Cryptocurrency for the masses: is it still a dream?
I work in the crypto-industry for two years already and, you know, sometimes I can’t sleep at night. Of course, this industry is young and not yet stable. The bitcoin conversion rate skyrocketed in two seconds, and still every day can be full of surprises for us. Regardless, that’s not the main reason of my sleeplessness.
So, what do I worry about? Here is my story.
Scene 1. History
How did it all start?
Everybody knows the legend of Satoshi Nakamoto. A person or group of people who came up with Bitcoin in 2008. Then, there were not enough enthusiasts to support and develop the technologies of Bitcoin. More precisely, the blockchain.
After that, people started mining, receiving huge rewards.
In general, programmers, cryptographers and those very familiar with the IT-world became real crypto-enthusiasts. For the general public, it was unknown and not interesting.
Still, with each year, more and more people became curious about this innovation. Cryptocurrency exchanges and exchangers appeared. Services, websites, stores started to accept payments in Bitcoin. Finally, the developers payed attention to the blockchain as a pioneering technology.
New crypto-currencies came to life — Ethereum, Litecoin, Bitcoincash, Paymon. The market developed very rapidly, covering more and more new areas… Everything could go well. I wish I could stop my story right here with the happy ending. But, unfortunately, I can’t.
Scene 2. Problems
Yes, in addition to general euphoria and joy, there are serious problems in this market. It’s time for the main question: WHAT STOPS PEOPLE to use cryptocurrency?
Let’s start with the technical issues. The first one I already mentioned is the volatility. I am from Russia, so I know what I speak about: recently the ruble fell against the dollar by 4%. The whole country talked about this. Everyone knows it’s bad, because prices will rise.
And now this is the same about the famous Bitcoin.
In this market, there are STILL TOO FEW PEOPLE. TOO LITTLE MONEY. Throw a stone into the ocean, or throw a stone in a puddle. The puddle sprinkles you, and the ocean does not react at all. This is the approximate difference between the market of cryptocurrency and the stock market.
The most popular cryptocurrencies in the world are slow. As you could guess, I’m not talking only about Bitcoin. The speed of cryptocurrencies doesn’t allow to exchange normally, to make free and instant transactions.
Remember December 2017. It was a great test of the Bitcoin blockchain. Only it did not pass the test. Ethereum also did not pass, as the technology still can’t fix it. Commission for the Bitcoin transaction averaged $55, and people had to wait for days to get their money.
Now let’s think. How many purchases and payments do you make on average per day? Including coffee and other small things. Maybe, 10–20 times? So, if all people in the world use Bitcoin they will have to wait for days to buy something and pay so much extra money for the commission. Very inconvenient technology, isn’t it?
So, at the peak load, the bitcoin network held 490,500 transactions, this is 24,525 people who use it as a means of payment per day! — an insignificant number. Yes, I took away the “hot wallets”. But if we are talking about “hot wallets”, then what are we returning to? To the banks!
Almost all blockchains have commissions. Why?
Firstly, this is a protection against overload in order to not put the network down. It is made to avoid people who would make 10,000 transactions per day just for fun.
Secondly, it’s necessary to reward miners. Miners are like the good guys who work on farms to confirm transactions.
People don’t need a commission either. An ordinary person from the street doesn’t want to pay a cent for the fact that he sends money.
For the users of 21st century it is incredibly difficult to use cryptocurrency! Have you ever been approached by a friend with a question: “Hey bro, how should I buy into crypt?” or “Hey, buddy, what is token?” Too complicated to explain, I think.
People got used to solve all the problems by one simple button, so it seems impossible for them when you start saying: “Go to MyEtherWallet or somewhere else, then create an Ethereum wallet, keep the public and private key…” And this is about 432 symbols, different numbers, and letters and different registers!
As for me, it has to be simplified. A person on the street is not interested in the consensus algorithm, how it works and what’s under the hood. He needs to use it:
It feels like we sometimes forget that we work for ordinary people, and not for computer programmers.
People (The market itself)
The biggest problem of cryptocurrency is the market itself. People who work in the industry.
The market is getting stuck. Many projects got stuck: “Blockchain, blockchain, blockchain. Blockchain advisers, blockchain consultants…”
If you open LinkedIn and enter TOP ICO Adviser, TOP Blockchain consultant you will find plenty of people who think the blockchain is just for the cryptocurrency. And they will be really surprised, hearing that this technology can be based not only on crypto. They, obviously, will argue with you. Moreover, they usually call themselves the “experts”! And they take money for “consultations”.
