What will it take for mass adoption?
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Cryptocurrencies — from Bitcoin to Ethereum and all the niche assets in between — are still seen as something of a marginal trading choice. Millions of traders — even those who have been dealing in fiat money for decades — still seem a little shaky when it comes to adopting crypto on mass. Even more so, many big businesses and governments around the world are still horribly unclear about where they stand. One thing you can say for certain, every nation on the planet is talking about crypto.
When you speak to companies and entrepreneurs, and individual traders already using crypto, the benefits are easy to see. It’s quick, safe trading. It cuts through weeks and weeks of red tape. What’s more, it protects financial value worldwide. It’s a global currency standard which, in years to come, might set the template for global transactions we can all benefit from.
However, even after years of people making huge strides in Bitcoin trading — and after years of people making bank off the back of crypto — why are so many people and organisations still so hands-off? What’s holding us back from mass adoption?
Let’s take a look at a few of the restrictions and perceptions — and what we can potentially do to break them all down for ease of trading across the years to come.
A massive array of choice
This first point is a simple one — there’s too much choice out there. Those opposed to adopting any form of crypto are likely to say that if Bitcoin is so valuable, why are there so many copycats? This isn’t a very strong argument, especially when you delve a little deeper and read up on the differences in usability and function of each cryptocurrency, but it pays to know where people are coming from.
Keeping track of the sheer number of cryptocurrencies out there can be a bit of a muddle sometimes. However, this really shouldn’t subtract from their wealth. In time, with mass adoption of crypto, one or two will likely stretch ahead and become even more valuable over time.
There is also the counter-argument that there are so many cryptocurrencies out there because people are massively engaged with the idea of alternative currency choices. This does not favour government very well, as this mostly steers in the direction against any fiscal policy, which let’s be honest has taken hundreds of years to establish.
Businesses are swaying in favour
Up until relatively recently, big businesses have avoided crypto, even Bitcoin, for the volatility factor but also the unclear regulatory framework. That’s because Bitcoin, amongst other cryptocurrencies, has a habit of dipping and spiking fairly frequently. However, when it spikes high, it’s very valuable — and when it dips low, it crashes. However, the most seasoned traders will tell you that it’s worth ‘riding the wave’, as it were, to ensure you continue to profit.
However, it’s clear that many businesses are actually bucking the trend. Despite the law being shaky across the globe, it’s clear that forward-thinking businesses are doing more and more to approach the time and cost-saving measures that crypto transactions can bring them. In the modern age, it is getting clearer and clearer that those running businesses need to rely on currency and trading which will cross boundaries, not to mention the next generation of tech-savvy individuals who will be all too familiar with cryptocurrency usage as part of their everyday life.
For mass adoption to take place across larger businesses and corporations, there needs to be a clearer correlation of success across the board. This means that there really will need to be more big businesses getting into crypto before the smaller bodies will follow suit. In fact, many big corporations are already putting blockchain to good use — why can’t they follow suit with crypto?
As crypto is volatile, businesses, by and large, don’t want to throw all their capital into investments which won’t necessarily pay off. If there is such a regular risk, is it worth staking so much on the line? You only have to look at rising businesses and startups already using crypto to see that there is definitely a trend moving towards risk-taking.
Possible solutions for businesses that wish to engage with crypto
If a business wishes to accept cryptocurrencies that tend to be volatile in nature, such as Bitcoin, Ethereum then the advice would be to use payment service providers that can ‘lock in’ the rate at the time of transaction. It seems to be an obvious solution, yet some businesses do not even ask this question. This immediately safeguards business owners against crypto volatility and moves the risk to the PSP or their settlements provider who are prepared for such risk as it is already factored in to their commercial model.
Another possible encouraging sign would be the use of stablecoins (more on stablecoins in a later article), however, in short, a stablecoin harnesses blockchain and cryptography, yet the value of the coin is pegged to, for example, the US dollar. Therefore, 1 coin = 1 US dollar. Stablecoins are already in circulation as a means to bring some level of practicality to everyday usage…but where’s the fun in that!? 🙂
In time, therefore, as the need for more stable currencies grows, it is highly likely that we will need to look for a global standard we can rely on for the foreseeable. Businesses, in many ways, must lead the way — and forward thinkers running tech startups, for example, are likely setting the templates to follow.
In some countries, the actual legal status of cryptocurrency can get incredibly blurry. In the UK, for example, while HMRC appears to be aware of crypto as far as their tax laws go, we are still a way away from Bitcoin being treated as genuine legal tender. As the lines are so blurry, many people — and businesses — are slow to get into adoption. It is happening but a little slower than I hoped. The UK’s financial infrastructure is one of the best in the world, and so it’s great to see their published guidance on businesses that engage in crypto assets (see link below).
However, some countries, such as Australia, have started embracing crypto in everyday life and trading. For example, you can now freely use crypto in physical shops and stores. The notion of this in the UK is a little odd right now. Some niche stores and brands — CEX, for example — handle Bitcoin to an extent, but as explained above, businesses are still holding off in the majority.
What it’s going to take for crypto to go fully mainstream is an acceptance of the new. In some parts of the world, big financial business is worried that crypto will overwrite fiat money as it is free from regulation. This lack of regulation is, of course, appealing to those who seek crypto at all.
Guidance on Crypto Assets — Published by UK Financial Conduct Authority (FCA): https://www.fca.org.uk/publication/policy/ps19-22.pdf
Is it worth holding out for crypto?
Yes! Of course, I am a strong believer that crypto is the future — though, I can also understand why big businesses and banks remain hasty to make any big moves. In time, once more businesses and big movers start adopting the technology, it is likely that more will start to feel positive about the phenomenon.
There are plenty of great reasons to start adopting crypto for business and to start investing in crypto full-stop. While it may be some time before we start to see any big positive adoptions, there are plenty of things we can do to take advantage of its benefits in the meantime.
I spoke on a podcast back in 2018 and I said that in order to see mass adoption, it’ll be the interoperability of crypto assets between, businesses, consumers, and governments that we will see real adoption. Bitcoin and a handful of other cryptocurrencies will mostly remain outside any regulatory framework, purely because of the nature of their technical infrastructure but it pains me deeply to express that the reality of adoption remains when all parties share in utility and practical function.
Why are Cryptocurrencies so Misunderstood? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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