Can cryptocurrencies become a standard, widely accepted form of payment? Why or why not?

Pan Zhao


24 March 2020


Can cryptocurrencies become a standard, widely accepted form of payment? Why or why not?

Cryptocurrency is a digital asset that is used as a medium of exchange like other currencies. It is used to secure financial transactions. This currency is not controlled by any central agency like other currencies are controlled by financial institutes and banks. Due to decentralized controlling system it is not the ownership of anyone. But it is extensively used by some people and earn good gains from it. This attracts the attention of people because it does not have processing fees, the return of investing in this currency is greater than any other currency. Therefore, people want that it should be accepted as a standard for payment.

Cryptocurrency is a new internet-based medium of exchange that uses a cryptographic function for any kind of financial transaction. It is based on blockchain technology that is extensively used to gain transparency, immutability, and decentralization. The distinctive feature of cryptocurrency is that it is not controlled by the central authorities of any country. Its decentralized feature makes it theoretically immune to the old ways of government interferences and control. It can be directly sent between two parties through public and private keys. Hence, only a minimum transfer fee is required to carry out this transaction. This makes it cheap as compared to traditional financial institutions that charge a huge amount on the transfer of even the minimum amount. It is now one of the globally renowned e – currency that brings sheer into the global economic system.

But this currency is still a centre of discussion due to its limited use. Critics of cryptocurrency stated that the market of cryptocurrency is going to doomed because of its lack of acceptance. Hence, to investigate this question, the research of different scholars is summarized in this paper. The literature is explored regarding the paper to persuade about the facts of this currency that will educate them on the information on this current.

The first article that I choose form literature discussed the aspects of cryptocurrency which makes it violate and create resistance to be used as a standard of payment. (Vejacka, 2014) stated that it is a virtual currency that is based on electronic communication but as per the response of policymakers and economists. Vejačka’s main claim in the paper is that due to high violation and low liquidity characteristics along with its only association with the electronic world makes this currency weak that can’t be used as payment standard. The findings of the author are based on the volatility of cryptocurrency and compared it with the volatility of commodities, main stock indices, and major currency pairs. Hence, the author used past trend analysis for the valuation of cryptocurrency and other commodities. Thus, the findings of this study show that the exchange rate volatility of cryptocurrency is much higher as compared to other commodities (Vejacka, p.78). Cryptocurrency hardly retain its value in the market. The only advantage that is related to cryptocurrency is due to their portability and its virtual character. But its virtual character also makes it non – existent outside the electronic environment like other tangible commodities. The Volatility of cryptocurrency is 1000 times greater than other commodities and currency exchange. Thus, the (Vejačka, 2014) concluded that all these aspects create resistance for this currency to be used as standard. He suggested that it might be used for the medium of exchange for black market. It will be used as a speculation tool or these speculators that still dare to trade in this currency. This currency is also not officially accepted by the global economy thus; it is risky to use as a standard of payment. (Vejačka)

He supported his argument from data of stock exchange and global reports that are authentic enough to support his claim. The evidence is quite supportive of his claim but the counter-argument that came in my mind is that what if this currency can only be used on online transactions of e-transactions. This would make this currency widely acceptable because the world is digitalizing now and most of the people only deal with e-transaction. This will give a competitive edge to this currency over others.

Moreover, the analysis of cryptocurrency is mandatory so that it’s possible to use as a standard of payment can be further analysed. Devries, Peter. D, in his article presented an analysis of cryptocurrency through analysis of interconnected global market.He discussed it through strength, weakness, opportunities and threat for a better understanding. He defined cryptocurrency as a digital barter” (Devries, 2016). It is the only renowned currency that paved the path of digital currency through a disruptive technology that provides a good alternative to a traditional financial payment system that is enacted for many decades. (Devries, 2016) argues that this currency will not replace “traditional fiat currency”, also bring change in internet-connected global markets that clear away barriers of normative national currencies and also bring positive change in the exchange rate (Devries, 2016). He further argues that it will also revolutionize the digital trade market by creating a free flow of currency without any fees (Devries, p.1). . He supported his claim through a series of report that shows how cryptocurrency grows in the past few years. Although it is used for macro payment it is used for micropayments than it will fill the economic gap and brings economic prosperity globally. These micro transactions will fill the economic gap that traditional financial markets and currencies are not able to fil. It also gives a lot of opportunities to people to build a digital property like cloud-based infrastructure. Thus, his arguments supported the use of cryptocurrency as a standard payment as it is worth from an economic point of view and digitalization. In this article, (DeVries) does not provide any counter-argument but the counter-argument that can be made is that if there are unlimited advantages of this currency and easy to use then why it is still not adopted by major economic powers like America and Chain to fill their economic gaps. Hence, this aspect is not highlighted in this article. From this article it is analysed that what are the strength and weakness of this currency that create hindrance in its acceptance as a global currency. Thus, it gives a reader good understanding about the facts of this currency.

