Over the last few weeks, we have seen several notable examples of the blurring of the lines between the worlds of Web 2 and web3. For example, there was the surprising success of Reddit’s NFT rollout. The platform has now created three million Reddit Vault crypto wallets since July 2022, meaning it has surpassed the NFT marketplace OpenSea in just a few months. It is a remarkable achievement, but it also provides further evidence that the mainstreaming of crypto adoption will not occur until all big tech companies get involved.
But these things tend to happen gradually, then suddenly. We also learned in the last month that Google would accept crypto payments for certain cloud services payments and that it would also be forming a strategic partnership with Coinbase. We also got something of a roadmap for Starbucks’ NFT rewards program. And there was also the news that Plaid was launching Wallet Connect, which is a wallet solution for developers to connect their products to over 300 crypto wallets.
The crypto question for eCommerce
All of these stories suggest momentum for crypto adoption, but perhaps the one that got the least attention in the media – Plaid’s Wallet Connect – is the most important, as it provides something of a roadmap for connecting crypto to eCommerce. If you are aiming to start or advance a business and are in the midst of planning how to create an eCommerce website, then the question of accepting cryptocurrency payments should be given serious consideration. Of course, it might be revisited at a later date, but for many, now is the time to get ahead of the curve. If Google and Microsoft are accepting payments in crypto today, it follows that the websites of tomorrow will certainly be using cryptocurrency.
But there are challenges that go beyond the economics of the crypto market. Your grandmother might be able to checkout using PayPal at her favorite website, but expecting her to connect a MetaMask crypto wallet might not just be feasible at the moment. What’s more, there are 100s of wallets built for Ethereum alone – what if the website is not compatible with grandma’s favorite wallet?
Plaid takes big steps
As mentioned, Plaid has taken some steps to address this. It’s not a comprehensive solution – far from it – but it is at least a step in the right direction. Plaid’s Wallet Connect effectively mimics the functionality of its Plaid Link API. That’s the banking interface that is (perhaps unknowingly) used by 1 in 4 Americans today. Like Link, Wallet Connect (it will launch for developers soon) is a type of go-between, acting as a user-friendly interface between the merchant and the crypto wallet.
This is, of course, only half the battle. Plaid’s marketing is toward web3 developers, and that – regardless of our optimism – remains a niche industry, albeit a growing one. Yes, PayPal has been moving forward into crypto, and Jack Dorsey’s Block Inc has for understandable reasons – Dorsey is an unabashed Bitcoin “maxi” – been embracing crypto payments on Cash App, but it still feels like we are waiting for that tipping point moment. But it will come. Of that, there should be no doubt.
And it leads us back to our original point: those building eCommerce websites today should be factoring in crypto as a means of payment. The reasons to do so are extensive: Crypto offers greater security, makes international payments easier, can be more cost-effective, can reduce – and even eliminate – processing fees, can open your business to a new audience, and even lend it some weight and credibility.
Significant barriers remain to online merchants
So if all these benefits are so obvious, then why is it not the default for eCommerce websites? There are several reasons for this, some of which put barriers up to the benefits we mentioned above. For a start, it’s still not easy to accept crypto, despite what some web3 enthusiasts might claim. You might see a video on Twitter of a coffee shop accepting Bitcoin payments through the Lightning Network, but these are anomalies. There has to be an admission that there are technical barriers to using crypto, enough to put off the average startup wanting to flog some shoes on a website.
Indeed, until we see the kind of SaaS payment services offered by eCommerce website builders for traditional payment methods, then we will remain a long way off from the mass adoption of crypto in eCommerce. Moreover, there’s also an ambiguous relationship between some of the gatekeepers of the internet and crypto. For evidence, just look at the mess that Apple has left the NFT sector in with its new rules for the App Store. These are the kinds of stories that put up blocks for businesses interested in adopting crypto.
However, there is also the sense that we are waiting around for one of the big fish to take the plunge into the water. Amazon seems to get along fine without crypto, and many would-be entrepreneurs will look to the behemoth retail platform as an example. But if it were to happen, then the floodgates would likely open.
Perhaps it’s best to keep in mind one of the mantras of the web3 movement, “we are still early”. We see the ‘drip-drip’ in technology, with innovations like the one from Plaid making things a little easier with baby steps. Sooner or later, though, we will see the dam burst open. The eCommerce platforms that are prepared for that moment will be declared the lucky ones.