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The early days of cryptocurrency saw excited social media posts when a corner stand or food truck accepted it for payments, with advocates happy with whatever real-world use they could get. Over the last decade the industry has grown significantly, with major corporations and even governments embracing censorship-resistant digital payments. In some sense we have evolved far past the point of touting a small local bakery accepting crypto as a success. In another way, however, we have arrived precisely at the point where chasing the small-fry merchants is exactly what we still very much need.
1: The chicken/egg game of usefulness starts with small merchants
— Anypay Global (@Anypay_) February 8, 2019
Despite brilliant technology and sound economic fundamentals, a cryptocurrency with no users has no use. Acquiring new users is challenging if they have nowhere to use it, and merchants will be hard to sell on adopting a new payment method without users. Approaching a small business with little complexity and direct access to the owner is, however, an achievable goal. A local economy with one business and one customer can soon grow to dozens of customers and several businesses, each new acquisition increasing the value proposition for the currency as a whole, and each new sales pitch becoming easier than the last.
For a hypothetically comparable amount of effort, first acquiring a large group of potential customers is not as quantifiable a metric for businesses as business adoption is for potential users. The same effort spent chasing a larger merchant or franchise in a vacuum would likely yield lower results. The best “bang for your buck” is probably going after a couple of small local businesses.
2: Small businesses become customers
Now of course, businesses need customers, and a successful local merchant adoption initiative will keep this relationship going strong. The benefit of targeting small businesses, however, is that they themselves can have a tendency to become customers. A larger crypto-accepting business will likely use a processor to convert immediately unless significant volume and stability is reached. The owner of a small business may not always convert, and has the discretion of using crypto revenue as personal income to shop around town at other supporting vendors. The next vendor may use those funds to patronize another, and so on. The micro economy using a new digital medium of exchange is much more likely to expand quickly than corporate giants determining when it’s in their interests to save some of their measly crypto income for paying expenses before converting the rest.
3: Large merchants will be late, not first, adopters
The goal of mass adoption, of course, is to have the largest and most demanded merchants accept cryptocurrency. They are likely, however, to be some of the last to make radical changes as to their accepted payment options. Working out a solution with corporate approval, standardizing infrastructure and accounting across all franchises, training staff, dealing with legal, avoiding upsetting partners, and so on, can be an insurmountable hurdle for large and slow-moving entities. The trick to approaching these larger entities is to already have significant adoption among smaller merchants to put the pressure on staying with the times and retaining customers. In essence, localized adoption is a strategy towards achieving global adoption.