The world is changing, and with it the way we pay for things. Cryptocurrency is the next big thing, and this guide will show you why it has the potential to become mainstream in the near future using crypto subscription payments.
Bitcoin and other digital currencies have been around for a while now, but they’ve only recently started to gain mainstream acceptance. This is largely due to the fact that they offer a more secure and decentralized payment system than traditional methods like credit cards.
With the rapid growth of both crypto payment and the subscription economy, the world should brace itself for the next stage of development: crypto subscription payments.
The State of Crypto Subscription Payments
While crypto subscription payments are not yet widely available, several projects and platforms are working on making them a reality. The most notable of these is probably the crypto payment processor BitPay, which has partnered with major companies like Microsoft, NewEgg, and Shopify to enable crypto payments on their platforms.
Other companies such as PayPal and Square have begun to allow crypto payments through their platforms. In a recent announcement, VISA has connected its platform with the USDC (US Dollar Coin). This move will enable 60 million merchants to start using and accepting cryptocurrency payments for business transactions.
As more and more businesses begin to accept crypto payments, we can expect the number of people using digital currency to continue to grow. This is good news for those who want to use crypto to pay for their subscriptions, as it will make it easier to find businesses that accept this type of payment.
History of Subscription Payments
Most people would believe that subscription payments were conceived in the digital age. However, this couldn’t be further from the truth. In fact, the use of subscription payments dates as far back as the 17th century.
At the start of the 1600s, books, newspapers, and periodicals monetized their audience through consistent recurring payments. In the early days of American democracy, citizens would pay to subscribe to their local town crier to stay informed about community news and events.
Charles Dickens was an English writer and one of the most notable people of the past to use subscription payments. Dickens earned a living by monetizing his books through recurring payments.
The model benefitted him greatly because he earned a fortune through his writings. He also didn’t have to wait until he finished writing an entire book to receive full payment for his work.
Subscription Payments Today
Fast forward today, and we are currently witnessing a subscription revolution. The subscription economy has grown by more than 100% in the past five years, and it’s showing no signs of slowing down.
Thanks to inventions like the credit card and the internet, subscription billing has become much easier to set up and manage. This newfound ease of use has given rise to a new breed of subscription businesses known as the subscription economy.
The subscription economy is a new business model in which companies provide their customers with access to goods and services on a recurring basis, usually for a monthly or yearly fee.
The most notable examples of this business model are Netflix, Spotify, and Amazon Prime. These companies have disrupted their respective industries by offering a more convenient and affordable way to consume their products.
Today, there’s a subscription to anything you can imagine: monthly meal plans, manscaping products, razors, eye glasses, gym memberships, etc. In addition, companies such as Zoura and Stripe have made subscription payment easier for both merchants and consumers, opening up the world to fast and convenient recurring payments.
The Beginning of Cryptocurrency
In October 2008, Satoshi Nakamoto published a paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System.” This paper will go on to lay the foundation for the first decentralized digital currency: Bitcoin.
Bitcoin is a form of Cryptocurrency that uses cryptography to secure its transactions and control the creation of new currency units. Cryptocurrencies are digital or virtual tokens that can be used to exchange goods, services, or other assets.
Bitcoin was the first Cryptocurrency to be created, and it is also the largest and most well-known. However, since its inception, Bitcoin has spawned several other digital currencies (Etherium, for instance), collectively known as altcoins.
Advantages of Crypto Subscription Payments
Cryptocurrency is becoming an increasingly popular way to pay for goods and services. There are a number of advantages that make crypto an attractive payment option for subscription businesses.
Community-first
Decentralization is one of the central properties of Cryptocurrency. Since a large number of stakeholders are incentivized to make the network successful, projects are often community-driven. Many Cryptocurrency communities feature a growing fanbase which contributes to a rare level of engagement that’s not seen in other types of communities. Crypto’s community-first mantra is a perfect match for the subscription model, which relies on building a close relationship with customers.
Lower Fees
Another advantage of using Cryptocurrency for subscription payments is that fees are often lower than traditional payment methods. For example, when you use a credit card to pay for your Netflix subscription, the company has to pay a processing fee of about three percent. However, when you pay with Bitcoin, the fee is often less than one percent. This can make a big difference for businesses with many small transactions, such as subscription businesses.
Instant Settlement
Credit card payments are notorious for taking days to settle in a merchant’s bank account. Cryptocurrency payments, on the other hand, are often settled instantly. This is because cryptocurrencies are decentralized and don’t have to go through the same intermediaries as traditional fiat currencies.
Fraud-Free
Anyone with access to credit card information can process transactions, regardless of whether or not they are the authorized cardholder. This makes it easy for criminals to commit fraud. However, with Cryptocurrency, each transaction is secured with a digital signature that can’t be forged. This makes it much more difficult for fraudsters to take advantage of businesses.
