How cryptocurrency is trendy
At the start of the year, the value of bitcoin was above the £ 41,180 mark.
Now, as digital tokens continue to rise as consumers move away from cash and more businesses around the world begin to accept cryptocurrency, retailers have started to adapt to result.
This month, Philipp Plein became the world’s first fashion company to accept payments in 15 different cryptocurrencies.
But what exactly are cryptocurrency and blockchain?
Simply put, a cryptocurrency is a type of currency like the British Pound but it is digital. Cryptocurrencies use ‘decentralized control’, which means they are not controlled by a single person, government, or central bank.
Meanwhile, blockchain is the technology that enables cryptocurrency to exist.
Bitcoin is the name of the most well-known cryptocurrency, the one for which blockchain technology was invented.
Following the announcement of the adoption of cryptocurrency by Phillipp Plein as a payment method, Katie Ramsingh, fashion editor and content consultant, said it was the start of a new trend.
“The number of fashion brands accepting crypto will only increase in the years to come,” she said. Retail Gazette.
Luxury watchmaker Hublot also accepts encrypted payments, while luxury retail conglomerate LVMH is testing blockchain-based authentication. Separately, major fashion houses and retailers Burberry, Givenchy, and Dolce & Gabbana are all embarking on NFTs – another form of cryptocurrency.
“Digital valuation and digital currency are the future, especially for Generation Z consumers who are bought around a wide range of electronics,” Ramsingh added.
Katharine Wooller, UK Managing Director of crypto-wealth platform Dahcxi, said: “There has always been a fatality in the acceptance of cryptocurrencies by international businesses, with retailers being no exception – the question is no. was never whether it was just when.
Wooller said that while Philipp Plein may be the first global fashion retailer to accept payment in crypto, we should expect many more to follow suit.
“Fashion retailers in general have complex supply and logistics chains spread across the globe,” she said.
“As a company based in Germany, even given the stability of the euro, the foreign exchange cost associated with paying for products in local currency from suppliers around the world must be enormous.
“If suppliers, distributors and customers can be encouraged to transact in crypto, international finance suddenly becomes simpler and more profitable.
“We expect this trend to spill over into the entire retail industry in all international activities.”
“Plein is a high-end luxury brand, so, in part, accepting payment in crypto can play into the transactional preferences of its high net worth customers.
“Again, like many high-end fashion retailers, while maintaining a street presence for the time being, Plein is strengthening its online presence.
“Crypto transactions between digital wallets facilitate e-commerce, while reducing transaction costs for both sides of card payment facilitators.
“At the main street level, this will also happen, although the pace will be slower.
“The day will come, probably sooner than most people realize, when consumers can choose to be paid in crypto.”
Wooller said that the fact that Phillip Plein was happy to accept crypto for retail products meant he found meaning as real money.
At the height of the Covid-19 pandemic, buyers have been urged to use cash alternatives when shopping to reduce the spread of the virus through banknotes and coins.
When asked if he thinks the pandemic has accelerated the trend in cryptocurrencies, Geri Cupi, founder of banking app Twig, said he thinks so.
“As people spend more time online and think about ways to make their money work harder for them, cryptocurrencies have seen a massive influx of new and interested people who may have been curious about crypto. change but hadn’t had time to examine it before, “he explained.
Cupi cited social media as another major driver of this trend, with investing methods easily accessible to new generations of people, with Instagram and TikTok accounts offering financial education snippets in easy-to-read videos and posts. understand everywhere.
As luxury brands continue to explore the potential use of cryptocurrency, can we expect low-cost retailers and chains to embrace its use in the near future? Rhian Lewis, author of The cryptocurrency revolution, said it was “absolutely” not a trend that would be limited to luxury chains.
“Rather than being the preserve of the super-rich, cryptocurrencies are used by all kinds of people in many different countries: just look at the popularity of Bitcoin in Venezuela or Nigeria,” he said. he adds.
Venezuela was ranked as the third country with the largest cryptocurrency adaptation in the world by Chainalysis in its 2020 report.
In the past, high transaction fees on bitcoin and ethereum networks have been a limiting factor when purchasing cheaper products where transaction fees can end up weighing down the purchase price. But rapid innovation in the industry means that even the cheapest products can now be purchased with cryptocurrencies.
“It’s possible that all brands will embrace crypto, but I think it will be more valuable for those with younger consumer populations,” Ramsingh said.
“Much like the html code the millennial learned through platforms like MySpace, Gen Z is learning to invest in crypto through TikTok, and over time this could become their preferred payment method.”
“This kind of movement has been happening for a while”
Cupi agreed, “We know that for younger generations such as Gen Z consumers, they are more open to using alternative payment currencies and as this group of consumers grows, their behaviors will shape what customers think. brands offer their customers. “
As more retailers consider accepting cryptocurrency, how easy would it be to fit it into different business models?
Joe Downie, marketing director of cryptocurrency platform NiceHash, said cryptocurrencies are “extremely easy to implement in any business model, and no special hardware or software is required.” .
“All the seller needs is a Bitcoin wallet or whatever that can be downloaded for free from any coin site or third party app stores, and the buyer just has to need a smartphone to scan the QR code to pay, “he explained.
“It works in a physical store or an online store, so it can be implemented anywhere, even at street food festivals and the like, with no upfront costs.
Ramsingh said it would be interesting to see a digital system that works the same as a traditional gift card. She said consumers can give the cryptocurrency to others as a gift, only to spend it at various fashion retailers that all accept the currency.
In terms of the risks involved in accepting cryptocurrencies for retailers, experts said digital currencies remain volatile in terms of price and whether a company decides to accept bitcoin or one of the many other crypto-coins. currencies in the market and keeping them in their own reserves, this they can see the value drop against the dollar, the euro or the pound sterling.
Lewis said the reverse is also true and it could greatly benefit businesses.
“A company that had accepted Bitcoin in exchange for its goods at $ 32,000 in January 2021 or $ 7,500 in January 2020 would have seen a huge increase in assets if it continued to hold it on its balance sheet, as Tesla has. indicated would be his strategy, “he said.
Following Phillipp Plein’s announcement, it is only a matter of time until we see which retailers are getting on the cryptocurrency train first and what effect that will have on the industry at the moment. wider.