What Must Institutions Do Before They Can Accept Bitcoin
Aug 22, 2018
Now we know what Bitcoin needs to do before it can become more widely adopted by institutions, but we must also consider what these institutions need to do too.
What must Bitcoin do?
Well it’s simple, Bitcoin needs to find balance, a steady price and see consistent regulation (adoption). Institutions will need to make changes too. Aside from the obvious ones - adoption of Bitcoin wallets, access to Bitcoin technologies, computers, ATMs etc, they also need to be able to deal with the cultural aspects of Bitcoin, in terms of investment and of course, potential volatility.
Volatility will always be a problem. Even within adoption when Bitcoin finds a steady price, it is going to have a far more volatile value than typical FIAT currencies. This doesn’t mean the we’ll constantly be paying different amounts for different products, what it does mean though is that institutions need to find a way to handle the price changes, to ensure that customers aren’t losing out, otherwise Bitcoin won’t work as an adopted currency.
It’s all to do with how institutions accept Bitcoin
According to Zycrypto:
“An individual observation and research revealed that some of the institutions have partnered some of the exchange platforms in order to ensure that deposited bitcoins are withdrawn right away. Most of the institutions have no plans of leaving them in their wallets to rise in the future. Their plan is just to open up their payment option.”
By accepting and converting Bitcoin straight away, volatility is reduced significantly. There are advantages to shops and stores holding Bitcoin as an investment, but this is also a risky process. Bitcoin will however find balance if this ‘hodling’ culture is extinguished by instant exchanges.
The Lucerne University of Applied Sciences is one institution that is doing just this, and are accepting Bitcoin to pay tuition fees. According to Zycrypto:
“How The Lucerne University of Applied Sciences accept bitcoin payment is very interesting. They do not personally handle bitcoin payments, but they have entrusted all the processes to Bitcoin Suisse which happens to be a bitcoin firm. The deposited Bitcoin is then converted to Swiss Francs the moment it reaches 10,000 Swiss Francs, and conversion is made once a week or once a day. According to research, students who pay tuitions in bitcoin enjoy just 1% payment fee which is very low as compared to the traditional banks.”
See more for yourself, here.
In essence, Bitcoin goes straight past the institution and is deposited with a Bitcoin ‘handler’, they then wait until the institution reaches a target amount (accounting for volatility too) then instantly pushes that Bitcoin back into FIAT, which in turn is then sent to the University. Therefore, they receive the correct payment and the customers aren’t subject to the volatility of the Bitcoin.
The way institutions handle Bitcoin payments is going to play a very big role in the future of Bitcoin adoption and may very well be the breaking point that helps customers decide which option they want to go for. Moreover, this makes way for more Bitcoin and cryptocurrency handling/accounting services, opening up a new area of the industry. Okay so it might not sit well with ‘decentraliers’ but as we know, for adoption to really work on a mainstream level, we need to give up a little bit of that decentralisation.
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