Bitcoin’s developers intended for cryptocurrency to have a practical use: as a peer-to-peer electronic cash system that could be traded on the internet for goods and services like the dollar, yuan, or euro. A revolutionary kind of money that operated on blockchain technology, cryptocurrency was to be open-sourced and tamper-proof, but also decentralized and not beholden to any third party, such as a government or bank.
Because of associations with outlaws and hackers, along with wild instability in price, bitcoin has become something else: a speculative commodity that takes investors for wild roller-coaster rides of volatility. A year ago, a single bitcoin was valued at nearly $20,000; today, it’s worth about $5,000 — and is no closer to realizing its original purpose.
Bitcoin’s failure to catch on as practical money, along with a lack of results so far from the thousands of other coins available, doesn’t mean that cryptocurrency can’t perform as its original issuers intended. It still can, and should, be normalized as a way to pay for goods and services. There are barriers, but they can be overcome.
Challenges of Crypto Adoption
The first barrier to adoption is the lack of a coin that meets the current needs of payments. Some coins offer fast transactions but are too simple for complex activity, while others offer advanced features but suffer security loopholes; all of them lack a single source of valuation. No cryptocurrency currently on the market has all of the required capabilities. The first truly usable electronic coin, one that is widely tradable for goods and services, has yet to be mined.
It’s in all of our best interests to create and use such a coin. Blockchain technology already offers appealing features that sharply curtail or even eliminate fraud and could reduce, or even end, transaction fees.
Until crypto is usable in practice, buyers and sellers alike will continue to default to dollars or other fiat currencies. The good news is that a new crop of developers is already going beyond trying to win the speculative market, turning their focus instead to solving real-world problems, including improving retail transactions.
No matter how beneficial using cryptocurrency would be for merchants, it is ultimately consumer demand that will drive adoption. That demand will in turn hinge on two factors: education and incentive.
Education of Consumers
Many times, adopting a new technology causes a great deal of trepidation.We’re afraid of messing it up and looking stupid, or of making a mistake that costs us time, money, or business. So we stick to the devil we know. This can be alleviated, however, if we can learn how to use new technology in a low-stakes environment.
We know that consumers are absolutely capable of developing new shopping and spending habits — just look at the way online retail has overtaken brick-and-mortar stores. It just takes the right incentive.In the case of online shopping, it was a combination of price, selection, and convenience: In its early days, Amazon won over consumers by offering far more titles, at a significantly lower price, than had been possible in any single bookstore. As the business model grew, the convenience factor became a driving incentive. From this, and other cases like it, we see that if it saves time and money and offers greater service, then consumers will adopt a new technology.
Incentives for Consumers
For cryptocurrency adoption, this means making a tool available that incentivizes consumers to use it while teaching them how. A mobile payment network and digital wallet like CrayPay, for example, offers consumers incentives on retail purchases. At the same time, it allows users to pay from their mobile phones — an increasingly familiar paradigm — in order to teach them how to use crypto in a low-stakes, seamless environment.
Cryptocurrency, running on blockchain technology, can make payments safer and more efficient while also saving everyone money by cutting out the middleman and his fees. Whatever the education, whatever the incentives, it’s something worth doing.