Beyond the Hype: Why Encryption Payments Are Still in "Beta"? The Truth Is Far More Complex Than You Think

Question

The story of encrypted payments sounds beautiful—Decentralization, low cost, borderless, instant Settlement. From Circle's $1 billion IPO to the "GENIUS Act" paving the way for stablecoin regulation, and the integration of Blockchain payment systems by financial giants like JPMorgan and Visa, it seems that the golden age of encrypted payments has arrived.

However, the reality is much harsher: high transaction fees, clumsy user experience, and cumbersome KYC/KYB processes make crypto payments still feel like an "unfinished product" in everyday use.

User Experience: The Gap from Ideal to Disappointment

One of the biggest pain points of encrypted payments is its lag in UX (user experience).

Complex process: wallet setup, network selection, and fee calculation, feels like entering a maze for beginners.

High risk: Choosing the wrong network, entering the wrong address, or losing the private key can all lead to permanent loss of assets.

Opaque fees: Many exchanges and payment platforms charge high fixed withdrawal fees (such as OKX charging around $20 in the UAE), making small payments impractical.

A real case of a user: A UK customer wanted to transfer USDC from Gemini to an OKX address in Dubai. After several weeks of document review and account unfreezing, it was still unsuccessful. Finally, they opted to transfer via Revolut Bank - faster and cheaper.

The "Double Whammy" of Regulation and Traditional Finance

The original vision of encrypted payments was to bypass the complexities of traditional finance, but now, regulation and TradFi have become its main drivers and constraints.

Regulatory requirements: KYC (Know Your Customer) and KYB (Know Your Business) processes are becoming increasingly stringent, leading to a decrease in the efficiency of cross-border payments.

Double conversion cost: In the UAE, it is not possible to directly exchange USDC for AED, and in Europe, USDT cannot be used for payments directly, forcing users to exchange multiple times and incur fees at each step.

The result is that encryption payments have been "surpassed" by bank transfers and credit card payments in cross-border scenarios—at least in terms of speed and convenience.

The Awkward State of Cross-Border and Micropayments

According to World Bank data, the average cost of traditional remittances is 6.4–7%, while cryptocurrency and mobile payments can reduce it to about 5%.

However, this advantage is offset by fixed costs in small transactions - sending $5 may have the same transaction fee as sending $1,000,000 worth of Bitcoin.

CoinFlip CEO Ben Weiss pointed out: "The efficiency of crypto payments for small transactions is still lacking, and real improvement takes time."

Technical Solutions: Breakthroughs in Layer-2 and stablecoins

Not all platforms are standing still. BitPay CRO Bill Zielke stated that they are reducing friction in crypto payments by supporting low-cost networks such as Polygon, Arbitrum, Base, and Optimism.

Layer-2 Advantages: Compared to the Ethereum mainnet, the confirmation fees of Layer-2 networks are much lower, and the settlement speed is faster.

Stablecoin Application: The "GENIUS Act" provides a clear regulatory framework for stablecoin issuance, balancing consumer protection and market demand, and is expected to promote the widespread adoption of compliant stablecoins in the payment sector.

The contradiction between self-custody and mass adoption

Another core obstacle to encrypted payments is the custody issue.

Ideal: Users have complete control over their assets and become their own bank.

Reality: Most people do not want to manage private keys and do not want to bear the risk of losing assets.

This is also why many newcomers prefer to buy encryption ETFs instead of using cryptocurrencies directly for payment.

Are we rebuilding the banking system?

The original intention of encrypted payments was to replace banks, but with TradFi taking over blockchain technology, the result may be "bank blockchainization" rather than "encryption replacing banks."

If cryptocurrency payments cannot surpass banks in terms of convenience, cost, and security, then its only advantage will be "Decentralization" - which, for most ordinary users, is not enough to change payment habits.

Conclusion

The success of encrypted payments is not only because they are faster than banks, but also because the old systems are slow, closed, and lack inclusivity.

However, transitioning from "beta version" to "the world's preferred payment method", cryptocurrency payments still need to address three core issues:

The user experience must be simplified to card-swiping level.
The cost of micro-payments must be close to zero.
Cross-border payments need to truly achieve frictionless.

Just as credit cards took decades to become popular, cryptocurrency payments also need time — but in this process, it must continually undermine the competitiveness of banks, otherwise the "decentralized payment revolution" may just turn into another technological trend absorbed by banks.