With the increasing popularity of cryptocurrency assets, the cryptocurrency payment industry is experiencing rapid growth. Singapore-based Web3 venture capital and research firm Bing Ventures recently released the "2023 Cryptocurrency Payment Industry Research Report" in conjunction with Alchemy Pay, analyzing the development history, current status and future prospects of this emerging payment method from multiple perspectives such as technology, commercialization and regulation.
Three tracks advance in parallel, market size to exceed 100 billion in 2026
Cryptocurrency payment has broad application prospects in both the digital economy and the real economy. Starting from the time of "buying pizza with Bitcoin" in 2010, this industry has developed for more than ten years, and has been subdivided into major tracks such as deposits and withdrawals, off-chain real economy payments, and emerging blockchain native scenario payments. Its development combines the technology-driven nature of the technology sector with the significant network effect nature of the Web2 platform, with a unique pattern of growth and competition.
Although the cryptocurrency market experienced a bear market in 2022, the growth rate of the cryptocurrency payment sector was not affected. On the one hand, well-known brands in the real economy such as Starbucks, Coca-Cola, Tesla and Amazon have embraced cryptocurrencies, and the market adoption rate and consumer familiarity of cryptocurrencies in the mainstream market have gradually increased. On the other hand, this market is attracting more and more participants to join. In addition, more and more countries and regions have begun to include cryptocurrency payments in the scope of regulation, and relevant laws and regulations are gradually being improved. For example, in 2022, the Monetary Authority of Singapore (MAS) successively approved payment service licenses for companies such as Circle, Paxos, Blockchain.com, Coinbase, Luno, Digital Treasures Center, Crypto.com, Genesis and Sparrow. In February 2022, Colorado became the first US state to accept cryptocurrency for tax payments. The Central African Republic became the second country after El Salvador to approve Bitcoin as a legal currency. El Salvador adopted Bitcoin as its official currency in September 2021.
Based on the estimated overall growth rate of the global payment industry and the sensitivity analysis of cryptocurrencies in the field of real economy payments, the report predicts that the global cryptocurrency payment market will reach hundreds of billions of dollars in the next three years.
The regional hybrid competition model of "compliance license + merchant resources" is difficult for one company to dominate the market
After years of technological evolution, the usability and efficiency of cryptocurrency payments have been effectively improved, but security risks and mutual trust issues between transaction parties still require more substantial solutions.
In addition, due to the strong network effect in this field, that is, the value of a product or service increases as the number of users increases, cryptocurrencies face fierce competition from traditional payment methods, which benefit from the network effect of existing users. Currently, the penetration rate of cryptocurrencies in the field of real economy payments is still less than 1%.
However, at the same time, leading projects have emerged in this industry. The report conducted a comparative study with Alchemy Pay and Moon Pay as representative projects. The report believes that in the future, regional mixed competition of "compliance license + merchant resources" will be the main competition mode. In this case, it will be difficult for a "dominant company" to emerge. At the same time, developing markets such as Southeast Asia and South America, where electronic payment methods are not yet deeply rooted and have a large proportion of "digital natives", are expected to become a breakthrough.
Technological innovation drives scenario innovation and connects the upstream and downstream of the industrial chain
In terms of emerging blockchain-native payment scenarios, attention is paid to innovations in cryptocurrency payment models and technologies such as NFT Checkout, on-chain identity aggregation (DID), and streaming payments.
However, the NFT Checkout business is closely related to the speed at which the NFT market enters the mainstream vision and consumer feedback. At the moment when the NFT market is sluggish, the business volume has been hit.
The cryptocurrency payment industry is still in the development stage and requires continuous innovation from market participants to gradually expand and penetrate into more on-chain and off-chain scenarios. Technologies such as DID and streaming payment are expected to enable new scenarios and provide new growth points for the industry. In addition, the payment links and experience of the cryptocurrency payment industry also need to be improved. This requires market participants to explore and connect the upstream and downstream of the industrial chain more and provide more merchant-side modules such as financial management, reconciliation, and merchant entry.
The full report of "2023 Cryptocurrency Payment Industry Research Report" can be downloaded from the Bing Ventures official website. Bing Ventures and Alchemy Pay hope that through this report, Web3 and blockchain enthusiasts, entrepreneurs and developers will have a better understanding of this market, so that more people can join in the thinking about the opportunities and challenges in this field.