Bitcoin's use as currency may just be getting started, Morgan Stanley says
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Is bitcoin (BTC-USD) going to become a widely used medium of exchange? Its lack of acceptance as a means of payment among merchants, as well as its high transaction costs, "is now changing," Morgan Stanley analyst Sheena Shah wrote in a note to clients Thursday. 
Room to grow? The global crypto market cap recently stood at $1.87T, which may sound large, but not when compared with more established asset classes like global equities (~$90T), bonds (~$120T), and Gold (XAUUSD:CUR) (~$12T), according to 2021 figures. 
A slew of payment companies, in particular, are looking to expand their reach in the growing decentralized space. For example, payments firm Strike recently teamed up with point-of-sale supplier NCR (NCR) and rewards-based payments firm Blackhawk Network, which "could mean that a large number of physical stores, restaurants and cafes in the US will be able to accept bitcoin payments in the near future," Shah explained.
Also, Strike in early April partnered with ecommerce platform Shopify (SHOP) to allow merchants to accept bitcoin (BTC-USD) payments as dollars over the Lightning Network, the most popular BTC scaling solution. "This is not a small deal," SA contributor Mike Fay said April 14. "The merchant benefits from this kind of exchange because the merchant doesn't need to pay traditional payment processing fees through traditional payment rails. For the user, paying for goods through Bitcoin's Lightning Network might ultimately lead to lower prices for everything since the merchant won't have to bake the processing fee into the cost of the item," he added. The crypto adoption "evolution" doesn't stop there. Another payment processing
firm, Fidelity National Information Services (FIS) said early April that it will offer merchants the ability to receive settlement directly in USD Coin (USDC-USD), a stablecoin pegged to the U.S. dollar. 
Keep in mind that fees on bitcoin (BTC-USD) transactions using the Lightning Network are next to zero, compared with the average fee to transact BTC on the Proof-of-Work blockchain of around $1.50, making the layer 2 payment protocol "much more practical for small payments that would otherwise be made using a debit card," the note said. 
Given that 85% of sales in the U.S. occur in shops rather than online, it's more important to monitor the development of physical stores' acceptance of crypto, Shah said. And while bitcoin's (BTC-USD) price swings are known to be wild, volatility could moderate significantly if BTC's usage as a medium of payment, either through cards or payment terminals, becomes more widely accepted, Shah noted. 
Furthermore, Starbucks (SBUX), after recently collaborating with digital asset platform Bakkt (BKKT) to offer crypto payment top-ups through its app, is now one of the largest retailers that accepts bitcoin (BTC-USD) in its stores. In the beginning of April, Bakkt, which enables customers to seamlessly access and transact across all digital assets, had allowed American Bank customers to access bitcoin and Ethereum (ETH-USD). 
But not everyone is on board. Ecommerce giant Amazon's (AMZN) CEO Andy Jassy in mid-April said that his company is "probably not close" to adding crypto as a payment mechanism.
Earlier in the week ended April 22, Australia's financial regulator unveiled a crypto policy roadmap as interest in the space expands.