We are now going on ten years of the Bitcoin era. Cryptocurrency has become a genuine part of finance in global society and can no longer be ignored. It has proven itself to be more than a fad or quirky interest of a few computer geeks. Why, then, has cryptocurrency and blockchain technology not been adopted on a wider scale? What is stopping the world at large from adopting Bitcoin and other tokens as the future of global finance? Let’s look at some of the largest obstacles.
Cryptocurrency is Still Young
One of the major reasons that Bitcoin and crypto have not yet achieved the widespread adoption that many long for is time. Just ten years ago the world new nothing about Bitcoin and blockchains. When you consider how far the cryptocurrency has come in such a short period of time, the advancement of digital currencies is very impressive.
But there are some people in the cryptocurrency community that have a short-term mindset. Indeed, the market sometimes lends itself to this frame of mind with its wild swings in value. Some have placed a higher focus on making a short-term profit than advancing the cause of cryptocurrency, and who can judge them?
Patience is a virtue required for the adoption of cryptocurrency and blockchain applications. There is a tremendous amount of work that has been done since Bitcoin was introduced, and most of it has gone unnoticed. It is largely conducted behind the scenes and doesn’t get nearly as much attention as Bitcoin gets when it shoots up in value or crashes back to earth. Whether we like it or not, the true focus has been on cryptocurrency as a profitable investment instead of as a pathway to a cashless society. This should change over time.
A Volatile Market
Another stumbling block in the path of cryptocurrency is the volatility of Bitcoin and other tokens on the crypto markets. It is not uncommon to see a token swing upward or downward by 20% or more in the space of a single day. It may even make these swings several times in the course of a day. While this can be great for swing traders and those looking to make a short-term profit, it causes important institutional investors to stay away.
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Speculation to an excessive degree is not good for crypto. It obfuscates the technology that is responsible for the whole thing. Blockchains and what they are capable of get lost in the shuffle of the market swings. This relates to what we were talking about with time. The media becomes more focused on Bitcoin’s value on a day-to-day basis. This fixation on value diminishes interest in blockchain technology.
A volatile market is also a risky market. This conveys the impression of an unstable form of currency. When a currency is unstable it is harder for merchants to accept is as a medium of exchange. Likewise, the consumer is also affected. A few hours ago your stash of Bitcoin may have been enough to buy you two tickets to the Bahamas. By the time you make it to your computer to buy the tickets the Bitcoin might only be enough for one ticket. This is an extreme example but swings like this have the ability to increase a buyer’s power or significantly reduce it.
If you were a merchant selling physical goods in your store and accepting Bitcoin, what happens when the value of the Bitcoin you accepted for a purchase falls suddenly? You could actually incur a loss because you have already paid for the inventory that you sold. There are solutions to these problems, of course, but it is the implementation that slows down the progress of adoption.
Knowledge is Power
There is an old saying that goes something like this: we fear what we do not understand. On the whole there is a general lack of knowledge about Bitcoin and other cryptocurrencies among the general public. Sure, they may know what Bitcoin is and that it is a virtual form of money, but they don’t really know about blockchains and wallets and any of 100 other things that relate to crypto.
Individuals have to be educated on what Bitcoin is and how to use it. This means making it much easier for people to buy crypto. The minute some people start jumping through hoops to get their hands on crypto is the moment that they lose interest. The fact is that many people perceive cryptocurrency and blockchains as being too difficult to learn about. We have to remove the technical stigma and replace it with a layman’s appeal.
Likewise, it is important to educate merchants on how to accept Bitcoin for their business. They have to be shown ways that the currency can be taken as payment and used to order inventory. With that comes the need to educate about taxes and how to properly keep records.
Education is a process that also takes time, so it is related to the first obstacle that we mentioned. All of these obstacles that are stopping Bitcoin adoption are connected to one another like a spider’s web.
For Bitcoin to be adopted on a mass scale there has to be some type of stable infrastructure. On the surface this seems to fly directly in the face of what cryptocurrency is all about. It’s supposed to be anarchic in a way. Decentralized. Unregulated. Immune to control and manipulation by single individuals or groups. It can remain all those things, but there has to be some type of governance that addresses issues like scalability.
Scaling is the most prevalent example of what is basically a lack of proper infrastructure. Bitcoin has always struggled with how to deal with increased user activity. This problem makes it hard for Bitcoin to compete with other forms of payment processing like Visa or MasterCard. Those platforms can process transactions much faster than Bitcoin at the present time.
There are solutions being developed that will help to shore up the infrastructure of Bitcoin and other cryptocurrencies like Ethereum. One of these is something called layering which is best reflected by something called the Lightning Network. This essentially creates a layer on top of the existing blockchain where transactions can be processed in a more timely fashion. There are also other cryptocurrencies being developed that are much faster at processing transactions.
It’s an Issue of Growing Pains
All of these obstacles are expressions of the growing pains that cryptocurrency has to face before it can achieve mainstream adoption. The positive side of the issue is that the progress which has been made thus far with blockchains and Bitcoin has been phenomenal. If we look at history we know that growth and evolution becomes exponential with the passage of time. The longer crypto is around, the faster it will grow.
Better education for those who know little about crypto. Better solutions for problems like scaling. Lower volatility in the crypto market. These are things the crypto community needs to focus on, things that combined with the passage of time will lead to the widespread adoption of Bitcoin and blockchains.