Come On Amazon, Get Into Crypto Already

In Big Tech, Apple was usually the one who was late to the party. When it comes to crypto, that does not seem to be the case. Apple has made moves to hire an “alternatives payment” manager that we can assume involves cryptocurrency. It became obvious when one of the key qualifications mentioned was experience with cryptocurrency. Google has been involved with blockchain technology related matters like their partnership with Theta Labs network. Other Big Tech companies like Twitter, Facebook and Microsoft have dabbled with blockchain and cryptocurrency on occasion but there is one company that we have not heard much about recently being involved in crypto … Amazon.

Amazon has actually patented a blockchain-based product authenticator back in 2020. It is not using cryptocurrency (as of writing) and has not really been in the news much. Amazon even removed crypto from their payment methods from the Twitch.TV platform . There is however news that Amazon is moving towards cryptocurrency payments. Just like Apple, Amazon is looking for a digital currency and blockchain expert. They might be considering crypto payments for their online retail business.

It is a big deal if Amazon embraces crypto. Not just for payments, but if the company invests in digital assets like Tesla. Amazon has a large retail empire which they could open to retail for cryptocurrency. This will most likely require payment processors like Visa, who have started to process cryptocurrency for payments in 2021. Amazon may permit payment processors to handle cryptocurrency to fiat conversions, meaning the final payment will still be in fiat.

Developers would find it an opportunity to create gateways for payment processors from crypto to fiat. Regulations must be followed as part of jurisdiction laws, so how it will be implemented is the challenge. The less you have to deal with regulators, the better it will be to just allow others to deal with it. Then again why would Amazon need a third party, when they are more than capable of implementing a system with their vast resources available.

According to an Amazon spokesperson:

“We’re inspired by the innovation happening in the cryptocurrency space and are exploring what this could look like on Amazon. We believe the future will be built on new technologies that enable modern, fast, and inexpensive payments, and hope to bring that future to Amazon customers as soon as possible.”

It sounds like the type of news that can move the market to the upside. It is also what speculators want to hear because it can generate more interest in Bitcoin and other cryptocurrency. That usually leads to FOMO buying sprees that help drive prices of digital assets higher. While the news cycle from the media had been full of FUD the past few weeks since “Elon FUD” back in May, it has since become more positive. Whether or not Amazon does finally consider cryptocurrency payments or develop their own token, they have confirmed their interest. For many analysts that is a sign that cryptocurrency is not about to go away any time soon.

(Cover Photo Credit by Anna Shvets)

Apple Pay and Coinbase Bring Crypto Payments To Retail

As of June 2021, users who have Apple Pay can now pay for items with cryptocurrency by way of the Coinbase debit card. The card also supports Google Pay with the option to pay with cryptocurrency like Bitcoin and Ethereum. In a press release statement (From the Coinbase blog):

“You can now use your Coinbase Card with Apple Pay and Google Pay to make it even easier to spend crypto at home and on the go.”

It is Coinbase that has integrated cryptocurrency payment options, and is not directly from Apple Pay. This means that users will need a Coinbase card first, which can then be added as a payment option on Apple Pay.

Coinbase provides a debit card from which users can attach their cryptocurrency wallet to use funds. One of the perks it offers is a cash-back spending feature (up to 4% according to Coinbase). This rewards heavy users back to their iPhone.

Before a user can pay with cryptocurrency, it is clear that it is not a direct exchange of value. It must first be converted to fiat at the point-of-sale. The merchant must also support payments in cryptocurrency, so this means that users cannot just use their card to make any payment in cryptocurrency. Merchants who accept the card can offer designated cryptocurrency payment methods (e.g. ETH, XLM, BTC).

Cryptocurrency debit cards are providing users not just a new payment method, but a way to actually use digital assets as a medium for exchange. They can be used to pay for goods and services where it is accepted, and that allows more utility for cryptocurrency. There are other types of cards offered by and BitPay, with their own reward system for users.

With crypto payments going toward mainstream adoption, the question is whether the volatility will have any negative effect. An example of this is sudden change in price of a cryptocurrency in the middle of a transaction. How will payment processors handle the variations, which can suddenly increase or decrease without warning? The idea is making the payment at the point-of-sale, but users may delay in paying from the time of quote. In the real world, prices are fixed with fiat currency and users pay for an item as listed. Prices don’t suddenly change after a few minutes. With crypto, prices can suddenly change while a user is waiting to make a payment. This is certainly something that will be tested.

