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When Will You Start Buying Dinner with Crypto? By TipRanks

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© Reuters. What is the best time to start buying dinner with crypto?

More than a decade ago, Satoshi Nakamoto wrote in a famous whitepaper that (BTC-USD) was a “peer-to-peer electronic cash system” that would allow “any two willing parties to transact directly with each other without the need for a trusted third party.” 

Up until now, Bitcoin hasn’t been able to deliver on that promise. While you may have some cryptocurrency, how often did you use them to purchase something?

Crypto as a ‘Funding Source’

When will crypto become a common payment option just like fiat? Some of the world’s leading payment and credit card companies are trying to make it easier to spend crypto, but they are barely scratching the surface. 

Visa (NYSE:), has created crypto-linked cards through partnerships with Circle, BlockFi and Coinbase. The company processed $1 billion of cryptocurrency-linked transactions during the first half (2021). Mastercard (NYSE 🙂 also plans to launch a cryptocurrency-linked credit card. 

PayPal (NASDAQ:) has launched a “Checkout with Crypto” feature to support crypto as a payment option. It converts Bitcoin, (ETH-USD), and to U.S. dollars to complete a transaction. There are also projects such as Bitpay and Coinsfer that allow users to pay in cryptocurrency for their goods. 

If you take a closer look at them, you’ll notice a common thread. They all convert Bitcoin to USD, or other currencies in order to process the transaction. It means the crypto is merely a “funding source” rather than a medium of exchanging value. It is also time-consuming and expensive to transfer crypto to different accounts or convert it into fiat.

Bistroo, a niche-based blockchain solution, is solving these problems and making it possible to make seamless payments in crypto within one sector. Bistroo (Dutch direct-to consumer platform) is for food, beverages, and meals. It allows restaurants to connect directly with their customers.

Bistroo offers a native BIST token. Bistroo allows restaurants to accept BIST order payments. Consumers have the option to use BIST tokens to pay specialty food shops and restaurants within its network. The payment process doesn’t involve converting BIST to fiat to carry out the transaction, though merchants can do so afterwards. BIST transactions are free from third parties because there is no intermediary. 

Obstacles

There are a number of factors that could hold crypto back from going mainstream. It is difficult to exchange crypto assets as they are volatile.

A $100 bill could allow you to purchase an Apple (NASDAQ.) (APPL), Magic Mouse, and then an iPad (APPL). Crypto is not widely accepted as a payment option due to price fluctuations.

Additionally, there are scaling problems that plague Bitcoin as well as many altcoins. These slow down transaction times and increase gas fees. Without the ability to scale, a blockchain network can’t become a popular payment method. It can take 10 minutes for a Bitcoin transaction to be verified. Although Ethereum works slightly quicker than Bitcoin, it is still subject to network congestion and high gas prices. 

Visa has the ability to handle more than 24,000 transactions per minute (TPS) even though it needs only 1,700 TPS in order to be functional. The Bitcoin network can process only 4 to 5 TPS, while Ethereum is capable of handling 15 to 30 TPS. Ethereum 2.0 is expected to process 100,000 transactions per second. The current speed of Ethereum 2.0 is a staggering 100,000 TPS. This will allow for smooth transactions.

Solutions

Thankfully, Layer-2 scaling solutions have emerged to overcome the scalability issues. Lightning Network, an L2 solution to Bitcoin. To facilitate fast and cheap payments it removes some transactions from Bitcoin’s blockchain base layer. It also opens up the possibility of large-scale bitcoin micropayments.

Lightning Network preserves Bitcoin protocol’s security and peer to-peer nature. To enable two interested parties to perform instantaneous and low-cost transactions, it uses payment channels.

The Lightning Network has allowed people from Central America to use Bitcoin to pay their bus fare and coffee bills since El Salvador adopted Bitcoin as a legal payment method. Lightning Network payments are fast and easy. They can also be used to pay at point-of sale terminals for transactions that do not require a fiat currency. 

El Salvador is proof that if the regulatory roadblocks are removed, “buying dinner with crypto” can and will become a reality.

Reuben Jackson was not holding any position in the securities discussed in this article at the time it was published.

Disclaimer: Information in this article does not necessarily reflect those of TipRanks. TipRanks does not warrant the accuracy, reliability or completeness of this information. The article does not constitute a solicitation or recommendation to buy or sell securities. This article is not intended to provide advice on legal, investment or financial matters. TipRanks, its affiliates, disclaim any liability or responsibility in relation to the content. You are responsible for your actions based upon the articles. TipRanks and its affiliates do not endorse or recommend this link. Performance in the past is no guarantee of future performance, price or results.

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