Global Reach
Current payment processors have many hidden costs, especially when requiring foreign currency conversions. They also often have country-specific restrictions limiting a business’s ability to sell to customers in certain countries. On the other hand, Cryptocurrency can be used to send and receive payments anywhere in the world without the need for a bank account or credit card or any hidden fees.
Censorship-Resistant
Since Cryptocurrency is decentralized, it is not controlled by any government or financial institution. This makes it much more difficult for businesses to be censored for selling certain products or services.
Challenges of Cryptocurrency Subscription Payments
However, Cryptocurrency doesn’t come without its fair share of flaws and challenges. Here are some of the main challenges you’ll face when using Cryptocurrency for subscription payments.
Pushing vs. Pulling
Bitcoin and Ethereum are cryptocurrencies that enable a one-way payment flow. This means transactions can only be initiated by the customer (a “push” payment) and not by the merchant (a “pull” payment). This can make it difficult to set up recurring payments, as customers have to manually send each payment.
There are some workarounds, such as using a service like Coinbase Commerce, which allows merchants to generate a unique cryptocurrency address for each customer that can be used to set up recurring payments.
Volatility
The value of Cryptocurrency can be very volatile, which means the price of a currency can go up or down significantly in a short period. This can make it difficult to price products and services in Cryptocurrency, as the currency’s value may change between when a customer is invoiced and when the payment is received. This is the biggest challenge that Cryptocurrency is facing.
Network Congestion
According to a recent survey of 2,500 Americans, the average person spends $237 in monthly subscription payments. Typical subscription fees often range from $10 to $40 per month.
With low transaction amounts, the variable rates of gas prices on the Ethereum blockchain can impact the relative cost of transaction fees. However, transaction fees can be very high when the network is congested. This often happens during Cryptocurrency bull markets when there’s an influx of new investors buying into the market.
High Switching Costs
Cryptocurrency subscription payment is still in its early stages, which means there aren’t a lot of merchants that accept it yet. This can make it difficult for customers to find places to spend their Cryptocurrency. Additionally, since there’s no central authority governing Cryptocurrency, there’s no easy way to reverse a transaction if something goes wrong. This can be a major deterrent for customers who are used to traditional payment methods’ safety and security.
List of Past Crypto Subscription Attempts
While we are optimistic about the potential and possibility of crypto subscription payments, it’s important to remember that the space is still very new, and there have been a number of attempts. These past implementations struggled due to the lack of any stable asset options.
However, the incredible rise of stablecoins in 2020 has given new life to the possibility of crypto subscription payments. But before we look at the future of Crypto subscription payments, let’s first look back at some of the attempts that paved the way to what this payment concept looks like today:
ERC 1337
A 2018 project by a group of Ethereum developers who recognized the need for a solution to the technical limitation of Crypto subscription payments. Four years later, the draft of these ideas has not made any substantial progress that would lead to its completion.
Groundhog
Another crypto subscription project by co-authors of ERC 1337, Groundhog, found success as a way to enable recurring payments on Ethereum. The developers sold it as a reliable revenue stream where businesses could use stablecoin like USDC or DAI to make crypto subscription payments.
Sablier
Developed in 2019, Sablier is a finance protocol that enables real-time crypto subscription payments. It allows anyone to stream money from one party to another, with the goal of eventually becoming the “Paypal of crypto.” The project has been fairly successful, with several large companies signing up to use their service.
The Future of Crypto Subscription Payments
As of the moment, there are yet any successful full-featured crypto subscription payment projects. While previous attempts offer some promise, it is still not enough to say that crypto subscription payments are here to stay. The space is new and ever-changing, which means there’s still a lot of room for growth and development.
The opportunity is still there for a project to come along and finally make crypto subscription payments consistent and permanent. The right combination of features, incentives, and user adoption can finally make crypto subscription payments a reality. And when that happens, it’ll be a game-changer for the entire cryptocurrency industry.
Why You Should Try ReliaBills
Crypto subscription payments are still on the way—but recurring payments have been here for a while now, and your business is lagging without a full-fledged recurring billing system. That’s why you need to try ReliaBills.
ReliaBills is an invoicing and recurring billing system that offers neat solutions to your payment processing needs. With our array of tools and features, you’ll be able to switch to recurring billing and start reaping the benefits of a subscription-based business model.
ReliaBills is the ideal choice for small businesses since it’s simple to use and offers a wide range of features at a very reasonable price ($24.95/mo).
Visit our website at www.reliabills.com to learn more about what ReliaBIlls can do for you and your business. You can also get started right away by creating your account.
Wrapping Up
Crypto subscription payments are an exciting new development in the world of Cryptocurrency. And while there’s still a lot of work to be done in terms of adoption and feasibility, the potential is there for this payment method to completely change the way we think about digital currency.
