Features that help merchants to manage crypto volatility

Volatility has long been accepted in Bitcoin and other cryptocurrencies, if not outright expected. Seasoned cryptocurrency traders know not to panic even when a popular currency like Bitcoin loses 30% of its value within the span of a few days, as it happened during the recent May cryptocurrency crash. In fact, the May crash was just one of many instances where the cryptocurrency market experienced jarring dips, only to recover a week later.

However, the volatility in crypto markets can be off-putting for merchants as they need the immediate cash flow to manage the purchase of their inventory, rental of the outlet and employees’ salary and more. While the volatility in crypto is caused by the things that make it unique and attractive to certain investors, it can be a hindrance for crypto’s mass adoption.

Yet there are solutions looking to soften the volatility when accepting cryptocurrency as payment. Pundi X’s XPOS solution, for example, is moving to leverage stablecoins in order to make it easier for merchants to mitigate the risk while enjoying the benefits of adopting cryptocurrency. Our initiative to bring cryptocurrency closer to the mainstream and use in their daily lives.

How XPOS manages volatility

XPOS manages volatility by accepting payments in cryptocurrencies like Bitcoin, then converting it into a stable coin with less volatility. This makes sure customers can receive stable coin value and have a healthy cash flow even if price swings hit the market.

The practice of leveraging stablecoins to protect traders is called ‘settlements’ and is usually accomplished by banks. The settlement currency used is either DAI or the USDT stablecoin, which is also used by crypto traders who want to avoid the extreme volatility of other cryptocurrencies while keeping value within the crypto market. Both DAI and USDT (also known as Tether) are pegged to the US dollar. Merchants in some countries where the value of the local currency posts loss against the U.S. dollar or experiences hyper-inflation will find this is particularly helpful.

XPOS vs e-wallets, crypto ATMs

XPOS’ ability to soften the impact of drastic price swings in crypto is what sets it apart from other e-wallets or crypto ATMs. Typically, an e-wallet or crypto ATM only allows its users to exchange fiat currency for cryptocurrency, with no option for merchants to lock the current value in stablecoins.

XPOS also does its part to introduce cryptocurrency to the mainstream by making it easy for brick-and-mortar stores to accept crypto payments as well as selling/topping up crypto. With the XPOS, a simple card tap or QR code scan allows a store to accept cryptocurrencies like Ethereum or Binance Coin, all while backing their transactions on the blockchain. We will see, in the near future, more cryptos will be supported for the on-chain transactions via XPOS.

Transaction mining

Mining crypto sounds irrelevant to most people but not for the XPOS merchants. Every XPOS merchant can be a crypto miner to receive rewards for facilitating the transactions. Transaction mining refers to any transaction that passes through an activated XPOS (receiving, sending or transferring) either for crypto payments or crypto sales, off-chain or on-chain. A trial has been conducted from 28th June to 2nd July so that the merchants can be familiar with the concept. Before launching the Pundi X Chain and integrating this feature, we will continue the trial to educate the merchants.

The need for solutions

With cryptocurrency edging closer to mass adoption, solutions will be needed to ensure crypto will be easy for use.

With El Salvador recently announcing that it’ll be the first nation in the world to adopt Bitcoin as its legal tender, it’s important that the average person understands how to use it in transactions. Pundi X is also in the process of allocating hundreds of free XPOS devices to the nation, in an effort to kickstart its cryptocurrency adoption.

Overall, cryptocurrency still has a long way to go before it’s adopted by the general public. Fortunately, there are a lot of solutions out there that’ll make the transition a lot easier — it’s up to people whether they’ll use it.