Photo Credit: Photo by André François McKenzie on Unsplash
Bitcoin changed the financial world when it was introduced in 2009 as the first cryptocoin to be developed. In 2013, Bitcoin entered a bull market and the price soared from $50 to $1,160 but since then it has experience volatile fluctuations. Riding the currency wave until it becomes mainstream and it can storm the market with its horns once gain. Bitcoin is the leader in cryptocurrency but it is far from the only player in the game. Litecoin is a strong rival of Bitcoin, and Ripple is on trend to become just as popular. Many people still don't understand these digital currencies, simply associating them with drugs or as a way to launder money. Real life Breaking Bad stuff. This perception is slowly changing as many large corporations are adopting cryptocurrency as a form of payment.
AT&T has started using BitPay to accept cryptocurrencies from their customers to pay their bills, the first mobile phone company to make this move. Other companies where you can spend your hard earned crypto money are Overstock.com, Newegg, Shopify stores, and Dish Network.
Cryptocurrencies gained further attention this week when Trump tweeted yet another nugget of gold.
"I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity...."
The old adage, All PR is good PR, stands true. The price of Bitcoin experienced a slight increase from this one tweet. Even better PR came from Jerome Powell, Chairman of The Federal Reserve, when he made a statement comparing Bitcoin to the likes of gold.
“Almost no one uses bitcoin for payments, they use it more as an alternative to gold,”
This has the crypto community feeling very positive about the future of cryptocurrencies. Powell referring to Bitcoin as, "A speculative store of value, like gold." should give people a sense of trust to at least look into investing in different forms of currency. The world of Digital Money is exciting, but it is also scary when you don't have a pile of money to invest without concern for your financial future. Facebook has a hearing July 16th, with the Banking Committee of the United States Senate to discuss the future of their own digital currency - Calibra. One of the world's largest social media platforms creating their own currency could be a major factor towards widespread adoption.
Barriers holding back mainstream adoption of cryptocurrencies:
Trust
The thought of digital money brings to mind hackers stealing your funds or various internet scams - now Nigerian princes want your Bitcoin. Another issue of trust comes from dirty crypto, cryptocurrency that is used for the purchase and sale of drugs, and for money laundering scams. Emotions control the ebb and flow of the Bitcoin market, so a feeling of trust is essential to its success.
The Technology
There is a reason so many teenagers have adopted the use of digital money where their parents are still scratching their heads. Gen Z has not known an age without a computer and internet access, they are the digital generation. Younger people have an easier time understanding the principles behind cryptocurrency and are more likely to adopt the technology early on. Older generations are still trying to understand how this currency works, they will be more difficult to convince. Traditional money feels safe and secure to them, why change what works?
Volatility
Bitcoin and most of its friends are not backed by actual coin, Bitcoins are not fiat money, (MintChip is a Canadian electronic form of money that is backed by the Canadian dollar). Bitcoin's value comes from whatever buyers are willing to pay for it at the time. A bull/bear market indeed.
Environmental Impact
Mining Bitcoin uses an incredible amount of electricity and resources from very powerful computers. Improving our environment is a passion of Gen Z and they are set to be the largest U.S. consumer base by next year. Gen Z is also more apt to adopt digital currency as a norm, so it would be beneficial to develop more sustainable mining practices. There are some countries already doing this such as this initiative in Canada. Ignoring important values of the next generation would only hurt cryptocurrency.
Conclusion
Despite the very bold statements of American entrepreneur McAfee, who thinks mainstream adoption will happen by 2020, I think it will take another 5-10 years before worldwide adoption is seen. The technology hurdle alone will need vast improvements to make crypto easier to understand and easier to purchase and sell for the everyday human looking for a wise investment. User experience should not be ignored.
It will happen though, we are in the digital revolution and a digital money seems like a predictable future.
