From Paper to Plastic to Digital Wallets : The Cashless Bankless Future is Inevitable
By: Maida Barrientos
Tags: Cashless, Wallet, Cryptocurrency, Token Sale

Face it : Crypto adoption is inevitable.

So read up as we try to give you a simple evaluation of what most financial institutions believe and what you can do to join the bandwagon.

RAPID ADOPTION OF MOBILE PAYMENT SOLUTIONS

Since the Pewresearch.com survey which targeted tech-savvy respondents, it comes as no surprise that most of them believe the public will embrace using mobile devices as digital wallets.

“Credit and debit cards will almost be dead by 2020,” predicted consultant and research business owner Stowe Boyd, “because of the convenience and lower costs of directing payments through mobile devices, either by swiping, near-field techniques, or other services offered by cell carriers or platform companies (like Apple).”

Jerry Michalski, founder and guide of Relationship Economy Expedition, noted, “Cash and credit cards as we know them are on their way out. Automation is here and will keep rushing in.”

John Pike, director of GlobalSecurity.org, responded, “So many people are already accustomed to buying a cup of coffee with a credit card that smart-device swiping is only a very small next step.”

Ross Rader, a board member of the Canadian Internet Registration Authority, noted, “Cash has already disappeared and plastic is just an intermediate device waiting to be replaced. The security, reliability, and costs associated with maintaining plastic will drive issuers and merchants to adopt hardware and software solutions, while consumers will be motivated by convenience and functionality.”

David Morris, managing director of research for the Michigan Economic Development Corporation, echoed the voices of many survey respondents when he noted that early adopters are paying by mobile device right now. “Smart-swiping devices will be prevalent by 2020, in fact it already is. This way of spending in retail establishments, online purchasing, etc., is already a dominant mode of financial interaction. I can only see it becoming even more widely adopted by 2020.”

Susan Crawford, a professor at Harvard’s Kennedy School of Government and formerly a special assistant for technology policy for President Barack Obama, added, “There is nothing more imaginary than a monetary system. The idea that we solemnly hand around printed slips of paper in exchange for food and water shows just how trusting and fond of patterned behavior we human beings are. So why not take the next step? Of course we’ll move to even more abstract representations of value. Other countries are already content to use their phones; we’ll catch up eventually.”

Vili Lehdonvitra, a researcher at the University of Tokyo and visiting scholar at the Helsinki (Finland) Institute for Technology, predicted that by 2020 “merchants will be offering completely automatic context-aware micro-payments that require no action on part of the consumer: simply grab a can of soda or hop on a tram, and you will be charged automatically. Virtual currencies will continue to be used as complementary money in closed-loop systems.”1

FROM CASHLESS TO BANKLESS

PayPal Holdings Inc PYPL.O said on Wednesday, Oct 21,2020 it will allow customers to hold bitcoin and other virtual coins in its online wallet and shop using cryptocurrencies at the 26 million merchants on its network in the beginning of next year.

This new service makes PayPal one of the largest U.S. companies to provide consumers access to cryptocurrencies, which could help bitcoin and rival cryptocurrencies gain wider adoption as viable payment methods.The San Jose, California-based company hopes the service will encourage global use of virtual coins and prepare its network for new digital currencies that central banks and companies may develop.2

This move by Paypal will now allow the millions of consumers to quickly adapt, and adopt the use of cryptocurrency to a whole new level of bankless finance.

Are We Ready To Adopt?

Only with increasing difficulty can one recall a time when the majority of the world was yet to adopt the internet.

In 1995, user adoption of the internet had only reached 10% of American households, five years after the very first web browser was launched.

Another five years later, in the year 2000, 50% of the United States nation had already adopted the internet.Imagining today’s world without internet is simply unfathomable and, in the future, the same will be said about cryptocurrency.

The technologies fostered by the crypto industry are often considered the most disruptive and paradigm-shifting advancements since the birth of the internet itself.

They are quickly transforming the way people interact, trade, and gain autonomy of their own wealth and assets.

In the early 90s, internet adoption was slow. Newly developed networks struggled with concerns of scalability, privacy and ease of use.

Today, we are witnessing these same key issues with cryptocurrencies and blockchains. In order to accelerate mainstream adoption, we must wear the hat of a user experience designer, because only then will we see cryptocurrencies reach their full potential across the globe.

Cryptocurrencies must first be simplified

Crypto is no simple concept. The industry is trying to squeeze a new technology into traditional patterns of finance. This may be easy for some, but definitely not for the majority.

Firstly, it’s important to communicate why there are key differences between traditional fiat money, such as euros, dollars, pounds, etc., and crypto, such as Bitcoin (BTC), Ether (ETH), etc.

Most people don’t understand that Bitcoin is a decentralized and global digital currency not backed by a central entity and immune to government interference.

This year, the United States Federal Reserve pumped trillions of dollars into the nation’s economy, which will have consequences at a later date when inflation inevitably rises.

