There’s a lot of chatter regarding the use cases of cryptocurrencies and how adoption would increase naturally if institutions globally accept crypto as a payment option. The question that lies is that do cryptocurrencies qualify as means of payments as of yet? The answer is pegged to the issue of volatility in the market. Currencies like Bitcoin, Ethereum etc. constantly deviate from their valuations in USD. Micro payments and use for commerce involve refunds, the claim for refunds might exist in a timeline where the price of the said crypto rises or falls drastically. Resultantly, a dilemma is created whether the customer is to be paid in the said cryptocurrency or in USD, in accordance to the initial price. According to Crystal Stranger, an EA (Enrolled agents are America’s tax experts)
Bitcoin and other cryptocurrencies can be problematic in payment transactions when customers request refunds, as should the refund be paid in cryptocurrency or in the equivalent fiat? When prices have fluctuated significantly this can cause a good bit of contention between customers and merchants.
Boss Cole, the CEO of Boss Crypto also believed that BTC might not qualify as a means of micropayments as of yet. He stated, talking to BlockPublisher,
Bitcoin shines in large, cross border payments as opposed to micropayments.
This problem might actually be addressed by stablecoins as they have a 1:1 peg with a particular fiat. But the issue with stablecoins is that the valuation might not actually serve to be stable, as the coin is entirely dependent on the valuation of the fiat it is pegged to. Further explaining, Crystal stated,
With a fiat-pegged stablecoin this (refund) is not an issue. Additionally, stablecoins serve a purpose for moving in and out of fiat without traditional financial accounts, giving convenience. However, stablecoins require the underlying issuer to control the fiat underlying the value, which goes against all the values of decentralization that underly cryptocurrencies such as Bitcoin. So it’s a mixed bag.