Here's Why This Crypto Expert Thinks Digital Currency Is Her

By Tim Crino, Senior editor, Inc. @TimCrino

Michelle Ann Gitlitz is an adviser and lawyer, specializing in the payments industry. Her new book, Reimagining Payments: The Business Case for Digital Currencies, was published earlier this year. Here, Gitlitz writes about how digital payments are transforming businesses: 

I am going to ask you to take a moment to stop and think about how you have made purchases over the past month or even year. Did you open your wallet and take out a bill? Did you write a check? Probably not. Roughly three in five Americans have not written a check in the past month. Cash is also dying: Norway, Sweden, and Finland are just a few of the countries moving towards cashless societies. And former president Donald Trump wants to build a Bitcoin stockpile. 

Beyond governments, more businesses are taking notice of and responding to changes in customer behaviors. Four years ago, Starbucks began reducing its reliance on cash. It was hardly alone. In 2022, Chipotle gave away $200,000 in free burritos and Bitcoin on National Burrito Day. (Yeah, that's a thing.) 

A year later, the fast casual chain unveiled Burrito Bucks, its own "inexperience currency" in collaboration with the über-popular online game platform Roblox. Burrito Bucks accompanied the launch of Chipotle's Burrito Builder game, also on Roblox. Players could exchange the currency for 100,000 free entrée codes at participating Chipotle restaurants. Thousands of customers rolled their own virtual burritos and won free in-store -- you guessed it -- burritos.

Chipotle's management clearly envisions a future in which consumers order meals and pay with cryptocurrencies. The obvious question is why?

I explore the answer in my book, Reimagining Payments: The Business Case for Digital Currencies.

Staying Power 

This year's resurgence of Bitcoin and the SEC's approval to list and trade a number of spot bitcoin exchange-traded products only underscores that digital currency payments are rapidly maturing and entering the mainstream. Despite ups and downs, which Inc. has chronicled closely, expect crypto to proliferate in the years ahead, especially among younger, tech-savvy consumers and those seeking to transact internationally with less friction and less cost. 

Readers should ignore this trend at their own peril. Recall that in the 1990s, there were many dot-com naysayers. The growth of the internet created a buzz among investors who were quick to finance these companies, notwithstanding that some lacked a business plan, product, or track record of profits. 

Many dot-coms failed -- and rightly so. But despite the dot-com crash, viable use cases -- including online communications, shopping, and digital entertainment -- survived and thrive to this day because of amazing new technology and fundamental shifts in consumer behavior. 

Security and Privacy 

For decades, electronic payment methods have required users to share a host of personal, identifiable information that hackers covet. At a minimum, your bank and credit card company know your Social Security number, full name, physical address, email address, and phone number. The 2017 Equifax breach may have been the highest profile hack, but it certainly wasn't the first -- and it sure won't be the last.

Let's say, however, that these financial stewards could completely safeguard all of this vital information. Let's talk about privacy. Does a credit card issuer, merchant, or service provider really need all of that information to process a payment for, say cotton balls or a sweater? 

While paying with cryptocurrencies isn't completely anonymous, crypto-based payment methods offer far greater security and privacy protections and controls than their antecedents. It's not even close. 

Speed and Efficiency

At a high level, payments made using our current banking and financial systems often suffer from high costs, lack of speed, and fragmentation. If that seems a bit abstract, then let me make it real.

Say that you're an independent contractor -- maybe a graphic designer. You invoice your client, and they pay you via bank transfer. But lamentably, wire-transfer fees can run you as much as $50. Even worse, it may take days for you to receive your funds. Rather than pay that fee, you opt for a check, but that's still going to take days -- at best -- to arrive in the mail

Massive advancements in payment technology, however, eliminate these fees and inefficiencies. In short, they knock down existing barriers. What's more, these new tools pave the way to faster, more affordable, efficient, and secure ways to make payments. 

Choice

Payments have never been static. Smartphones, near-field communication, and other exciting technologies ushered in an era of digital wallets and payment apps.

Digital currencies represent the next step in the evolution of payments. For example, they help users transact in the metaverse and those using Web3 decentralized gaming. Both offer an emerging payment frontier where opportunity abounds and cash isn't accepted. Think this reality is far away? Think again.

In its February 2023 Global Consumer Insights Pulse Survey, the consulting firm PwC found that 26 percent of participants claim to have participated in metaverse-related activities in the past six months. Reasons include entertainment, virtual experiences, or purchasing products. Nearly one in 10 said they've purchased an NFT.

One thing is certain: No one takes cash in the metaverse. There are opportunities to increase customer bases in the metaverse, and cracking the payments nut there will reap rewards.

In a related vein, billions of people cannot partake in traditional financial services offered by banks and credit unions. They lack choice -- and have for decades. Specifically, their options for cashing checks, remitting funds internationally, and obtaining credit are decidedly limited. Even worse, these folks often can only obtain them through deceptive and predatory financial institutions. Watch this episode of Last Week Tonight if you don't believe me.

Digital currency payments, however, improve financial inclusion. They can expand access, ownership, and usage of a broad range of financial services. And they're here to stay.

Photo Credit: Getty Images.