It’s been more than ten years since Satoshi Nakamoto released the white paper that launched Bitcoin. Although cryptocurrencies have a market valuation of more than $200 billion, they have not had much success in breaking into the mainstream. The popularity of cryptocurrencies has increased steadily over the years, and the dramatic price increases in 2013 and 2017 did contribute to increasing awareness and encouraging adoption.
Compared to other cryptocurrencies, Bitcoin has fared far better, with major corporations such as Microsoft, Expedia, and a few others already accepting Bitcoin payments. However, the initial purpose of cryptocurrencies has not been achieved, and cryptocurrency continues to have a limited number of applications. When a new calendar year comes to a close, cryptocurrencies still face significant challenges in order to gain widespread acceptance.
According to some estimates, there are more than 6,000 cryptocurrencies available on the market at the present time. All of these currencies assert that they are superior to one another and that they solve certain difficulties in various sectors. The sheer number of alternative currencies that have been released in the previous five years demonstrates how fluid the market is, as well as the amount of experiments that are taking place in this area.
Despite the fact that digital currencies are on the increase, Bitcoin and other cryptocurrencies have failed to achieve widespread worldwide adoption for a variety of reasons. But let’s take a look at what mainstream acceptance means for the cryptocurrency industry.
What Does the Widespread Use of Crypto Finance Mean?
When it comes to cryptocurrencies, the term “mass adoption” refers to a time in which cryptocurrency is widely recognized in business and used as legal money all over the world.
While experts predict that this change will be inescapable, this does not preclude governments from making every effort to prevent it. Ultimately, though, all that a massive government can accomplish is to slow down the process.
One of the biggest hurdles to the broad use and integration of blockchain technology is governments’ “reluctance to impose rigorous regulation of cryptocurrencies, owing to widespread false concerns about cryptocurrencies,” according to the World Economic Forum.
As a result of the Crypto Asset Services Regulation, cryptocurrency exchanges are held accountable for consumer safety, transparency, and governance principles that safeguard client money from cyber attacks, theft, and malfunction, amongst other things.
Also of note, the regulation employs specialized terminology that is unfamiliar to those who work in the cryptocurrency market, and it divides stable coins into two categories: e-money tokens (stable coins with a value tied to a single fiat currency) and significant assets (reference tokens), which are determined according to criteria outlined in Article 39 of the Regulation.
Despite rising interest in Bitcoin and other cryptocurrencies, cryptocurrency has not yet gained widespread acceptance in the mainstream economy.
Although there is no way to forecast when widespread adoption will occur, a Marketology projection of 2050 is a realistic guess.
In the world of cryptocurrencies, the demand for stability is not unique.
Any currency that is to be utilized as a trustworthy means of trade must be stable in order to be effective. The more that coin prices rise and fall, the more that regular people will be reluctant to use coins for their everyday transactions in the future.
People have not yet become accustomed to thinking about cryptocurrencies as a legitimate form of money, whether they are hoarding coins in the expectation that values will rise dramatically soon or refraining from using them completely for fear that they would lose all of their worth.
The unpredictability of pricing, on the other hand, has a negative impact on routine money services such as remittances, currency exchange, and the usage of ATMs. Businesses must charge extravagant fees in order to be able to employ cryptocurrency because they must hedge their risks.
Bitcoin ATMs can charge up to 15% of the transaction value only to convert bitcoin to fiat money. As a result, the initial objective of cryptocurrencies, which was to provide a more cost-effective and flexible alternative to traditional payment systems, has been completely defeated. Why would the typical individual choose to use them when they have no benefit over government-issued money?
The on-ramp is the single most significant source of friction in the cryptocurrency world. Moving from fiat to cryptocurrency necessitates contact with a centralized, regulated body, and the process of passing through AML and KYC can result in a significant reduction in value. The prohibitions against bitcoin aren’t often driven by a desire to safeguard customers from making ill-informed investing decisions or accruing credit card debt in the first place. Banks have taken a defensive stance when it comes to cryptocurrencies, as they are attempting to create a protective wall around themselves by refusing to accept cryptocurrency deposits. As a result, it has become increasingly difficult for early entrepreneurs to bridge the gap between fiat and cryptocurrencies, as well as to locate trustworthy custodial partners.
Some countries have been restrictive and unfriendly, including as China, which outlawed initial coin offerings (ICOs) in 2017 and imposed severe regulations on all cryptocurrency trade, including a ban on international exchanges. In preparation for the introduction of their own digital currency, Chinese policymakers have taken efforts to discourage the usage of cryptocurrencies in the nation. Other nations have been friendly, while the majority of those who are unsure of what to do have buried their heads in the sand and done absolutely nothing.
Western governments have been a little hesitant when it comes to the regulation of digital currencies in recent years. Some authorities may not have a thorough understanding of the technology to be able to put in place appropriate regulatory legislation. It has taken the IRS and the SEC over ten years to adopt a position on this issue in the United States. Smaller nations, like as Malta, have seen cryptocurrencies as a potential and have taken the lead in developing legislative frameworks that are supportive of the cryptocurrency sector.
The majority of individuals are unaware of how cryptocurrencies function and are unable to distinguish between blockchain and cryptocurrency. Bitcoin has a relatively high learning curve compared to traditional currencies. Learning about cryptocurrencies and blockchain technology may appear to be an abstract topic that is nearly hard to understand at first glance. A major hurdle for most individuals who are interested in entering the cryptocurrency market is the fear of not knowing how they operate. Coinbase Earn, a system that rewards users with free bitcoin in exchange for completing various educational activities and seeing instructional content, is one of my favourites. To increase adoption, it is necessary to address the education layer, which is a vital component. I think it would be fantastic if some of the larger exchanges took more attempts along these lines.
Managing private keys is likely to be a significant aspect in the future.
It is not in the interest of the common individual to be concerned about losing their private keys along with their cash. Multisignature, scorched earth vaults, uPort-style social account recovery, and hardware wallets are all fantastic ideas, but they require a lot of work to be implemented. It is a significant barrier to entry in today’s era of easily resettable passwords to have to memorize a 64 character seed phrase or write it down on a piece of paper at the risk of losing your whole savings account balance or more. Private key management services are unquestionably going to play an increasingly essential role in the future, according to the industry’s experts. When people can buy, spend, and keep cryptocurrency without needing to grasp cryptography or blockchain consensus methods, the introduction of new wallets will have a greater chance of achieving widespread acceptance.
The Libra initiative on Facebook has made it quite evident that we are moving closer to the privatisation of money. Stablecoins have the potential to provide access to the 1.7 billion unbanked and underprivileged people worldwide. For this reason, central banks and governments are attempting to prevent the use of Libra by the general public.
A total of $9 million is lost every day in bitcoin scams, according to Investopedia. As a result of this conduct, people and companies have forgotten about the benefits of blockchain and have instead refused to invest in a currency that they believe is ideal for criminals, terrorists, and money launderers to utilise as a means of payment. When it comes to digital cash, people want security as well as a centralised authority that can resolve their problems. It is difficult to hunt down and penalise defaulters in decentralised systems because of the nature of the system. The task of taking accountability for scams and reporting them is a difficult one to play. That is one of the reasons why national governments are reluctant to speak openly about the rules and regulations.
Before we can make the leap to widespread acceptance, two things must take place first. Governments must establish an atmosphere that encourages the use of cryptocurrencies. And we need to create better user interfaces so that people who are not technically savvy may use cryptocurrencies in the same way they use their phones, drive their vehicles, and charge their credit cards, without having to comprehend how the technology works.