In the article, the Krückeberg stated that cryptocurrency emerges as an important currency that has grown so immense in a short period. This new technology is an insertion of technology and finance that is only operated through a digital network. Hence, there is no physical existence of this currency. This makes this currency a centre of attraction for the financers and investors because it gives good returns. This is the concern of everyone that this should be categorized into a proper asset class that creates for them to trade on in this currency (Krückeberg). This currency shows the characteristics of a distant asset class that is based on strong internal correlation, and the absence of its correlation with any traditional asset class makes it different. Moreover, the author claims that it’s high liquidity makes it admirable for everyone to trade on it that give them significantly and good returns. He claims that the addition of this cryptocurrency to the traditional portfolio structure made it a significant and also good for the risk adjustment point of view. Through its adjustment in the traditional market, the market will boom and outperform.

The findings of this article is based on recent trends of cryptocurrency and how many people are involved in it. This paper is based on the findings of previous years and also the trend analysis of cryptocurrency makes the findings of this paper worthy (Krückeberg, 2019). There is no counter-argument found in this paper. Although a few points in the paper must be thoroughly researched. For example, the author claimed that the addition of this currency in the traditional market will be healthier for overall trading but it did not mention how even though this cryptocurrency is still under the classification stage. Unless it is classified into a proper asset class how one can predict the outperformance of the market based on this currency. For any currency to be used as standard of payment it must fulfil all requirements of currency so that I can be accepted as a currency. Thus, this article is effective because it analyses the dimension of currency for being classified as a standard currency.


Furthermore, this fact cannot be ignored that many restaurants are accepting this currency from customers and use them in their day to day operational functions. (Nova, 2018) who is a reporter in CNBC news reported that there are many cafes and restaurants where this currency is readily used in supermarkets although this currency is still at an early stage. Starbucks Howard Schultz stated that a new currency is coming that be used to buy coffer but this can only be acceptable if it is paid with tax. As per the calculations of the Chainalysis, that tracks only cryptocurrency data shows that consumer used this currency for merchant services and monthly average spending was recoded $190 million in 2017 that was only $9.8 million in 2013 (Nova). Bitwala a financial technology company is planning to open a cryptocurrency bank through which people will be to use it as a normal current. Through this bank, people will be able to convert their cryptocurrency into their desired currency (Nova). . The arguments that are stated by the author are based on real figures and the acceptability of this currency by people shows that how much they are interested to invest in this currency but lack of support from the side of legal and financial authorities creates resistance for this new payment system. I find this article effective because the information that is presented here is information that shows growth in this currency and what further initiatives are taking by companies to promote cryptocurrency among the people.

Concluding the findings of this paper in a nutshell, it is analysed from the findings of the research paper that there are many positive and negative points associated with this currency that create resistance for adopting this as a standard payment system. From the side of the company’s significant efforts are made to incorporate it into a payment system but lack of corporation from the side of financial institutes does not promote the use of this cryptocurrency. The major loophole is in the standards or regulations that are not comprehensive enough to support the use of this new digital currency. The standards are made to support the traditional economy for this currency new standardization and new formation of monetary policies, rules and regulations are required. This will help in using this currency as a standard of payment.
















Works Cited Bech, Morten L. “Central Bank Cryptocurrencies.” BIS Quarterly Review September (2017 ): 1-10 . DeVries, Peter D. “An Analysis of Cryptocurrency, Bitcoin, and the Future.” International Journal of Business Management and Commerce 1.2 (2016): 1-7. Krückeberg, Sinan and Peter Scholz. “Cryptocurrencies as an Asset Class? In Cryptofinance and Mechanisms of Exchange – The Making of Virtual Currency, edited by Stéphane Gouette, Guesmi Khaled and Samir Saadi.” Springer. (2019): 1-40 Nova, Annie. Bitcoin takes on cash, as more places accept the cryptocurrency. 2 March 2018 . <>. Vejacka, Martin. “Basic Aspects of Cryptocurrencies.” Journal of Economy, Business and Financing (2014 ): 75 – 83 .

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