I wanted to discuss an issue that in my view will be very important for the wider adoption of the marketplace by “mainstream” merchants, and that is their ability to quickly and reliably convert earned SafexCash to fiat, and the associated costs of this process.
Kindly note I am not talking about Jimmy selling his xbox, or the darkweb/silkroad crowd. I am talking about reasonably high volume traders who would like to tap into the ever growing crypto-buyers’ market, in addition to their business on Amazon etc…I am going to assume these sellers are primarily interested in fiat, since all their expenses (buying wholesale, manufacturing, etc) are in fiat. These sellers are merchants, not crypto-speculators.
Related to this, it is often said that one of the advantages of the Safex marketplace will be a comparatively low fee of 5% (I assume average, since it makes no sense to have same fee for everything). But, if these sellers are primarily interested in getting fiat for their merchandise, we need to consider the total cost of the overall process.
Let’s say I am a merchant and I just sold something - this is what I have to do to actually get money for it:
- Send SafexCash to an exchange with sufficient volume (+pay a fee);
- If SafexCash has no fiat gateways, need to sell SafexCash for another crypto (+pay a fee);
- Sell that crypto for fiat (+pay a fee);
- Withdraw fiat to my bank account (+pay a fee).
In addition, operational costs are likely higher, since the above steps are something I don’t have to do on a fiat marketplace. My accounting is probably more complicated too, depending on tax and other laws in the country I operate in.
There is also an added risk of crypto value change (relative to fiat) anywhere in the above chain. The more time passes between the selling and converting to fiat, the greater this risk is. And let’s not forget possible issues, such as SafexCash wallet being in maintenance preventing me from depositing on the exchange.
So as a seller, I have two options (or a combination of them): I can accept that I will operate with a lower margin in this market, or I can transfer all these costs and risks to the buyer, by incorporating them into my price. This would mean my price on Safex marketplace will be likely higher than my prices on fiat marketplaces.
In conclusion (and TLDR version) - the ability of sellers to quickly and reliably convert their SafexCash to fiat is a major risk for the success of the marketplace, and will influence the rate of its adoption. It is also an external risk, since the project has no direct control over this (assuming Safex itself will not be providing a fiat gateway for SafexCash).
So I would like to hear your thoughts about this, and maybe even a comment from Dan whether this has been considered, and is there anything being planned to somehow mitigate this risk.