Despite Widespread Rollout, Slovenians Remain Nervous About Crypto

LJUBLJANA — The souvenir shop at Slovenia’s highest pass in the Alps offers the usual range of postcards and tourist knick-knacks. But there is a catch: you can also pay with Bitcoin if regular money is too boring.

The wooden kiosk on the Vršič pass, where tourists stop to admire breathtaking scenery and where flocks of sheep struggle to protect themselves from the scorching sun, is just one example among the thousands of shops and places in this small European country that allows customers to pay with virtual currencies. You can find crypto anywhere, from pet food stores, toy and clothing stores, to bars and hotels. Ads touting crypto startups explode on the radio on sweaty summer days.

It’s all part of a buzzing scene of Slovenian crypto startups, looking to revamp the financial market and tinker with new blockchain technology in hopes of making it big in an unbridled global industry.

There’s just one big catch: Ordinary Slovenians still prefer old-fashioned fiat currency for making payments – and they’re avoiding digital currencies amid concerns about their valuation and, more broadly, drip revelations about crypto Ponzi schemes.

Indeed, while companies say they expect their customers to switch to crypto as a means of payment within the next couple of years, market research featured in a report by consulting firm Deloitte suggests that it is still difficult to integrate cryptocurrency into existing financial infrastructure and across other digital currencies. The report also highlights companies’ fears about the security of payment platforms.

In another recent article, the rating agency S&P Global also found that most of the crypto market currently revolves around speculation, not payouts.

This tension reflects the broader dilemma of crypto: is it supposed to be an investment or a currency? If it’s the former, those with a risk appetite can buy or sell it as an asset that often fluctuates wildly. In the latter case, there is a web of regulatory and supervisory issues that policy makers have yet to resolve.

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 get into crypto is one of the reasons there’s still little appetite for using it as a form of payment.

That said, some traditional payment giants, like MasterCard and Visa, have been moving in space, confident that crypto payment will become mainstream. Through partnerships with crypto networks, both companies now sell crypto payment cards that work on their regular network. Other major brands, such as Gucci, Starbucks and Microsoft have also taken the plunge, generating excitement.

“With increased industry maturity and regulation, we are seeing crypto assets becoming increasingly relevant to a wider section of Europeans, beyond what we would call ‘early adopters’ or ‘natives. of digital,” said Christian Rau, senior vice president for crypto and fintech enablement. at Mastercard Europe.

An innovation in Slovenia is Ljubljana-based GoCrypto, which allows businesses to price and get cash in euros, protecting them from a highly volatile market while allowing customers to pay with over 50 cryptos. -currencies. Merchants work with a GoCrypto POS terminal that accepts the amount of cryptocurrency for a fixed euro price, while customers scan a QR code that takes a portion of cryptocurrency from their digital wallets, where they keep their money. For merchants, this means avoiding debit and credit card processing fees.

But so far few customers ask to pay this way. According to GoCrypto, crypto payments make up around 3% of all transactions on their systems. But while that share is small, it still comes from a huge year-over-year jump – 883% between 2020 and 2021.

Buzzing Boot Scene

“Everyone has touched crypto in Slovenia, hairdressers, postman, every table is discussing crypto,” said Miha Vidmar, product manager at Bitstamp, a global exchange that trades between fiat and crypto. -change. He made his debut in the country very early, in 2011.

Tanja Bivic Plankar, chair of non-profit group Blockchain Alliance Europe, agrees that the country was a “very early” adapter with crypto at that time.

Crypto and blockchain technology – an online, public ledger that records transactions on a network of computers, making it nearly impossible to alter or hack – quickly attracted Slovenian computer engineers and entrepreneurs who were building their startups while looking to raise funds.

According to Bivic Plankar, this innovation has helped start-ups quickly start from scratch. “As a former socialist country, we don’t have a long tradition of angel investors and venture capital for startups,” she said.

After some initial global successes with companies like Bitstamp, a wave of initial coin offerings – fundraising campaigns where companies create and sell crypto coins to early backers for fiat currencies – launched a boom in crypto startups in 2016.

“We are a small country and everyone talks,” Vidmar said. “So when these 22 and 23 year old guys built a global crypto exchange and made millions, it sparked interest.” These success stories include GoCrypto, which now operates in 69 countries and makes money from POS terminal fees for crypto as well as conventional payments from its parent company Elly and other transactions.

Niche Market

For now, it is still a small minority of Europeans who actually hold digital currencies. Only 17% owned crypto in 2021 – and 40% of them made their first crypto purchase that year, according to a investigation by the Gemini cryptographic platform.

At BTC City near Ljubljana, one of Europe’s largest shopping malls with more than 500 stores, a woman pulls several bills in exchange for a children’s building block in a toy store. This made the cashier smile, who remarked that he rarely sees crypto payments. “People pay with bills or by credit card,” he said. “They want something simple.”

This sentiment was echoed in an informal survey of seven store managers in Ljubljana, who also said crypto payments were rare.

“It’s so hard for us Europeans and Americans to embrace 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 crypto as an investment, not a means of payment.”

But there are also those like Iris Jeraj, who owns a busy clothing store in Ljubljana, who take a more optimistic view. It started offering crypto payment as an option for transactions in 2018 and sticks to its strategy.

“That’s the future, and over time that’s what customers will want,” she said.