Bitcoin (BTC) and mass adoption of cryptocurrencies in the real economy: what are the options?

Mon 29 Nov 2021 ▪ 20h00 ▪ 9 min read — by Guillaume Moret Bailly

Bitcoin is a generational phenomenon and an economic and ideological revolution. Crypto-currencies have gained  traction in the financial markets lately. The impending  launch of Bitcoin ETFs, the adoption of Bitcoin as legal tender by El Salvador and multiple other factors have led to a recent all time high for the King of Crypto – Bitcoin. This excitement is  propelling the entire crypto market north, which is now worth more than 2.5  trillion dollars. For crypto enthusiasts it is only a matter of time before the adoption of crypto for payments becomes widespread. But for the  novice, the sector is still very opaque. For many “newbies”, the thought of going out to buy your bread using  crypto still appears as something very distant. The understanding of this complex but crucial issue comes down to asking how and when cryptos will pass from the world of their currently limited narrow application to the wider real economy. 

Cryptocurrencies; a financial phenomenon but not yet democratised in the real economy? 

From a user experience point of view, we have come a long way, and there is no denying that trading Bitcoin or any other cryptocurrency is a bit easier today than it was a decade ago. Nevertheless, there is still a long way to go before your grandparents start shopping in Bitcoin. Registering on an exchange, going through KYC, downloading a wallet to secure your cryptos. All these elements and more are all substantial obstacles to overcome for a digital asset that is already complex to understand and at times, volatile. 

Solutions to the problem of volatility have emerged with stablecoins, which are backed by the value of a local fiat currency or an asset such as gold. But stablecoins are not without their flaws, and there are many questions about Tether in particular, whose fiat resources have often been questioned. On the other hand, stablecoins appear to be more of a tool for traders to secure their profits rather than a real tool to enable the adoption of cryptocurrencies in everyday payments. 

Certainly there are some incredible announcements, the obvious example of El Salvador deploying Bitcoin on a national scale, is a first step towards mass adoption. However, there is still a lot of friction as explained above. This makes crypto-currencies an object of speculation instead of an object of real payment. A rather striking example is the commemoration of Pizza Bitcoin day which remembers the first payment made in Bitcoin. On May 22, 2010, Laszlo Hanyecz bought two pizzas for 10,000 Bitcoins. Today those Bitcoins are worth over half a billion dollars! 

The Vow currency project, frictionless adoption of crypto through merchant networks

It is with these underlying challenges in mind that the Vow project has taken the opposite approach by launching a large-scale project on an international scale. As we explained in a previous comprehensive article on the project. Vow aims to be a new and better form of currency than we know today by proposing a decentralised issuing infrastructure implanted organically in the real economy. 

Vow is a project based on two types of tokens. Firstly, Vow, which is a free floating ERC777 token. Vow enables the issuance of tokens called Vcurrencies which are linked to the value of the local fiat currency, thereby creating their equivalent in the Vow ecosystem called veuros, vpound, vdollars and so on. 

An important feature in the adoption proposed by Vow is that it happens in a frictionless manner. What we mean by this is that the issuance of vcurrencies is carried out directly by merchants who agree to receive back these same vcurrencies at par with the local fiat currency, as a discount on  their goods and services. For example, merchants have the possibility of offering “Vow cashback” rewards denominated in vcurrencies as opposed to fiat rewards. For example, 20% back on a 100 euro item allows the merchant to give back 20 vcurrencies that the customer can spend at his store when he returns, or at all other merchants who accept Vow currencies. The huge advantage for merchants who integrate the vcurrencies distribution network is that they receive the full amount of the sale amount – in this example 100 euros – at the time of the customer’s purchase as opposed to just 80 euros in a traditional discount  based rewards system or a fiat cashback system. The only condition is that they must honor their ‘vow” to the community and become a vcurrency acceptor, for at minimum the amount they have issued

From the perspective of the consumers who collect free Vow currencies by making purchases with their bank cards at participating merchants, there is no palpable difference between a euro or a dollar and a v-euro or a v-dollar. The Vow currencies have the same value as the local currency in all participating stores. In addition, if the consumer wants to sell their Vow currencies for fiat, they can do so to other ecosystem participants at the prevailing secondary market rate. Consumers who need fiat may wish to offer their Vow currencies at a discount to others. Any buyer who acquires v$1 dollar for example  $0.95 knows that they can redeem it for its face value of a $1 discount anywhere in the ecosystem. Therefore there is a continuous incentive to buy Vow currencies and a disincentive to sell them. Anyone with BTC or ETH or any other cryptocurrency now has a chance to spend 105% of their crypto’s value by conversion to v$ prior to purchase.

Vow works as a new type of reward ecosystem  for networks of merchants, loyalty networks, large banks or any large companies that wish to develop a more efficient rewards system. All of these companies or institutions have the opportunity to become vcurrency issuers, thus allowing the development of a completely decentralised money supply  that works on the concept of tokenization of rewards. 

One of the most important aspects of each unit of vcurrency, is it is explicitly not a unit of value. In fact it is a unit of negative value (or discount.) No single party anywhere guarantees its value, and no party guarantees to “cash in”. A unit of vcurrency in this respect it is not emoney or a stable coin.

Finally, to return to the Vow token. It is at the heart of the system in the sense that merchants wishing to issue Vow currencies and thus tokenize rewards must first stake a certain amount of Vow. The system is designed so that the more decentralisation and adoption of Vow there is, the more demand there is for the Vow token itself, and with a floating price, this should  translate to an increase in the price of this token. 

Vow presents itself as the most promising project to enable mass adoption of cryptocurrencies in the real economy

As you can see, Vow has chosen this approach in order to offer a very important initial use case to make mass adoption of Vow currencies possible. Since consumers and merchants will experience no change from the use of traditional currency, they benefit without any friction from the advantages of the decentralised system made possible by Vow and Vow currencies. Vow has already established strategic partnerships in more than 11 countries and is the project that could very well allow the mass distribution and use of cryptocurrencies in a very simple way.  By starting with a use case such as merchant funded rewards it leverages  actors in the real economy; merchants, banks, large consumer groups, media houses, insurance companies, to reach and onboard millions of users – very quickly. 

Later on, the team behind the Vow project has lined up other use cases with the power to change current monetary and economic paradigms by giving power back to decentralised actors at the heart of the real economy. 

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Guillaume Moret Bailly

Passionate about blockchain technologies and cryptocurrency for few years now, I am abolsutely sure that mass adoption will come. Always up-to-date with the latest trends on the cryptocurrency markets and it is my pleasure to share those secrets with you.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.

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