After a decade of trading and a market cap in hundreds of millions, it’s not yet clear – will cryptocurrencies like Bitcoin go over to the mainstream use?
One factor that could make or break a cryptocurrency is the ability to outgrow its FinTech image and put on some real economy clothes. It depends on consumers who decide whether or not to adopt cryptocurrencies as a payment method. Sadly, they are still vague when it comes trading fiat money for the cryptocurrency.
Also, some high-profile people are pessimistic on this idea of cryptocurrencies. A Nobel Prize-winning economist Robert Shiller (no pun intended) compared cryptocurrency with the Dutch ‘tulip mania’. On the other hand, Myron Scholes, another Nobel laureate, is taking part in the development of a low-volatility cryptocurrency Saga (SGA).
So, why cryptocurrencies aren’t mainstream yet?
Here are the 10 reasons:
1. Difficulties Spending
There are only a few places that accept cryptocurrency. These numbers are nowhere close to bringing crypto to mainstream usage. It’s still really difficult to pay for goods and services at large marketplaces. Not having a common place or a common system to spend cryptocurrency makes adoption much harder.
"In order for cryptocurrencies to become mainstream, the infrastructure surrounding it must be user-friendly and efficient; otherwise, adoption may be limited to a select tech-savvy audience as it has largely been until now."
2. Poorly Understood
Cryptocurrencies still remain that exotic fruit everyone has seen but never really knew what it tastes like. An average person without researching this topic doesn’t really understand what cryptocurrencies do and what their use is. We can be thankful to the blockchain technology that is seeing use cases in medicine, transport, and even food. The exposure to this technology could lead to more interest in cryptocurrencies from the average Joe.
Currently, most people still love to have something tangible, like fiat or gold. Cryptocurrencies still need to tackle the problem of tangibility and trust.
It changes. It changes really fast. No one knows what value a crypto coin will have in the next minute. The value just keeps rising, dropping – the action continues. As a reminder, we can tell you that Bitcoin was close to 20,000$ at the end of the last year, then it lost more than half of its value at the beginning of 2018. Luckily, it has started a bullish trend, and some experts even claim that it will surpass its all-time high by the end of this year.
How can volatility be solved?
The issue of volatility could be solved with more people using cryptocurrency. As more people join the crypto world, the less sensitive any of them will be to price jumps and drops. Cryptocurrency exchange rates could become irrelevant to daily consumers, just like fiat exchange rates are now.
4. Legalities and other Regulations
Each country has different regulations on cryptocurrencies and it gets really confusing. This is one of the reasons why crypto hasn’t gone mainstream yet. Some countries compare cryptocurrencies to fiat money; others say that they are investment tools, and others just flat out ban them.
Some consumers are even worried about whether they need a broker’s license to spend their crypto coins on everyday utilities.
Luckily, there’s hope – the Chairmen of the SEC and the CFTC have asked Congress for regulatory tools for cryptocurrencies. The regulators are playing the same game as we are – and they will surely copy each other’s success.
5. Illegal Activities
We have already heard that Bitcoin and other cryptocurrencies are used by terrorists and extortionists.
“Bitcoins users on either end of a transaction can remain relatively anonymous and cybercriminals have found ways to mask their addresses, so it can be difficult for government authorities and companies to trace such illegal activities.”
The worldwide ransomware attack WannaCry used Bitcoin as a payment for unlocking the computer data. It still remains the best tool to hide one’s identity and transactions.
Cryptocurrencies pose a risk of luring people into Ponzi schemes. There’s still a great deal of misinformation and lack of understanding on cryptocurrencies. Also, fraudsters take advantage of gullible and less experienced people by launching Ponzi schemes, which promise ‘Guaranteed’ and ‘Huge’ returns in no time.
One of the most known cryptocurrency Ponzi scheme is Bitconnect. People have invested thousands of dollars into the scheme, and even some Youtubers lured their followers to buy into this “investment platform”. In the end, Bitconnect shut down and was accused of running a grand-scale Ponzi scheme.
Cryptocurrencies are not regulated by government or banks, unlike other investments. When you buy something with a credit card and get ripped off, you can call a bank for compensation. A whole different story with, for example, Bitcoin – there is no way to get your money back.
8. Not a Commodity, not a Currency
Cryptocurrencies lack clarity about their origin. Back in the old days, metals like silver and gold were used as currencies. After that, we saw the rise of fiat currencies that are printed by the government or central banks. Some say that cryptocurrencies aren’t called commodities because they can be mined (verify transactions by solving mathematical problems).Also, it’s not a currency because it’s not controlled by any government and is ‘democratic’.
9. Media Influence
Social media and other media outlets have been the primary sources of outrage and confusion for the cryptocurrency community. It appears so that some media websites are bought to write and promote articles that influence people to sell their cryptocurrency holdings. As a consequence, the price of cryptocurrency drops, as well as the trust and confidence of the investors.
The way that media looks at cryptocurrency as means of manipulation and psychological influence is one of the main reasons why cryptocurrency is struggling to gain mainstream adoption.
10. Learning Curve
For a person who expects fast, easy and clutter-free transactions cryptocurrencies might look like a wild animal. Regular fiat transactions require you to have a bank account which can be opened without much problem. Cryptocurrencies, on the other hand, require a whole array of things before getting started. People need to learn how to set-up a digital wallet and how to properly store private keys and passwords because without them your account is worthless. Then, people need to register to an exchange where they will be able to buy crypto for real money. Lastly, some exchanges have different and difficult interfaces, so a wrong click could mean that you’ve just sold 100 Bitcoin for 10 cents.
All in all, blockchain technology and cryptocurrencies are revolutionary and can offer new business and trust models. This technology could be potentially used for anything, ranging from quality assurance to trading, from audits to supply chain management. Find out the 17 blockchain use cases that you might not have known. However, cryptocurrencies need more time to mature, develop new security functions and establish trust with the community. Also, people need to be open-minded about the whole situation and want to learn more about cryptocurrencies and their use cases.
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