Certain crypto, like Bitcoin, may be considered too valuable to spend. However, that would probably be the digital asset merchants would like to accept for cryptocurrency payments. Users will have to consider whether they want to spend fractions of their BTC for a pair of sneakers or just HODL it. There are other crypto options of course, which is why this can still work out for both users and merchants. Another thing to take note of are the transaction fees. Users would probably want to use a blockchain where transaction fees are cheapest to spend their crypto.

Stablecoins may provide a better solution to go around the volatility. This might be a good option since it is pegged to more stable assets. Users can set their Coinbase card to use a stablecoin like USDC as their payment option method. All users will need to do is convert a certain amount of their base crypto like Bitcoin to a stablecoin. From there they can fund their debit card with less worries about volatility.

Both Apple Pay and Google Pay come from large tech platforms that serve millions of users. Integration with cryptocurrency payments is further simplified through the use of smartphones. Apple Pay users have iOS (iPhone) while Google Pay users have Android (Samsung, OnePlus, Huawei, etc.). This finally takes the world of retail digital payments to the blockchain.

VISA Forges New Connection Between Fiat And Cryptocurrency

Payments giant and credit card company VISA, have announced they are providing support for cryptocurrency payments using the USDC stablecoin starting with partner USDC is an ERC-20 token that runs on top of the Ethereum blockchain network. This makes use of a stablecoin to settle payments using VISA payment products through their partners. At the moment VISA will pilot the payment system with, a cryptocurrency platform and digital exchange, with plans to offer the service to other partners. VISA is going to make using cryptocurrency much more available for payments. This legitimizes cryptocurrency payments for goods and services, since VISA is a financially regulated entity.

This is a bridge between traditional finance with emerging fintechs involved with cryptocurrency and digital assets. VISA had tried to bridge cryptocurrency payments before, but plans fell through. Perhaps VISA is now ready to provide the service with more knowledge and understanding of cryptocurrency. This allows VISA to better understand the new space fintechs are operating from, which involves innovative products that implement digital currency and blockchain technology. Perhaps it is a sign that changes are coming to traditional financial systems. VISA has been warming up to cryptocurrency and other digital currency (non-crypto) as evident from their more recent postings.

Before VISA, payments processors like PayPal and Square have provided support for cryptocurrency. PayPal has paved the way for users to buy cryptocurrency like Bitcoin through their app. Square allows their customers to buy, hold and sell cryptocurrency through their platform, including the Cash app. Prior to that, there were not many mainstream apps other than those provided by digital exchanges like Coinbase that allow their users to purchase cryptocurrency. VISA is different in that it is providing a way for customers to make payments with the cryptocurrency they hold. This is a layer that has been missing and it could accelerate utility of cryptocurrency as a payment method. Using the blockchain may also provide faster settlements compared to the current system, but scaling remains to be seen on blockchain networks like that of Ethereum.

While the purpose of cryptocurrency is for open direct payments system (Peer to Peer), VISA is not exactly that type of platform. It still operates under the traditional financial system, which is highly centralized and permissioned. That means VISA is not exactly an open network, it requires a membership for its customers. That is why the product they offer is more of a bridge between the traditional fiat system and cryptocurrency. The decentralized aspect of a transaction still falls under the blockchain layer, but through a VISA payment gateway. In the case of USDC, the payment is from a user’s digital wallet on the Ethereum blockchain or even a custodial wallet that supports USDC. What VISA provides is a way to make that payment possible to retailers who will accept the transaction. VISA has so many partners in the retail space that they work with, this opens opportunities for cryptocurrency companies like to have access to more traditional financial markets.

VISA could also open another bridge, this time to the DeFI space of the blockchain. Most platforms in DeFi run over the Ethereum network, but other platforms like Binance, Polkadot and Cardano offer their own ecosystems that provide DeFi apps. If there is integration to support VISA, that can bring more users to the DeFi space who are using VISA credit cards or payment applications supported by the VISA network. At the moment, VISA and other credit card companies do allow customers to purchase cryptocurrency from digital exchanges. Opening up to support decentralized exchanges in the DeFi space are more challenging due to regulatory compliance. If this can be resolved, it opens up the space to allow interoperability of dissimilar payment networks to become possible.

This is overall good for the Ethereum network. VISA will not only need to have USDC, but also Ethereum’s native token ETH (ether). In order to process transactions using USDC, small denominations of ETH are used to pay for costs called “gas” which are part of the transaction fees paid to the network. This is for processing transactions that have to be verified and secured on the blockchain. It may also be likely that it will be VISA’s partners who hold the USDC and ETH, while VISA just helps bridge the retail merchants with the cryptocurrency payment as the settlement layer. The main issue with Ethereum has been scaling, but the development community is fast tracking efforts to scale the network.

