Loans, shopping, and rewards – Top 3 things crypto is not good enough for

Cryptocurrencies may be a marvel of modern fintech, but there are still things that they’re simply not good enough for.

They may be one of the best investment options today when comparing them to Forex and stocks but considering them in other industries we immediately see the shortcomings of this technology or a digital asset as many governments like to refer to it.

In this article, I’d like to showcase three industries or activities where cryptocurrencies are not necessarily the best choice to go for. Naturally, all of them have exceptions where they do indeed feature cryptos, but that doesn’t mean they’re successful.

So, without further ado, let’s see the three sectors where cryptos should not be the first option.

Loans and P2P platforms

Financial Technology has been developing extremely rapidly, but it seems to be mostly focusing on things such as loans and payments. In many countries, the sector has developed into something completely automated for lenders and borrowers through the usage of the blockchain.

Of course, this is an amazing way when applying for loans on a P2P network as the process is much faster than a bank. However, there are quite a lot of overheads that all parties involved need to consider when conducting such agreements.

For example, the biggest issue that one could possibly face when using cryptocurrencies for loans is the exchange rate of course. Cryptos are one of the, if not the most volatile asset in the world and lending them out for more than a year could force the borrower to pay twice as much, or the lender to receive two times less than they were supposed to.

Therefore, there are always overheads such as hedging and agreeing on the most prominent rates, how much the lender wants to make out of this investment and how much the borrower is able to pay. In the end, the processing of the loan could be very fast, but its conclusion is usually extremely slow. Therefore, we get an even amount of time or even more for the process of just getting a loan through fiat currencies.

This is not the only case with P2P lending as well, according to Greendayonline, payday loans are also starting to suffer from the popularity of cryptos as more and more people are starting to use them and get confused in the returns they see at the end.

“We’ve lost count on how many complaints we had to address with some clients in the past. We mostly do consult, and should we had advised going for a crypto loan, they’d most definitely come back to us within a month and ask us why they have to pay double.

In most cases, the person would outright refuse to hedge simply because they were hoping the exchange rate would fall and they’d be allowed to pay less. 99% of the time that was not the case and they were forced to pay more.

No company would agree to such a risk unless they do some research first, and all of them did indeed to it.”

Shopping

Another segment that cryptocurrencies have simply failed to tap into completely is the retail industry. There are very few websites that allow crypto shopping and manage to remain profitable. If they do manage to remain profitable, then that profit is mostly coming from their fiat options.

It’s simply too risky to allow crypto transactions this day and age, especially when you are a registered company that needs to file taxes, pay salaries and keep everything well under control. A volatile asset like cryptocurrencies is simply not good enough for stability. It may be pretty good for growth, but it’s a nightmare for stable growth.

There could even be a case for a store where they lose so much from crypto transactions that they can’t even stock up anymore to continue selling.

The decent success that the blockchain has had in the retail industry is its application for tracking purposes.

For example, a large retail store would install these tracking bars on its products so that consumers would be able to track it starting from the raw materials all the way to the shelf of the store.

That much had some good positive traction from the general populace, but it needs to be said that it had nothing to do with Fintech as a whole.

Rewards

Rewards were also a big hype in the crypto industry, more specifically for people who enjoyed playing video games.

The idea behind this project was that people would be able to financially benefit from their otherwise non-productive habits.

Unfortunately, though, the companies that developed these games didn’t necessarily want to associate themselves with money-making platforms, simply because they would have to go through quite a lot of regulatory scrutiny for it, while not necessarily getting any benefits in return.

The idea of making money through video games died out early on as well. Not because the companies nixed it, but because people don’t want to play a game they don’t want to, even if it can pay them money especially through cryptocurrencies.

Another project was to unite the digital assets that video games would give to their players. For example, a player of a game A would be able to buy something in game B through the cryptos he or she generated in game A. But, of course, this was not that easy to implement as the video game industry is very competitive.