Let’s imagine them. There’s an “adviser” sitting somewhere in front of the computer giving advice to anyone who asks. And why does he name himself an adviser? In fact, they usually have no idea how the market really works. And as a result, there is no trust between the market players.
For example, do you know John McAfee? Of course, you do. He takes $100,000 from ICO-projects for a single tweet, and he doesn’t really care whether it’s a scam or not.I`m not sure he cares about the quality of the projects. Leading cryptocurrency media demand $200 to $40,000 per article. They also don’t care what the quality of the project is, they just earn money.
So that’s why there is no way to trust anyone here. If you want to make an article in Forbes about your product, it can be published for free. But if there are words, such as “blockchain”, “cryptocurrency”, ext, then it costs a fortune. And this is not Forbes’s problem, it’s the market’s one.
Everyone is after the HYIP. Investors do not try to look for the really promising startups. They are chasing the HYIP. And what it will bring us to?
Plenty of companies today make the projects, conduct ICOs, advertise it on cryptocurrency media, attracting the target audience. So what? It works only for the small community.
Let’s look at the statistics. Today the market capitalization of the cryptocurrency is 334400 billion dollars (24 May, 2018). In the world — more than 70 trillion.
I’m sure, crypto can’t become popular because people simply don’t believe us, and so they don’t believe in the technology. And this is not their fault.
Scene 3. Solution
It is relevant to compare the boom of ICOs, blockchain-companies and cryptocurrency with the dotcom era. Everything was the same.
Among all these HYIPs, small projects grew up and developed. (By the way, do you know what HYIP means? HYIP — High Yield Investment Program — this is a pyramid!)
The dot-com bubble burst on March 10, 2000, when the NASDAQ high-tech companies index collapsed, most dot-com companies burst together with the US stock market. As a result, hundreds of Internet companies went bankrupt, were liquidated or sold. Several company executives were convicted of fraud and embezzlement of shareholders’ money. Most business models of new, Internet-oriented companies were inefficient, and their funds were spent mainly on marketing campaigns and advertising on television and in the press.
Does it remind you of something?
There were projects that did their job, despite the fact that there were competitors with billions of dollars in marketing. One such a project is Google. And don’t say this is the mistake of the survivor. It is necessary to think — WHY did they survive?
Google was created by a few students in 1998. Having made the beta version, it turned out that the search results of Google were better than those of other search engines. Google was praised for more technological innovations than the overloaded portal sites that were seen during the growing dotcom bubble as the “future of the network”, especially by stock market investors.
And what’s the solution for the blockchain-projects today? The same — just DO your job!
Let’s take Company X. Like many others (not the scam ones) it starts without money and support, but with enthusiasm and desire to change the world. The only right thing for them is to work, despite scam-advisers, scam-experts and extortionists, who threaten and ask for money. The company doesn’t give a penny to them. It just continious to work almost 24 hours a day, inspired by its own idea.
Then finally, the first investors appear. The company meets real crypto-advisers and people from the real sector of the economy. Some experts actually deny them, but this is normal — they learn from the criticism. Also, the startup doesn’t forget about the institutions. Basically, they do not understand anything in crypto-world, but it is still necessary to MAKE them understand. Otherwise, Company X would close in its small community and do nothing for the world.
So the result comes soon. Important figures of the industry pay attention to the project. The startup finds partners and pays them in tokens for the promotion. And it’s possible only in case the projects are really worth attention, and the idea is very innovative and useful for people. This is an example of honest work and success.
Let’s remember the Amazon investors in 1998 when they invested $ 10 and the stock rose to $95 at the peak. Only now Amazon shares — $1500
Investors need to think long term.
So, companies also should think in long-term and work in any situation, with the fall of the market, with a shortage of funds. If this is a real team and a real product, it will be needed on the market. If you find a really strong team with fire in their eyes, it will repay you in full!
“All problems have a technical solution, just the biggest problem is to choose the right solution and give up those that entail other problems” © Arthur Charles Clarke.
I worry about us. I worry about people who work in this market. Because, as for me, we could change the world in the better way, but not all of us want to. Most of us just think of how to make money on cryptocurrency. That’s why I can’t sleep, not only dreaming about the perfect world, where the cryptocurrency is popular and everyone can use it — fast, safely and free, but also working for this idea.