Top Cryptocurrency Mass Adoption Challenges And What To Do To Encourage Widespread Use Cases
Top Cryptocurrency Mass Adoption Challenges And What To Do To Encourage Widepsread Adoption
With crypto’s latest downhill trend, it is almost impossible to talk about positive outlooks and future projections. Bitcoin’s recent falling prices and by extension, other altcoins have triggered widespread episodes of fear, uncertainty and doubt.
This is particularly alarming because most people didn’t anticipate bitcoin’s price falling to “extreme lows” of $3500. “Experts” are saying everything from “we saw it coming” to “bitcoin will drop to $0”.
Seasoned industry watchers and participants know that this has happened so many times in the past. It is imperative to note that 1 BTC was valued at less than $700 in July 2017 –slightly over a year ago.
So, all things considered, bitcoin is doing relatively well; maybe not as expected, but overall, it’s not doing so badly. If we’ve learned anything from past bearish crypto trends, it’s the fact that the market always bounces back.
This is why even though it doesn’t look like it yet, this is probably the best time to start thinking about doing even more to encourage cryptocurrency adoption across the globe. This way, when the next bullish run begins, the industry can ride the wave and attain increased popularity and adoption.
To do this successfully though, we would need to identify and understand the problems that might get in the way of mass adoption.
Severely Volatile Markets
In December 2017, we saw bitcoin rise to soaring heights of $18,000, pulling other cryptos up with it. Ethereum was priced at about $1,000 too. It was such a great time for many early investors and those who rode the waves.
New millionaires were minted and many made more money in a few months of trading crypto than they did in the past 5 years combined. Even better, we saw traders who made a year’s salary in less than 60 days of trading.
These days however, bitcoin and the entire market is doing poorly. Bitcoin that was the darling of all crypto traders last year, has crashed to unexpected lows, with some experts, predicting even lower prices.
If past precedents are anything to go by we can expect bitcoin’s value to go up in the near future. Unfortunately, this is one of the key issues affecting bitcoin and other cryptocurrency’s mass adoption. This extreme volatility makes it unsuitable for use as a reliable means of value exchange.
While there’s every possibility that the price will skyrocket back up again, such fluctuations are not for the faint-hearted. They’re also not suitable for use as a currency. The solution to these wild price fluctuations? Stablecoins.
We’re beginning to see more and more of these coins, whose values are tied to real world assets, show up in the market. If stablecoins attain significant adoption, they just might become the preferred cryptos of choice.
Smart investors are usually wary of investing in assets fueled by mere speculation as against tangible valuation. Bitcoin and many other cryptos are in this category now. Bitcoin and other cryptos have to overcome these wildly fluctuating prices if they want to still be around in the near future.
Difficulty In Usage
One of the biggest challenges facing cryptos as a whole is usability. Traditional currencies are popular because they are easy to use. There’s no hoops to jump through. All you have to do is simply choose what to buy and pay.
Cryptocurrencies on the other hand, can be tedious. For instance, signing up to trade on a crypto exchange –even the more popular ones- can mean jumping through a few hurdles like Know Your Customer (KYC), exchanging your fiat currency to bitcoin before trading other cryptos, withdrawal limits caused by liquidity issues and so much more.
Compared to traditional finance where you have even contactless payment systems, cryptocurrencies are stressful. The good news is there are a few crypto projects solving these problems and making life a lot easier for all crypto users.
Dash for instance, is doing great things in the payments sector through its instant payments technology. But even with some of these technologies, there’s still a long way to go with these cryptocurrency technologies.
Mass adoption becomes easier if and when usability becomes seamless and intuitive. Alphanumeric addresses need to be replaced with something easier like names or emails, hot and cold wallets need to be better secured, and so much more.
Even some of the more revolutionary products like decentralized exchanges used for peer to peer transactions will need to have better user friendly interfaces.
Another major problem that has been bedeviling the industry is scalability. Currently there’s a limit to the number transactions per second that most of these networks can process. Compared to VISA’s huge number of executed transactions per second, the cryptocurrency sector is largely lacking behind.
And this is due in part, to scalability issues. Some of the networks like bitcoin and ethereum are working on resolving this. If they succeed, it will further improve their chances of becoming widely acceptable.
Bitcoin is currently working on the Lightning Network, while ethereum is working on the plasma protocol and SNARKS. If successful, ethereum’s plasma protocol will dramatically increase its capability to process hundreds of thousands of transactions per second.
And some companies see the potential of this technology, resulting in their preparations to adopt the tech if/when it finally rolls out.
Crypto’s fast rising profile has seen regulatory agencies across the world, institute policies and regulatory framework specifically targeted at the crypto sector.
While these regulations will help curb the excesses that’s rampant in the industry and eliminate the scam projects, the reality is that they can be quite crippling. Right now, regulations are at the behest of country and state.
Some countries like Malta have favorable regulatory policies and frameworks, others like China don’t. This has sent mixed signals across the crypto community, resulting in many potential investors becoming wary of the sector.
The good news is that these regulations are forcing the industry to take a deeper look at some of its less honorable projects. While there’s no central governing board or anything of the sort, we’re seeing countries increasingly formulate policies that can help.
Even more, crypto exchanges are beginning to include more traditional markets and assets in their lineup. For instance, ICE Markets’ launch by Bakkt early next year is creating a lot of buzz, and putting the crypto sector in favorable light.
In fact, Bakkt’s technology and platform will make it incredibly easy for users to migrate their bonds and stocks paper certificates to the blockchain.
Current Liquidity And Security Problems
Security and liquidity problems are real and affecting the current state of the market. As we speak, crypto exchanges are still battling with liquidity –hence the need for custodial services- and security flaws.
This year alone, over $20 billion in cryptos has been stolen by hackers. Exchanges need to beef up their security by implementing hacker and fail proof security measures. With these in place, investor confidence in cryptos will soar through the roof.
If investors know that they can leave their tokens on an exchange platform and trade without the need to worry about losing their tokens, most would rest easy. And this will have the added benefit of reducing liquidity issues as people wouldn’t need to withdraw so much funds from the platforms.
The good news is that in spite of all these major challenges, all of these key issues are being rectified and attended to. Once all these barriers are eliminated, you can be sure that cryptocurrency will enjoy near instant widespread adoption and popularity across the globe.
And if you’re worried about crypto’s rapidly dwindling fortunes, don’t. The industry does this every 3-4 years as a form of correction. Investors who are familiar with the cycle know this is the best time to actually buy, and hold until the downward trend is reversed.