Bitcoin, on the other hand, has a limited supply. With a set maximum, it is anti-inflationary. This means that over time, it increases in value.

Nodes and hash rate aside, we need to better educate the public on how understanding and adopting cryptocurrency does not need to be complicated.

Not Many People Understand Crypto Wallets and Private Keys

But we need to explain to users that using crypto is easy, accessible and highly beneficial.At the same time, it’s important to communicate that this is not just a crypto versus traditional banking scenario.

We are all adopting crypto together.Many cryptocurrency exchanges are building strong relationships with banks across the world, and a variety of traditional institutions are also educating their users on the many advantages of crypto.

Right now, it is those who understand the inner workings of cryptocurrency technology that are reaping the benefits of its value. New users should not be excluded just because they lack the awareness of how to access more than one form of finance.

Crypto Confidence

Users need to feel confident that even if they use Bitcoin, a stablecoin or another cryptocurrency, they can exchange their funds for fiat at their convenience.

Crypto debit cards now serve as a solution to meet this demand. Cash can be just as easily accessed from a crypto ATM as it is from a traditional bank account holding fiat.

We need to help them become comfortable with purchasing and trading crypto, which is why onboarding users with easy-to-use applications is key.

The beauty of crypto is being able to access different types of currencies all in the one place.It is up to the crypto community to simplify the process of onboarding by making it as convenient as accessing traditional finance from an everyday bank.

The process must be intuitive, and it must make sense.The crypto ecosystem must be more convenient than existing technology.

For users to adopt crypto, there must be a need for it.

What’s the point of transitioning to a new kind of money if my existing bank account does the job? What is the need in the market for learning and adopting new forms of finance? It took a worldwide pandemic, to realize we have less control over our own finances than we thought.

We know too well from past financial crises that we cannot control the value of our money when it is in traditional fiat. Cryptocurrencies offer greater autonomy over where we choose to invest, bringing financial control back to the people.

Crypto also provides users with the power to earn back crypto on purchases through a new ecosystem of “cryptoback” reward systems.

It is only now that we are seeing more attractive membership and cashback benefits that have been missing from crypto since the birth of the currency, but it is important to match what traditional fiat has to offer and go a level further.

Traditional fiat reward systems usually reimburse “rewards” that are often limited to airline miles and other reward systems.Crypto cashback, on the other hand, offers the opportunity to earn a percentage of your transaction value back in Bitcoin.

Crypto is borderless.

This significantly lowers the fees of cross-border transactions and makes accessing your money instant wherever you are.

Mainstream crypto coins like Bitcoin and Eth adoption is inevitable, and those who are late to the party may miss out on purchasing these in-demand assets at affordable and minimum investment levels. but then again everyone deserves the right to access these transformative forms of finance.3

Increase in Global Demand Use

Global demand to be paid in Bitcoin and ETH increases as more people are able to work freely from anywhere and businesses have fully accepted the ease and security of the digital wallet.

At this point Bitcoin can now be considered as a legitimate medium of exchange worldwide. Increasingly being used by corporations, banks, and governments as a legit unit of exchange.

Due to the emergence of a superior, deflationary, new monetary standard, people increasingly store their personal wealth in Bitcoin rather than fiat.Central Banks power is ever so slightly reduced and previous local monopolies on money are described as a thing of the past.4

Digital or eWallets

A digital wallet is a program which allows the user to store electronic money (and manipulate them). Think of its as your digital bank.

The information component is a database containing personal user data (name, card details, payment options, and so on.5

Cryptocurrency mobile wallet apps

Since any cryptocurrency is virtual (you can’t touch it with your hands!), you also need electronic wallets. Otherwise, you won’t be able to manage such funds.

In fact, bitcoin is being stored in the blockchain network, not in the cryptocurrency wallet itself. The wallet only contains private and public keys and it’s transactions.

Cryptocurrency wallets are divided into several types:

Desktop wallets, they’re accessible only from the computer on which they are installed. They provide sufficient data security, although when hacking a computer (or if it’s been infected with a virus) there is a chance of losing all means.

Hardware wallets which are similar to previous ones but using a hardware data storage device (USB or something of the sort).

Online digital wallets. Their work is based on cloud storage technology. As you understand, there are some drawbacks in the cloud-focused approach (like a greater risk to have information stolen), although there are also benefits: let’s say, the accessibility (namely, the possibility to use these wallets anywhere, from any device).

Mobile digital wallets, they work as an application on the mobile device. The advantages are undeniable, you’re even allowed to use such wallets in retail outlets.

Paper wallets, they provide the highest level of security but are not always convenient to use.

There are e-wallet apps focused only on a particular type of currency, but there are also those which allow making any type of mobile payments. You have to take it into account when choosing a digital payment system we’ve talked about earlier.6

So let’s discuss electronic wallets advantages and disadvantages.