With VISA’s announcement, other payment companies like Mastercard and American Express should take notice. This introduces a business model that brings cryptocurrency native platforms with the traditional retail space. The predominant form of payment in the VISA network is by credit and debit card. By integrating a cryptocurrency method into the network, it opens up new channels for making payments. The choice of using a stablecoin also makes plenty of sense given that cryptocurrency is very volatile. This changes the narrative that cryptocurrency is trying to replace traditional finance. Before that can happen, it must have greater utility. Perhaps VISA can help bring it to more mainstream adoption, to the point where we can buy toilet paper with cryptocurrency.

(Image Credit: Photo by Tom Fisk)

Electronic Payments Are Safer In Times Of Pandemics, But Does That Lead To More Value For Cryptocurrency?

The spread of the novel coronavirus (COVID-19) has ravaged the global economy significantly. Lockdowns and restrictions on air travel will affect many industries, and that has led to a tanking economy. The virus has now been declared a pandemic by the WHO, so it has had some serious effects on the policies of the world’s major nations to take drastic measures to curb the increase in cases. The hashtag #StayHome has been trending on both mainstream and social media, to encourage people to social distancing in order to prevent the further spread of the virus via community transfer.

The issue of containing the virus seems no longer possible, especially in countries like Italy, Iran and Spain were the virus quickly spread. It is overwhelming their healthcare systems and led to declarations of national emergency. Experts agree that the main way the virus is spread is through social contact. An infected person can potentially spread the virus to three other persons they come in contact with. The virus is not the same as the flu, it is a different strain of the coronavirus that is related to SARS. It can spread like the common cold and the flu, but the symptoms can turn from mild to severe. The most severe cases require ventilators to help patients breathe. Scientists are discovering more about the virus, and this can help researchers find a solution or way to mitigate the problem.

One way the virus can be spread is through cash i.e. paper currency. This has been the case in China, where authorities there have been either disinfecting or destroying paper currency. The amount of time the virus can survive on surfaces also depends, but if it can last more than a day (24 hours) on the surface of paper currency, that it is a cause for concern. It can happen quickly enough that there won’t be time to disinfect it. It is not like every store that accepts cash will suddenly take the time to disinfect the money they accept or give back as change.

In a typical scenario of virus transmittal by paper currency, an infected person who handles the money makes a payment at the store. The clerk at the register takes the money and the virus transfers to the clerks hand. Now the transmission to the clerk can be the moment the clerk touches their face and the virus finds a way in through the eyes or nose. Once the virus gets into the clerk’s body they may not immediately show symptoms. In fact, some infected persons appear asymptomatic or show no signs of the virus until much later (14 days according to most medical experts). The virus is further spread by the clerk when handing back change to the store’s customers. It then begins to spread through the rest of the community as someone comes home from the store. You can catch it from shaking hands too, the reason for elbow bumps.

The WHO is now advising us to use forms of electronic digital payments as a precautionary measure. It is contactless, meaning there is no physical contact involved that could lead to virus infection. Paying with a credit or debit card at the store is an example. Other ways to pay are online, via an app. Some stores and restaurants will accept electronic payments and then allow customers to pick up their order. It is still risky to even go out and have items handled at the stores, but electronic payments can help as another way to avoid contact with the virus. Self checkout of items at a supermarket using a card payment method appears to be the most ideal way. The important thing to remember though is for everyone to wash or sanitize their hands after any transaction. Once the virus gets on your hands it can easily spread. It is also important to not touch the face, rub eyes and avoid habits like biting finger nails.

It is still wise to be careful though. This is because you still have to be alert since this gives hackers an opportunity to victimize more people. Make sure that you connect to a secure link that always uses HTTPS. Sites like Amazon provide this by default, but make sure that you are connected to the correct site. You can check to see if there is a padlock icon next to the website name. It should show HTTPS in the web address as well. If your browser does not support this protocol, your connection is vulnerable because it leaves your data exposed (e.g. credit card number, etc.). Check that the app you installed from your merchant is also legit. This can be verified by the vendor’s website. If you are already using Apple or Samsung Pay, you have biometric authentication for more security.

Now it leads to the question, will cryptocurrency become more valuable during times like pandemics?

