Cryptocurrency in B2B Payments?

As reported in a recent issue of MIT Technology Review, some cryptocurrencies lost nearly all of their sky-high value over the last 18 months. Does that foretell the end for crypto? Or does it still have something of value to contribute to B2B payment processing? Reviewing recent applications and developments in the crypto universe may help to answer those questions.

The IMF Promotes Crypto

The most profound news may be from the IMF. A scholarly paper published by the International Monetary Fund (IMF) in November of 2018 suggested that central banks may want to issue digital currency. The argument made was that the role of cash is becoming obsolete in the digital age of electronic payment processing. The paper examined the potential for “a widely accessible digital form of fiat money that could be legal tender.” The same month that paper was published, IMF Managing Director Christine Lagarde gave a speech titled “Winds of Change: The Case for New Digital Currency.” She extolled the virtues of digital currency, explaining that it may provide greater privacy, security, and enhanced consumer protection.

Oily Crypto?

Crypto pioneers envisioned digital coinage that would eliminate intermediaries, most notably governments and their strictly regulated fiat currencies. So the idea of a government cryptocurrency sounds like an oxymoron. But Venezuela rolled-out the “petro,” declaring it a national currency backed by petroleum assets. Venezuela claims to have five billion barrels of oil on reserve to ensure that support. Suspiciously, the country has no infrastructure to extract that oil, even if it does exist. MIT Technology Review wrote that the petro cryptocurrency is apparently “either a scam or a flop.” Maybe it was both a failure and a con.


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Worldwide Developments

More than a dozen other nations, however, are seriously considering the issuance of digital currency, and many experts think they are on to something real. Two of the best examples are China and Sweden. The People’s Bank of China launched the Digital Currency Research Institute to develop a form of sovereign electronic currency. China sees value in controlling a digital currency that can be more easily tracked and traced. It also views crypto as a less expensive and more efficient alternative to cash, for executing transactions.

Meanwhile, the government of Sweden is watching cash fall out of favor at an unanticipated rate, as Swedes switch to mobile payment apps. Sweden’s central bank is researching crypto as a tool for addressing the trend. Decision makers there believe that without a stable, government-issued digital currency the payment markets may be vulnerable to disruption. People will use privately-developed digital currencies instead of cash. If the government sits idly by and allows that to happen, it may erode the strength and trustworthiness of the Swedish monetary system.

Leading banks in India are also reportedly running pilot programs to evaluate the practicality of cryptocurrency as a form of electronic monetary exchange. But so far the experiments are geared only toward transactions between large corporations and financial institutions