If 2021 taught us anything about digital currencies, big banks and large payment providers will now be more comfortable with Bitcoin (BTC). While the CEO of PayPal and other big companies are expressing their enthusiasm for crypto payments and salaries paid in Bitcoin, executives at Visa, JPMorgan and ING agree that Bitcoin is still more of an investment vehicle than a currency.
This idea was revealed during a panel discussion titled “Buying with Bitcoin” held during Forbes’ online event “2021 Blockchain 50 Symposium: Crypto Goes Corporate”. Michael del Castillo, Associate Editor at Forbes, led the discussion and was accompanied by Umar Farooq, CEO of JPMorgan’s Onyx blockchain unit. Mariana Gomez de la Villa, program director for distributed ledger technology at ING; and Cuy Sheffield, Vice President and Head of Crypto at Visa.
Have preferred bitcoin payments since 2014?
When asked panelists whether or not something has changed for Bitcoin payments since 2014, all three executives noted that the primary use case for Bitcoin is still a store of value. Farooq pointed out that accessibility is the only significant change Bitcoin payments have seen since 2014:
“Square and PayPal, for example, make it easier to use Bitcoin. However, I think Bitcoin payments will remain more of a marketing game for many large companies. “
While Farooq mentioned that consumers can certainly use Bitcoin to pay for items, volatility poses a major challenge. He also pointed out that tax implications for crypto payments become even more complicated.
Sheffield noted that Visa is seeing growing demand from customers looking to access Bitcoin, but many are still viewing digital currency as more of a “savings account”. Because of this, Sheffield stated that Visa is currently focused on “stacking sats” or allowing customers to purchase small units of bitcoin overtime. “Companies like Fold allow customers to spend fiat and then earn bitcoin back. That was our main motivation,” he noted.
Echoing Farooq and Sheffield, Gomez de la Villa noted that Bitcoin remains an investment, largely due to challenges such as persistently high transaction fees. “I don’t think Bitcoin will be widely used as a means of payment right now,” she said.
JPM Coin is not a cryptocurrency
Given the views expressed by all three panelists on Bitcoin payments, it should come as no surprise that Farooq mentioned that JPM Coin – JPMorgan’s 2019 digital currency offering – is not a cryptocurrency.
Rather, Farooq stated that JPM Coin was specifically designed to meet the needs of JPMorgan’s Fortune 500 and Fortune 1000 corporate customers. “Our customers want access to programmable money, conditional payments, and future features. However, it is less important to them to be in a fully decentralized, public network with autonomy, ”he said.
Farooq noted that JPM Coin gives companies the payment options of the future, but behaves more like a digitized M1 or the amount of money normally spent by banks. He said:
“We believe companies can interact on the platform to conduct decentralized transactions across the ecosystem and gain access to programmable money. JPM coins are not a pure cryptocurrency because in my opinion a pure cryptocurrency has an independent value on a public blockchain like Bitcoin or Ether. “
Alongside JPM Coin, Farooq discussed the reasons behind the recent $ 65 million investment round in ConsenSys, led by major financial institutions such as JPMorgan. According to software company ConsenSys, the new funding will help expand blockchain infrastructure solutions for businesses to enable more decentralized finance and Web 3.0 applications on Ethereum. In light of this announcement, del Castillo asked Farooq whether JPM Coin was a competitor to Ether (ETH).
According to Farooq, JPM Coin does not compete with Ether as JPM Coin is specifically geared towards JPMorgan’s customers rather than retail investors. Farooq also mentioned that while JPMorgan built the quorum platform on top of Ethereum, which has now become ConsenSys Quorum, these two platforms should be merged so that JPMorgan’s blockchain solution can be built on the network that ConsenSys is running on becomes. “We have a great relationship with ConsenSys and we will continue to work with them on core technology,” said Farooq.
Stablecoins enable new payment methods
When asked about the future of stablecoins, all three panellists agreed that stablecoins could be a useful tool for cross-border transactions, along with a solution that allows fintechs and startups to build financial products.
Stablecoins were of particular interest to Visa as the major credit card company recently announced a pilot program that would allow its partners to use the Ethereum blockchain to process fiat transactions. According to an announcement from Visa, the company will partner with crypto exchange and card issuer Crypto.com to provide a crypto-processing platform for fiat transactions later this year. This allows Visa partners to exchange the stablecoin USD Coin (USDC) through Visa’s payment network to process fiat transactions.
Sheffield noted that Visa has been closely following the stablecoin ecosystem over the past few years, with a particular focus on USD coins:
“We were impressed and excited to see USD Coin and a developer ecosystem. There are also an increasing number of fintech and crypto companies that are actually building their businesses on USDC. “
Sheffield mentioned that USD Coin is becoming a “Crypto-Native-Dollar-Based Treasury Infrastructure” and noted that work is being done to make Visa act as a bridge between USD Coin payments and innovative crypto companies.
In terms of cross-border transactions, Sheffield indicated that stablecoins will enable new digital wallet products, followed by more efficient cross-border business-to-business payments used by non-crypto companies. Borrowing from Sheffield, Farooq noted that stablecoins will help on the cross-border front, but pointed out that regulations need to be put in place first:
“In the short term, stablecoins act like money in your Apple Wallet – they are used in closed ecosystems to create and generate value. In the long run, however, it depends on regulators becoming familiar with large-scale cross-border payments. “