If you have started using a crypto payment card, you will be aware enough that this represents new technology and a method of making transactions that did not exist just a few years ago. But what comes next?
The lesson of history with new innovations and tech is that they often develop rapidly, with extraordinary leaps in developments that their inventors could never have envisaged.
Many examples exist: We went from the Wright brothers to putting men on the moon in 66 years, while the computers used in the Apollo missions have a fraction of the power smartphone users carry in their pockets today.
When the internet and its rapid development are considered, it can clearly be seen how digital technology is progressing at a bewildering pace. For a new sector like Crypto, these are exciting times.
The Emerging Role Of Blockchain Interoperability
Trying to guess what will happen next is not easy, but there has been plenty of research and central to it has been Blockchain. This system and the ledger it facilitates have been vital to enabling cryptocurrency to work. The development of Blockchain is, therefore, central to the future of crypto payments.
It is not hard to find predictions. Last year, The Blockchain Team listed ten predictions for the technology for 2023 and beyond. Some of these were not directly related to crypto, such as its adoption by healthcare providers and governments, but others were.
Most notably, it forecasted the development of interoperability between Blockchain networks. This would transform individual Blockchains from being isolated entities to being able to collaborate and share data, so that multiple Blockchain networks can be combined to enable more functions, like giving wider scope for payments.
The Rise Of Decentralised Payments
Further to this, decentralised finance (DeFi) is seen as the next big step in this area, having already made a major impact on finance. However, DeFi 2.0 will represent a ”transformative phase poised to further revolutionise the financial landscape”.
A central feature will be an increase in scale, building the capacity to enable a higher volume of payments, while cutting out transaction fees and other costs, a key benefit being greater financial inclusion in this expanding system.
Tech Report has published a similarly dynamic outlook in its 2024 report on the future of the technology.
Noting that it was the emergence of cryptocurrency in 2009 that saw Blockchain rise to prominence, it has also highlighted the growing prominence of DeFi, stating: “The future of finance may very well be the use of blockchain technology.”
Another prediction was the rise of central bank digital currencies. This is not a totally new idea; the Bank of England has confirmed it is looking at the idea of a digital pound.
This would not replace cash, and since so many transactions are now made electronically rather than with notes and coins (just as in the past many payments used cheques), the move towards a largely ‘cash-free society’ may already be all but unstoppable. However, it could still represent a further diversification of the payments landscape.
Digital Payments Will Continue Increasing
Reports into the payments landscape certainly forecast a lot of change. The 2023 McKinsey Global Payments Report noted that the shift from cash to digital payments continued to grow in 2022 and observed that this would not only continue, but increasingly feature digital wallets.
McKinsey also saw clear growth in digital payments in cross-border transactions, part of the reason for this being the increasing adoption of this technology in developing countries.
These points were echoed by the PwC Payments 2025 and Beyond report, although only 42 per cent of financial sector survey respondents were sure there would be a major rise in cross-border, cross-currency and B2B transactions.
Areas Of Uncertainty
Perhaps Mckinsey’s most notable prediction was that the 2020s will be the ‘decoupled era’ for payments, characterised by “payments becoming increasingly disconnected from accounts and other fixed repositories of value.”
However, it injected a note of uncertainty at this point; noting that technology has driven each successive development in payments, but it is not yet clear what the “winning” form of tech will be in the ‘decoupled era’, with candidates including ‘platform as a service’ models and generative AI.
Clearly, however, this sort of decoupling offers potential for crypto, one that XRPaynet is set to capitalise on. This can include technological adjustments to harness the most effective tech, whatever that turns out to be.
Predicting the future is by nature an uncertain business, but what appear to be the most likely trends are ones that favour the growth of cryptocurrency payments, be it increasing digitisation, more agile and user-friendly Blockchain, or the ‘decoupling’ of assets from cash value.