If 2021 taught us anything about digital currencies, it’s that major banks and major payment providers are now more comfortable with Bitcoin (BTC). While the CEO of PayPal and other major companies are voicing excitement over crypto payments and salaries paid in Bitcoin, executives from Visa, JPMorgan and ING all agree that Bitcoin is still an investment vehicle rather than a currency.
This idea was revealed during a panel discussion entitled “Buying with Bitcoin”, which took place during Forbes’ online event “2021 Blockchain 50 Symposium: Crypto Goes Corporate”. Michael del Castillo, associate editor at Forbes, led the discussion and was joined by Umar Farooq, CEO of JPMorgan’s blockchain unit Onyx; 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 Bitcoin Payments Progressed Since 2014?
When asked whether anything 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 major change Bitcoin payments have seen since 2014:
“Square and PayPal, for example, provide easier ways to use Bitcoin. Although I think Bitcoin payments will remain more of a marketing game for many large companies.”
While Farooq said consumers can certainly pay for items with Bitcoin, the volatility poses a major challenge. He went on to point out that tax implications create even more complications when it comes to crypto payments.
Sheffield noted that Visa is seeing growing demand from customers seeking access to Bitcoin, but many still view the digital currency as more of a ‘savings account’. As such, Sheffield explained that Visa is currently focused on “ stacking sats, ” or allowing customers to buy small units of Bitcoin overtime. “Companies like Fold allow customers to issue fiat and then recoup Bitcoin. This was our main motivation,” he noted.
Following on from Farooq and Sheffield, Gomez de la Villa noted that Bitcoin remains an investment, mainly due to challenges such as persistently high transaction fees. “I don’t think Bitcoin will be widely used as a means of payment at this point,” she said.
JPM Coin is not a cryptocurrency
Given the sentiment of all three panelists regarding Bitcoin payments, it should come as no surprise that Farooq said that JPM Coin – JPMorgan’s digital currency offering announced in 2019 – is not a cryptocurrency.
Instead, Farooq explained that JPM Coin was created specifically to meet the needs of JPMorgan Fortune 500 and Fortune 1000 corporate clients. “Our clients want access to programmable money, contingent payments and future capabilities. But they don’t care much about being on a fully decentralized, public network with autonomy, ”he said.
Farooq noted that JPM Coin offers businesses the future payment options, but works more like a digitized M1, or the money supply typically issued by banks. He said:
“We believe that companies can come and communicate on the platform to perform decentralized transactions in the broader ecosystem, giving them access to programmable money. JPM Coin is not a pure cryptocurrency because, in my opinion, a pure cryptocurrency is something of independent value on a public blockchain, such as Bitcoin or Ether. “
In addition to JPM Coin, Farooq discussed the reasons behind the recent $ 65 million round of investment in ConsenSys, which was led by major financial institutions, including JPMorgan. According to software company ConsenSys, the new funding will help expand its enterprise blockchain infrastructure solutions to enable more decentralized finance and Web 3.0 applications on Ethereum. Given this announcement, Del Castillo asked Farooq whether JPM Coin is a competitor to Ether (ETH).
According to Farooq, JPM Coin does not compete with Ether, noting that JPM Coin is specifically targeting JPMorgan’s clients and not retail investors. Farooq also said that while JPMorgan built the Quorum platform on Ethereum, which has now become ConsenSys Quorum, the idea was to merge those two platforms to allow JPMorgan’s blockchain solution to build on the network that ConsenSys runs on. “We have a great relationship with ConsenSys and will continue to work with them on the core technology,” said Farooq.
Stablecoins will enable new payment methods
When asked about the future of stablecoins, all three panelists agreed that stablecoins can be a useful tool for cross-border transactions, along with a solution that allows fintechs and startups to build financial products.
Stablecoins have been of particular interest to Visa as the major credit card provider recently announced a pilot program that will allow its partners to use the Ethereum blockchain to settle fiat transactions. According to an announcement from Visa, the company will partner with crypto exchange and card issuer Crypto.com to provide a crypto settlement platform for fiat transactions later this year. This allows Visa partners to exchange the stablecoin USD Coin (USDC) through Visa’s payment network to clear fiat transactions.
Sheffield noted that Visa has been closely monitoring the stablecoin ecosystem over the years, with a special focus on USD Coin:
“We are impressed and excited to see USD Coin and an ecosystem of developers emerging around it. There is also an increasing number of fintech and crypto companies actually building their businesses on top of USDC. “
Sheffield said USD Coin is becoming a “crypto-native dollar-based treasury infrastructure,” noting that work is underway to ensure Visa acts as the bridge between USD Coin payments and innovative crypto firms.
Regarding cross-border transactions, Sheffield pointed out that stablecoins will enable new digital wallet products, followed by more efficient cross-border business-to-business payments used by non-crypto companies. Echoing Sheffield, Farooq noted that stablecoins will help on the cross-border front, but pointed out that there must be regulation first:
“In the short term, stablecoins will behave like money in your Apple Wallet – they will be used within closed ecosystems to create and generate value. But the long run depends on whether regulators are comfortable with cross-border payments on a large scale. “