LJUBLJANA – The souvenir shop on Slovenia’s highest alpine pass offers the usual range of postcards and tourist trinkets. But there is a twist: you can also pay with Bitcoin if ordinary cash is too boring.
The wooden kiosk in the Vršič pass, where tourists stop for breathtaking landscapes and flocks of sheep struggle to shelter from the scorching sun, is just one example among the thousands of shops and clubs in this small European country that allows customers to pay with virtual currencies. You can find cryptocurrencies everywhere, be it in pet food stores, toy and clothing stores, bars and hotels. Ads advertising crypto startups explode on the radio on sweaty summer days.
It’s all part of a vibrant Slovenian crypto startup scene, which is looking to reshape the financial market and tinker with new blockchain technology in hopes of going big in an unbridled global industry.
There’s just one big problem: Ordinary Slovenes still prefer old-fashioned fiat money for making payments – and are shunning digital currencies amid concerns about their valuation and, more generally, the drip of revelations about crypto Ponzi schemes. .
In fact, while companies say they expect their customers to turn to cryptocurrencies as a means of payment over the next couple of years, market research presented in a report from consultancy Deloitte suggests it is still difficult to integrate cryptocurrency with infrastructure. existing financial and other digital currencies. The report also highlights firms’ concerns about the security of payment platforms.
In another recent article, rating agency S&P Global similarly noted that the majority of the cryptocurrency market currently revolves around speculation, not payments.
This tension reflects the broader dilemma for cryptocurrencies: is it meant to be an investment or a currency? If it is the former, those with a propensity for risk can buy or sell it as an asset that often fluctuates enormously. In the latter case, there is a whole tangle of regulatory and supervisory issues that politicians have yet to understand.
Take, for example, the question of who bears the currency risk, the merchant or the customers? For now, it’s the latter – and their reluctance to go all-in on cryptocurrencies is one of the reasons there is still little appetite for using it as a means of payment.
That said, some traditional payment giants, like Mastercard and Visa, have moved into the space, confident that crypto payments will go mainstream. Through partnerships with crypto networks, both companies now sell crypto payment cards that work on their regular network. Other big brands, such as Gucci, Starbucks, and Microsoft, have also jumped on board, sparking excitement.
“As industry maturity and regulation increases, we see crypto assets become increasingly relevant to larger parts of Europeans, beyond what we would call ‘early adopters’ or ‘digital natives’,” said Christian Rau, Senior Vice President for Cryptocurrency and Fintech Enabling at Mastercard Europe.
One innovation in Slovenia is Ljubljana-based GoCrypto, which allows businesses to set prices and get money in euros, protecting them from a highly volatile market while allowing customers to pay with over 50 cryptocurrencies. The shopkeepers work with a GoCrypto POS terminal that accepts the amount of a cryptocurrency for a certain euro price, while the customers scan a QR code that takes some of the cryptocurrencies from their digital wallets, where they keep their money. For merchants, it means avoiding debit and credit card processing fees.
But so far, few customers are asking to pay like that. According to GoCrypto, crypto payments account for approximately 3% of all transactions on their systems. But while that share is small, it still stems from a huge year-over-year jump: 883% between 2020 and 2021.
Buzzing startup scene
“Everyone has touched cryptocurrencies in Slovenia, hairdressers, postmen, every single table discusses cryptocurrencies,” said Miha Vidmar, chief product officer of Bitstamp, a global exchange platform that trades between fiat and cryptocurrency. It began in the country early in 2011.
Tanja Bivic Plankar, president of the non-profit group Blockchain Alliance Europe, agrees that the country was a “very early” adapter with cryptocurrencies during that time.
Crypto and blockchain technology – an online, public ledger that records transactions on a computer network, making it nearly impossible to modify or hack – soon attracted Slovenian IT engineers and entrepreneurs who were building their startups while trying to raise money.
According to Bivic Plankar, this innovation has helped young companies grow rapidly out of thin air. “As a former socialist country, we don’t have a long tradition of angelic investors and venture capital for startups,” he said.
After some initial global successes with companies like Bitstamp, a wave of initial coin offerings – fundraising initiatives in which companies create and sell crypto coins to early advocates for fiat currencies – kicked off a boom in crypto startups in the 2016.
“We are a small town and everyone is gossiping,” Vidmar said. “So when these 22 and 23 year olds built a global cryptocurrency exchange and made millions, it sparked interest.” These success stories include GoCrypto, which now operates in 69 countries and earns from cryptocurrency POS terminal fees, as well as conventional payments from its parent company Elly and other transactions.
For now, it’s still a small minority of Europeans who actually hold digital currencies. Only 17% owned cryptocurrencies in 2021, and 40% of them made their first cryptocurrency purchase that year, according to a survey by the Gemini crypto platform.
In the city of BTC, outside Ljubljana, one of the largest shopping centers in Europe with over 500 stores, a woman designs several banknotes in exchange for a child’s construction set in a toy store. This sparked a smile from the cashier, who noted that she rarely sees cryptocurrency payments. “People pay with bills or credit cards,” she said. “They want something simple.”
This sentiment was echoed in an informal survey of seven store managers in Ljubljana, who also said crypto payments are rare.
“It is so difficult for us Europeans and Americans to adopt the phone as a payment tool, because we love cards,” said Dejan Roljic, founder and CEO of GoCrypto.
Even Bivic Plankar admits that most Slovenians “still see cryptocurrencies as an investment and not as a means of payment”.
But there are also those like Iris Jeraj, who owns a busy clothing store in Ljubljana, who have a more bullish view. It started offering crypto payment as a transaction option in 2018 and sticks to its strategy.
“This is the future and, over time, this is what customers will want,” he said.
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