As we have seen in the news, once the virus was declared a pandemic and seems beyond containment, the market crashed on Wall Street and other financial markets around the world. This led to dumping of stocks for money. The lockdowns have also had a major impact on the economy, leading to loss of livelihood for many workers in the entertainment, restaurant, service and retail industry. Generally any job that requires social interaction, as social distancing has been encouraged by authorities to stem the possible worst case scenario projections. Panic from the mainstream media reports have led to more fear, uncertainty and doubt i.e. FUD.

The cryptocurrency market did not do any better, but even worse. Bitcoin (BTC) and the altcoins crashed as well, with the value of Bitcoin dipping to a low of $4,106.98 on March 13, 2020 with previous highs from $9,937.40 back on February 23, 2020. It is not just about the weak hands pulling back or whales dumping, the sentiment was due more to the bleak outlook on the economy. People dumped their cryptocurrency back to fiat currency. In times of crisis, people don’t buy cryptocurrency. Instead it is the opposite. It followed the Dow Jones fall and stock market crash in this case. If you have ever heard any cryptocurrency trader or influencer say that things are going to get worse before they get better, that is a fair assumption.

There is another viewpoint though that with crisis comes opportunity. While everyone else you know maybe dumping their stocks or cryptocurrency, there are others who are buying at the dip (as traders call it). It becomes a buying opportunity, like a sale on something that was once expensive to buy. When Bitcoin fell from $9,000+ to < $5,000, some traders viewed this as the time to buy and accumulate more coins. This gives some traders a chance to finally have 1 BTC in anticipation of greater value in the future (much like investing in a stock but without dividends).

It seems apparent though that cryptocurrency is not valued as a medium of exchange. In times of crisis more people were selling their cryptocurrency and not using it for electronic payments. The use of cryptocurrency in making payments is still not mainstream. In fact, cryptocurrency is more important as a store of value than for making payments. Imagine if the banks suddenly suspend your funds during a pandemic and there was no way for you to take it out. In this case having cryptocurrency would be ideal by exchanging it for fiat currency or making transactions. You also have some of your assets in digital form and thus you have value that can be exchanged later.

At this moment it is more a question of what is practical. If you had to buy toilet paper right now, would you be willing to spend it in BTC or ETH? Another question is, will the store accept your payment in cryptocurrency? The answer to both questions is usually no. Electronic payments using fiat currency stored in a bank account is still the preferred method, not from a digital wallet that holds the value of cryptocurrency. What seems obvious thus far is that in crisis mode, people will stick to what is familiar in order to get by.

Ethereum Denominations Explained

Ethereum’s digital asset is Ether (ETH). It is a cryptocurrency whose fiat counterpart would be the Dollar, Euro or Yen. Ether can be spent on electronic payment systems, just like a form of digital medium of exchange. Its balance is then updated on a blockchain, where a digital wallet’s history is maintained that logs all transactions from the beginning to the present. Just like the Dollar, Ether can also be broken down into smaller denominations or fractions of the digital asset. The Dollar can be divided into cents, with denomination in penny (1 Cent), nickel (5 Cent), dime (10 Cent) and quarter (25 Cent). Ethereum also has its own denominations that are a fraction of Ether. Even Bitcoin (BTC) has smaller denominations called Satoshis.

The following table lists the various denominations of Ether, starting with its lowest unit called Wei. The table lists the values in Wei and Ether.

Denominations of Ether

The units are expressed with nicknames taken from pioneers in computing (Ada Lovelace, Charles Babbage, Claude Shannon, Nick Szabo, Hal Finney, Wei Dai) and Ethereum’s co-founder (Vitalik Buterin). The smallest denomination is Wei, which would be written as 0.000000000000000001 Ether for 1 Wei. That is 10 to the negative 18 in exponential form. The more commonly used denomination is Gwei, which is a billionth of a Wei or 10 to the negative 9 in Ether.

To get a better understanding of denominations, here are the values of 1 for each unit in Ether.

1 Wei = 0.000000000000000001

1 Kwei = 0.000000000000001

1 Mwei = 0.000000000001

1 Gwei = 0.000000001

1 Twei = 0.000001

1 Pwei = 0.001

When calculating gas, which is the unit of computation on the Ethereum blockchain, an entire Ether would be too much value. Therefore, like the way a Dollar can be divided into cents or a fraction of the currency, Ether can be denominated into smaller values. That way the cost of computation is kept low for transaction fees that occur during smart contract execution. The default maximum gas value is set to 21,000 gas units, which is in the denomination of Gwei. That would be worth 0.000021 Ether.

Denominations or fractions of a currency are a more fundamental way of dividing into more logical units of cost. Rather than a whole Ether to spend, a smaller denomination can be used as charges for a transaction. This lowers fees, making the system usable for payments and transfers.