Main benefits

Simplified payment process. With the online e-wallet, the user can very quickly pay for the service or product in the online store. As you know, payment with a plastic card involves a much more complicated process, since it’s necessary to enter the card number, CVV code, etc.

Unlimited period of use. Once the user has registered an account in the system of electronic payment services, he may use it as he likes, for a really long time.

Convenient work in the online mode. Paying with electronic money is the best solution for freelancers who deal with clients online.

High transaction speed. Bank transfers sometimes take from several hours to a few business days. Transactions with electronic money are performed in a matter of minutes.

Disadvantages of e-payment services

Disadvantages include:

mandatory Internet access;the low probability of hacking the digital card wallet. However, the security issue will be discussed separately because it deserves more of our attention.

How Do They Work?

Unlike traditional ‘pocket’ wallets, digital wallets don’t store currency. In fact, currencies don’t get stored in any single location or exist anywhere in any physical form. All that exists are records of transactions stored on the blockchain.

Cryptocurrency wallets are software programs that store your public and private keys and interface with various blockchains so users can monitor their balance, send money and conduct other operations. So, to simplify, your wallet stores a copy of your private keys and your transactions stored on the blockchain.

When a person sends you bitcoins or any other type of digital currency, they are essentially signing off ownership of the coins to your wallet’s address.

To be able to spend those coins and unlock the funds, the private key stored in your wallet must match the public address the currency is assigned to. If the public and private keys match, the balance in your digital wallet will increase, and the senders will decrease accordingly. There is no actual exchange of real coins. The transaction is signified merely by a transaction record on the blockchain and a change in balance in your cryptocurrency wallet.7

Are Cryptocurrency wallets secure?

Wallets are secure to varying degrees. The level of security depends on the type of wallet you use (desktop, mobile, online, paper, hardware) and the service provider. A web server is an intrinsically riskier environment to keep your currency compared to offline. Online wallets can expose users to possible vulnerabilities in the wallet platform which can be exploited by hackers to steal your funds. Offline wallets, on the other hand, cannot be hacked because they simply aren’t connected to an online network and don’t rely on a third party for security.

Remember that no matter which wallet you use, losing your private keys will lead you to lose your money.

Similarly, if your wallet gets hacked, or you send money to a scammer, there is no way to reclaim lost currency or reverse the transaction. You must take precautions and be very careful!

Backup your wallet. Store only small amounts of currency for everyday use online, on your computer or mobile, keeping the vast majority of your funds in a high-security environment. Cold or offline storage options for backup like Ledger Nano X or paper or USB will protect you against computer failures and allow you to recover your wallet should it be lost or stolen. It will not, however, protect you against eager hackers. The reality is, if you choose to use an online wallet there are inherent risks that can’t always be protected against.

Update software. Keep your software up to date so that you have the latest security enhancements available. You should regularly update not only your wallet software but also the software on your computer or mobile.

Add extra security layers. The more layers of security, the better. Setting long and complex passwords and ensuring any withdrawal of funds requires a password is a start. Use wallets that have a good reputation and provide extra security layers like two-factor authentication and additional pin code requirements every time a wallet application gets opened. You may also want to consider a wallet that offers multisig transactions like Armory or Copay. A multisig or multi-signature wallet requires the permission of another user or users before a transaction can be made.8

Next phase? Go figure.

The pandemic is now pushing us to the next phase of financial and economic evolution. The crypto economy and it’s various sectors are here to stay and is a warranted dynamic with a gentle push from the global pandemic. Deal with it. Adopt then adapt.

And for sure, you really do not want to touch money ever, again.

References :

Main Findings: The Future of Money | Pew Research Center, https://www.pewresearch.org/internet/2012/04/17/main-findings-the-future-of-money/

PayPal to open up network to cryptocurrencies | Reuters, https://www.reuters.com/article/paypal-cryptocurrency/update-1-paypal-to-open-up-network-to-cryptocurrencies-idUSL1N2HC0PL, Anna Irrera, Tom Wilson

To Accelerate Cryptocurrency Adoption, We Must First Improve User Experience, https://cointelegraph.com/news/to-accelerate-cryptocurrency-adoption-we-must-first-improve-user-experience

(2) Why Mass Adoption is Inevitable : Bitcoin, https://www.reddit.com/r/Bitcoin/comments/9yxl2a/why_mass_adoption_is_inevitable/

Digital Wallets: Types, Ideas, and Future of Such Products | Agilie app development company blog, https://agilie.com/en/blog/digital-wallets-types-ideas-and-future-of-such-products

Digital Wallets: Types, Ideas, and Future of Such Products | Agilie app development company blog, https://agilie.com/en/blog/digital-wallets-types-ideas-and-future-of-such-products

Cryptocurrency Wallet Guide: A Step-By-Step Tutorial — Blockgeeks, https://blockgeeks.com/guides/cryptocurrency-wallet-guide/