LJUBLJANA — The souvenir shop on Slovenia’s highest mountain pass in the Alps offers the usual array of postcards and tourist knick-knacks. But there’s a twist: You can also pay with Bitcoin if ordinary cash is too boring.
The wooden kiosk in the Vršič Pass, where tourists stop for breathtaking landscapes and flocks of sheep struggle for cover from the blazing sun, is just one example among the thousands of stores and venues in this small European country that lets customers pay with virtual currencies. You can find crypto anywhere, whether pet food stores, toy and clothing shops, or bars and hotels. Commercials touting crypto startups blast on the radio on sweaty summer days.
It’s all part of a buzzing Slovenian crypto startup scene, which is seeking to rejig the financial market and tinker with new blockchain technology in the hopes of making it big in an unbridled global industry.
There’s just one big catch: Ordinary Slovenians still prefer old-fashioned fiat money to make payments — and they’re shying away from digital currencies amid concerns over their valuation and, more broadly, the drip-drip of revelations on crypto Ponzi schemes.
Indeed, while businesses say they expect their customers to turn to crypto as a means of payment in the next two years, market research laid out in a report by the consulting firm Deloitte suggests it’s still hard to integrate cryptocurrency with existing financial infrastructure and across other digital currencies. The report also points to businesses’ fears about the security of payment platforms.
In another recent paper, the ratings agency S&P Global similarly found that most of the crypto market currently revolves around speculation, not payments.
This tension reflects the broader dilemma for crypto: Is it meant to be an investment or a currency? If it’s the former, those with an appetite for risk can buy or sell it as an asset that often fluctuates wildly. If the latter, there’s a whole tangle of questions concerning regulation and supervision that policymakers still need to figure out.
Take, for example, the question of who carries the foreign-exchange risk, the shopkeeper or customers? For now, it’s the latter — and their reluctance to go all in on crypto is one reason why there’s still little appetite to use it as a means of payment.
That said, some traditional payment giants, like Mastercard and Visa, have been moving into the space, confident that crypto payment will go mainstream. Through partnerships with crypto networks, both companies now sell crypto payment cards that work on their regular network. Other large brands, like Gucci, Starbucks and Microsoft have also jumped on board, sparking enthusiasm.
“With increased industry maturity and regulation, we see that crypto assets become increasingly relevant to wider parts of Europeans, beyond what we would call ‘early adopters’ or ‘digital natives’,” said Christian Rau, senior vice president for crypto and fintech enablement at Mastercard Europe.
One innovation in Slovenia is Ljubljana-based GoCrypto, which lets businesses set prices and get money in euros, protecting them from a highly volatile market while still allowing customers to pay with over 50 cryptocurrencies. Shopkeepers work with a GoCrypto point-of-sale terminal that takes in the amount of a cryptocurrency for a set euro price, while customers scan a QR code that takes some of the cryptocurrencies from their digital wallets, where they keep their money. For merchants, it means avoiding debit and credit card processing fees.
But so far, few customers ask to pay that way. According to GoCrypto, crypto payments represent about 3 percent of all transactions on their systems. But while that share is small, it still comes off of a huge year-on-year jump — 883 percent between 2020 and 2021.
Buzzing startup scene
“Everybody has touched crypto in Slovenia, hairdressers, postman, every single table discusses crypto,” said Miha Vidmar, chief product officer at Bitstamp, a global exchange platform that trades between fiat and crypto currency. It got its start in the country early on, in 2011.
Tanja Bivic Plankar, the president of nonprofit group Blockchain Alliance Europe, agrees the country was a “very early” adapter with crypto around that time.
Crypto and blockchain technology — an online and public register that records transactions across a network of computers, making it almost impossible to change or hack — soon attracted Slovene computer engineers and entrepreneurs who were building their startups while looking to raise money.
As Bivic Plankar sees it, this innovation helped young firms ramp up quickly from nothing. “As a former socialist country, we don’t have a long tradition of angel investors and venture capital for startups,” she said.
After a few initial global successes with companies like Bitstamp, a wave of initial coin offerings — fundraising drives where companies create and sell crypto coins to early backers for fiat currencies — kickstarted a crypto startup boom in 2016.
“We’re a small country, and everybody gossips,” said Vidmar. “So when these 22- and 23-year-old guys built a global crypto exchange and made millions, that sparked interest.” Those success stories include GoCrypto, which now operates in 69 countries and makes money off of fees for point-of-sale terminals for crypto as well as from conventional payments from its parent company Elly and other transactions.
Niche market
For now, it’s still a small minority of Europeans who actually hold digital currencies. Only 17 percent owned any crypto in 2021 — and 40 percent of them made their first crypto purchase in that year, according to a survey by crypto platform Gemini.
In BTC City outside Ljubljana, one of the largest shopping malls in Europe with over 500 shops, a woman draws several bills in exchange for a kid’s construction set in a toy store. That prompted a smile from the cashier, who remarked that he rarely sees crypto payments. “People pay with bills or credit card,” he said. “They want something simple.”
That sentiment was echoed in an informal survey of seven store managers in Ljubljana, who also said crypto payments are rare.
“It’s so difficult for us Europeans and Americans to adopt phone as a payment tool, because we love cards,” said Dejan Roljic, the founder and CEO at GoCrypto.
Even Bivic Plankar concedes that most Slovenians “still see crypto as an investment and not as a means of payment.”
But there are also those like Iris Jeraj, who owns a busy clothing store in Ljubljana, who take a more bullish view. She started offering crypto payment as an option for transactions in 2018 and is sticking to her strategy.
“This is the future, and with time, this is what customers will want,” she said.
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