One macchiato, please — Wait, do you accept cryptocurrencies?

Published March 16, 2018, 12:00 AM

by manilabulletin_admin

trax 1

Today, digital wallets not only bring in the unbanked—those without bank accounts or credit cards—into the mobile payment ecosystem. They also accept cryptocurrencies.  After all, coinmarketcap lists over 1,500 cryptocurrencies, both coins and tokens, today.

The question though, is, how far away are we in Southeast Asia from being able to buy our priceless espresso drinks with our cryptocurrencies?

What Comes Between You and Your Macchiato Tall?

If you think we are still light years away from using cryptocurrencies, take in these facts: The Arizona state Senate has passed a bill that will allow taxes to be paid in cryptocurrencies. In Japan, crypto exchanges are required to be registered by the government. In Chile, the first bitcoin exchange launched in 2015 was funded by the government. In South Korea, locals can buy bitcoins in 7-Eleven stores. (Of course, the global sentiment is not always toward cryptocurrencies. On the other side of the spectrum are countries that had outlawed them for now. But I digress.)

Cryptocurrencies have the potential to be an alternative to existing forms of payment such as credit cards that are saddled with high fees and low approval rates. They can move from your digital wallet to another person without using intermediaries such as a bank or a credit agency.

In their current form, however, cryptocurrencies are not yet practical to use in common payments contexts. Price volatility aside, here’s why:

  • Large transaction fees still exist. Bitcoin, for instance, charges fees for its mining operations that verify transactions on its decentralized, shared ledger—or blockchain. These fees could be higher than what credit cards charge and fluctuate over time.
  • Only a few establishments support cryptocurrencies. Figuring out which establishments support cryptocurrencies as a medium of payment is in itself a barrier to its use. In 2013, Kashmir Hill, now a senior reporter in San Francisco for Gizmodo Media Group, went on a seven-day experiment to see if she can live for a week using bitcoin. She learned how hard it was to convince many business owners to accept bitcoin as payment.
  • Low speed. The speed per transactions in Bitcoin or Ethereum’s networks is significantly slower than that of current payment providers Visa or Paypal. For Bitcoin, it could take up to an hour of waiting before a transaction is verified by enough computers and entered into a block.  This is because of the artificial limit of 1MB of data allowed per block that core developers placed into the code.
  • Irreversible transactions. Bitcoin’s immutability is an added security of its system. However, as a medium of exchange, its lack of an “undo button” can be a headache to a consumer. In contrast, credit cards, bank account transactions have options to be reversed where needed.

Blockchain Technology: Beyond Bitcoin

Blockchains such as that of Bitcoin and Ethereum do not rely on one central server to process transactions or store funds. These are also the permission-less types. The cryptocurrencies work on the idea that every node—or the connection point in the blockchain’s distributed relay network—has a record of every transaction and validates everything themselves to make sure there is no double spending.

Obviously, Bitcoin and cryptocurrencies are not the end-all and be-all of blockchain. In fact, we are slowing hearing about this technology’s other applications.

Among the early blockchain developers is the Hyperledger Project, a community of developers from companies led by IBM and hosted by Linux Foundation that collaborate to create a toolkit of open-source, blockchain, and smart contract-related technologies. is one example of a platform using the project’s Hyperledger Fabric, a blockchain framework that provides a foundation for developing applications with a modular architecture so that components such as consensus and membership management are plug and play.  The Hyperledger Fabric is an enterprise-level permissioned blockchain, where all participants have known identities, and designed to be scalable and secure.

“We at are also aware that for a cryptocurrency to be effective as a payment option, it must integrate well with consumers and businesses’ existing financial arrangements. It should be able to offer buyer and merchant protection mechanisms,” CEO Ann Cuisia-Lindayag said. “It should be reliable, easy, and cheap.”