Ai Editorial: How a cryptocurrency like bitcoin is faring as a payment method?
First Published on 8th August, 2018
Ai Editorial: Even as travel ecommerce players closely evaluate what to expect as far as bitcoin is concerned, they also need to consider the possibility of fraud, writes Ai’s Ritesh Gupta
The future of bitcoin is under scrutiny. Questions are being raised – is bitcoin investment safe? Has pricing been manipulated? Some believe that the cryptocurrency would bounce back, though the pricing has taken a beating this year.
As for the travel industry, the recent news pertaining to Expedia Group opting to remove bitcoin as one of its payment options is an important development. A certain section of the industry has shown penchant for accepting cryptocurrency payments over the years. But now it seems that travel merchants, including airlines, are not extensively going to opt for cryptocurrency until this payment method establishes its staying power and stability. Volatility associated with a cryptocurrency like bitcoin and counting the same as a payment method isn’t exactly a prudent combination.
Even as investors may enjoy the instability to an extent (it is also being pointed out that since it is dissimilar to stocks or bonds, it is tougher in comparison to unearth price manipulation and fraud in case of a cryptocurrency), for a currency to be a pragmatic option for both shoppers and merchants it has to attain stability. In fact, negative publicity around cryptocurrencies such as bitcoin isn’t helping the cause. A couple of months ago, the Justice Department in the U. S. was in news for probing whether traders were deploying unlawful tactics to dupe others into buying or selling cryptocurrencies. According to a report by Bloomberg, the department attempted to look into illegitimate initiatives such as spoofing and wash trading. Also, the fact that bitcoin is labelled as a relatively risk currency also doesn’t help, for instance, in case the private key is lost or stolen it ends up being an issue.
The issue of trust
Even as travel ecommerce players closely evaluate what to expect as far as bitcoin is concerned, they also need to consider the possibility of fraud.
According to a report by Bitcoin.com News, cryptocurrency fraud stood at $9 million per day in the initial months of this year.
Since cryptocurrencies rely on a public ledger called a blockchain, the issue of trust has surfaced. What if it results in distrust? Sift Science has emphasized that in case of cryptocurrencies like bitcoin, “trust quite literally is currency”.
On the positive side, it is being highlighted that crypto payments are attractive for high-risk ecommerce entities engaged in selling big ticket items. Largely, the industry terms these transactions as secure ones. Aspects like cryptocurrency transactions carrying no personal information, and lower or no fee, too, makes them luring.
The way it works – when a user intends to transfer bitcoins to an individual or an entity, all computers running bitcoin software manage and administer the sender’s public signature through an algorithm and validate the previous transactions encoded in the blockchain to ensure the sender owns the bitcoins they say they do. This technology is regarded as a safe one. Overall, the trust has dwindled owing to a spate of deceitful initial coin offerings (ICOs), claims about mining services, and dubious practices on trading platforms. In a study of around 1500 cryptocurrency offerings, the Wall Street Journal found around one-third with red flags that include plagiarized investor documents, promises of guaranteed returns, and missing or fake executive teams. All the stakeholders need to be cautious. As highlighted by Kount, depending solely upon the regulatory bodies won’t be able to combat the increasing cryptocurrency fraud. Potential investors and businesses, too, need to educate themselves.
Merchants, including airlines, need to evaluate how bitcoin payments protect merchants against fraud and chargebacks. This is because chargebacks don’t work in a system built around blockchain. Also, there is a need to assess how does a cryptocurrency like bitcoin protect and compensate defrauded customers. Sift Science recommends that merchants should assess where their cryptocurrency was being stored and one should set up defenses accordingly. Also, companies taking bitcoin payment must be transparent and communicative with users when they decide to introduce crypto as a payment method.
Hear from experts at the upcoming 7th Annual ATPS Asia-Pacific, to be held in Phuket (4th – 6th Sep 2018). https://lnkd.in/fgEMiF6