The emergence of Bitcoin nine years ago has spawned the creation of an entirely new blockchain-based industry that promises to change the way people live in tremendous ways. Thus far, the industry has accomplished a great deal, ranging from the growing attention that cryptocurrencies have received as investible digital assets from the financial industry, to the creation of a dynamic and novel capital-raising mechanism in the form of initial coin offerings (ICOs). Despite this however, significant hurdles still exist that are preventing the industry from getting this promising piece of technology into the hands of the masses.
Getting into the cryptocurrency space is often characterised as ‘falling down the rabbit hole’, and currently, not enough individuals are falling down that proverbial hole, and with good reason. Learning about cryptocurrency and blockchain can first seem like an abstract concept that is almost impossible to grasp. Breaking down complex concepts and ideas in the community is a must before one can expect mass adoption to be possible. To be fair, numerous resources have been created to make the transition into this area as easy as possible. However, education/intuition extends into the ease with which one can use crypto-related services. The simple act of sending cryptocurrency from one person to another could arguably be a more seamless process. In reality, the average person does not want to worry about losing their private keys along with their funds, and this fear likely serves as a considerable deterrent to getting into the space. Private key management services are without a doubt going to play an increasingly important role in the community.
Educating businesses as well as the average individual is also an important distinction to recognise. The integration of blockchain into business processes can be an important avenue in introducing the industry to the masses. As such, organizations such as the Chamber of Digital Commerce must be recognized as playing an important role in introducing the potential of the blockchain and resultant technologies to these businesses. Education is a critical layer that must be addressed in order to achieve greater adoption.
One thing that the cryptocurrency space is well known for is the volatility in the market. The price of Bitcoin and any other cryptocurrency can rise by 20% and just as easily fall by another 20% in the span of a few hours. Now for traders, this is a good thing, because volatility is really what generates gains. However, excessive speculation takes away from what is really important in the space, the underlying technology and what it can do. Media coverage is overwhelmingly more concerned with the price of Bitcoin and what is happening in the ICO market instead of the technologies that make all of that a possiblity. Moreover, volatility in the market introduces currency risk, which makes using cryptocurrency as a medium of exchange all the more difficult. As a consumer, it is true that volatility can boost one’s purchasing power, but it can just as easily significantly reduce it, and for some, that risk is too much to bear. What has ended up happening is that many of these currencies are being treated as digital speculative assets instead of spendable currency that one can engage in day-to-day transactions with. However, we are seeing the gradual emergence of stablecoins, that are specifically designed to tackle volatility in the space. The successful implementation of stablecoins will without a doubt prove a big step in facilitating the mass adoption of cryptocurrency.
If mass adoption is to come, proper infrastructure will need to be in place in order to adequately accommodate for the increase in users. We have all seen examples in which immature infrastructure has proved incapable of accommodating increased user activity. One clear case being the substantial increase in transaction fees on the Bitcoin network towards the end of the year. And of course the slowing down of the Ethereum network soon after the breakout success of the blockchain-based virtual game, Crypto Kitties. This is an issue that has clearly not gone unrecognized by the community, as second-layer scaling solutions such as Bitcoin’s lightning network promises to increase the transactional capacity of the network. Encouragingly, what these spikes in demand do represent, is an interest in what this community is building, which the optimistic among us would construe as being a foreshadowing of what is to come in the near future.
There is a somewhat short-termism mindset that arguably plagues some actors in the community. No better indicator of this is the activity that occurs in the ICO market, perfectly exemplified by the fantastical amounts of money that some projects manage to raise. Despite this however, there is the often repeated adage that:
‘Rome wasn’t built in a day’
The construction of any industry that hopes to stand the test of time will require a considerable amount of patience. The work that has been done in this industry, just nine years since the emergence of Bitcoin, has been truly phenomenal, which makes it all the more exciting to see what the next nine years will bring.
The potential of this ecosystem far exceeds the number of participants that currently operate within it, mass adoption has simply not yet arrived. Certain obstacles must first be addressed before such an event can occur. However, what is important to realize is that we all possess the means by which to facilitate mass adoption. Be it by educating family and friends, or building something that tackles one of the aforementioned issues, we can all knock down an obstacle that this young industry faces.
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