“I don’t think you should get too excited just yet, just watch the jockey,” said CFRA analyst John Freeman, agreeing that the hot air makes it hard to predict what’s going to happen next.

– “When, not if” –

The barriers to widespread adoption of direct crypto payments for everyday items are significant, if not insurmountable.

Developer Cronje said it operates largely without cash or regular banks, using services like BitPay and BitRefill that allow you to spend crypto anywhere from Amazon to Uber.

But he agreed that his less tech-savvy friends would “go broke very quickly” if they tried to rely on blockchain, the technology behind cryptocurrencies.

Instead, he envisions a future in which people will continue to use credit cards and banks, but internal tasks will be largely automated on the blockchain.

“This is a technology that conservatively estimates will save them 20 percent to 25 percent in overhead and costs,” he said.

“So it’s not about if, it’s about when.”

Meanwhile, non-financial companies will continue to enter the crypto space, often only to become a little wiser, not richer.

Hotel chain Pavilions, for example, partnered with a payment company last year to allow guests to use cryptocurrency, but found it made little difference to its business.

“It turns out that no one likes to spend their bitcoins even on vacation!” Pavilion spokesman Tim Sargent told AFP via email.

“It showed us that bitcoin is more of an investment vehicle than something people are willing to part with in exchange for payment.”