Since the advent of blockchain technologies and associated cryptocurrencies in 2009, less than 30 million wallets have been opened around the globe. Mass adoption of Bitcoin has not reached the heights expected yet and it has become a worry to most investors of the asset.
Back in 1989 during the advent of the internet age, much skepticism and criticism were thrown about the industry. Ten years later, over 280 million people were connected to the internet globally. Blockchain has had the same calls of growth but is yet to gain such adoption in the world.
According to Statista, the total number of blockchain wallets opened as of Q3 2018 is 28.8 million users. This shows close to 10 times fewer people accepting blockchain compared to the internet in the same period, what could be the issue?
Graph showing the growth of blockchain wallet users. (Image source: statista)
Table of Contents
- Steps to Mass Adoption of Bitcoin
- 1. Unsystematic issues
- 2. Unsystematic challenges
- 3. Regain trust of the people
Steps to Mass Adoption of Bitcoin
The problems associated with the mass adoption of Bitcoin are easy to spot out but finding solutions is not as simple. Below we look at the various steps to be taken to increase the adoption of Bitcoin across the world. In general, the issues can be categorized as systemic and unsystematic challenges.
1. Unsystematic issues
· Solving scalability issues
One of the most persistent problems in the world of cryptocurrencies is the scalability trilemma. The trilemma involves Decentralization – Scalability – Security and the challenge of a blockchain project obtaining all the three. Bitcoin and Ethereum were created with decentralization and security in focus. However, it became evident that the transaction processing times can be extremely slow and expensive.
Well, from the technical side, there are still some obstacles as far as I see – the current 7tx/s limit is quite too low to provide a global payment network. Still, I believe that all these aspects will be solved over time – and all these smart brains out there will come up [with a solution] for these current or upcoming issues. – Dominik Weil, Co-Founder of Bitcoin Azerbaijan
This problem is currently being addressed using the Lightning Network that is set to increase the throughput and speeds on Bitcoin’s system. For masses to uses the technology, transaction times need to be minimized.
· Security and ease of use
Cryptography is one of the safest ways to transfer value in a peer to peer network. Bitcoin has however suffered from the theft of private keys and theft of coins as seen during the Mt. Gox scandal. Furthermore, buying and exchanging of Bitcoin requires a longer process than most payment options.
New investors in the field are usually discouraged in the processes required to obtain and store Bitcoins. Having a one-stop shop that you can buy and securely store your coins will play a huge role in the adoption of Bitcoin in the future.
2. Unsystematic challenges
· Government participation in blockchain: “Regulation first, Business later”
Governments have the biggest role in pushing global mass adoption of Bitcoin in two major ways: regulation and education. Blockchain technologies have suffered a lot in the past decade from governments lacking proper regulations set in place for the industry.
The Securities Exchange Commission (SEC) has a “regulation first, business later” policy (Image: Bitcoin Magazine)
Mass adoption of Bitcoin needs the government’s regulations to be implemented well and in a timely fashion. Working in an unpredictable environment makes it difficult for people to join the movement which should be solved by setting fixed rules.
“The first step for Bitcoin to be adopted on the mainstream level is US government’s stamp of approval, the rest has already been done – ATM machines, Bitcoin Exchanges, Merchant Accounts, Bitcoin Wallets, Bitcoin Payroll – the system is up and running.” – Michal Handerhan, CEO of BitcoinShopUS.
The recent regulations being set in the United States by the SEC and further scrutiny by the Chinese governments will be key for mass adoption of Bitcoin. The G20 summit also discussed the blockchain industry but are yet to offer a conclusive say on the topic yet.
· Big Corporations and Merchant adoption
One external factor that will boost the mass adoption of Bitcoin as a form of transaction is adoption by big corporations and merchants. According to Kevin Barnes, CEO of Playcoin Entertainment,
“The largest corporations accepting bitcoin as a global payment form. The more your daily life sees bitcoin being accepted as a payment form, the more you are programmed to adopt it as such mentally.”
· Kill off speculation in the market
Bitcoin is being used more as a speculative asset rather than a transaction asset. This has made the price of Bitcoin extremely volatile from highs of $20000 USD to $3500 USD today, less than a year later. Such wild swings in volatility continue to push away investors (risk averse) from the asset.
“For Bitcoin to have value as a payment method, two things need to happen: It must be very easy to obtain bitcoins and it must be very easy (and cost effective) to use them to purchase a wide variety of goods.” – Teemu Päivinen, CEO of Coinmotion
Having stability in the price of Bitcoin will not only increase adoption among the retail investors but institutions as well. A currency requires stability for widespread use to grow hence the need for stability with Bitcoin.
3. Regain trust of the people
Trust is almost completely lost in the blockchain and cryptocurrency industry. This can be seen through the closure of most blockchain projects barely a year after offering their ICO. As of 2017, over 60% of the projects that offered an ICO were scams or failed before the end of Q3 2018
In a recent survey carried out by PricewaterhouseCoopers (PwC) users specified Trust as one of the biggest barriers to blockchain adoption. Potential reasons could be the constant exchange hacks, scams and the whole bad publicity surrounding ICOs. In a sense, people still don’t trust the technology itself. Many are put off by the possibility of losing all their funds due to a private key theft/loss.
Regaining trust will require stringent laws to be in place to kill off ICO scams. Notwithstanding, pump & dumps and any kind of underperforming project should be destroyed. Investors’ trust in projects that are stable (and NOT scams) will increase the overall adoption rate of Bitcoin.
· Measures to regain investors trust
Vitalik Buterin, Founder of Ethereum speaking at TechCrunch (Image: TechCrunch)
Vitalik Buterin, Ethereum’s founder has repeatedly called for a new model for ICOs to operate, DAICOs. This model allows investors to vote on the release of funds raised in a gradual manner. Provided investors are satisfied with the performance of the team, they release the next batch of tokens. If the team underperforms, investors can decide to destroy the contract and get their funds back.
This keeps the development teams focused on the project and discourages raising capital without a solid plan.
We still have a long way to go for Bitcoin to be globally adopted. However, with the points above being taken into consideration and implemented, massive adoption of Bitcoin will be reached soon. The future awaits for all the enthusiasts in Bitcoin. It is also your role to educate the masses!
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