What is needed for mass adoption?
The 3 things according to Armstrong are: Volatility, Scalability and Usability. Of course he has a point and all 3 things need to be addressed. And they can be. There are good solutions out there.
The real question is: are these things really standing in the way? Yes, they definitely are. The bigger question is: why are these three things still standing in the way? Especially with all the funding that was raised in the last bull market almost 2 years ago? Has there really been so little productivity? Let me try to answer that from what I’ve seen.
The three things Armstrong mentioned are on a macro level. We also have to look at the obstacles that are on a different — a micro — level.
The first hype is over
According to Gartner, blockchain is currently entering the ‘Trough of Disillusionment’. Although cryptocurrency is more than just blockchain, it has got affected by it: the first hype is over and it’s struggling to get to the next step. That’s not necessarily a bad thing. It’s just a step in growing up, in getting mature.
Following that thought we have to look at the Cryptocurrency Maturity Model:
The last couple of years crypto struggled through the first phase. Of course the technology behind cryptocurrency will constant be improved. It needs to evolve to gain the end goal: mass adoption. For example improvements have to be made on the following terrains:
- Security: trust is needed for the people to embrace cryptocurrency. While cryptocurrency by themselves are safe, it’s the interfaces used to trade and to do payments with, that are vulnerable. The Cryptopia and the Bithump hack are just two examples of events that took place this year.
- The speed: transactions are too slow. Everyone that has transferred BTC or ETH knows what it is to have to wait for confirmations. The speed becomes even more of an issue when real-time confirmation is needed. At this moment even the fastest blockchain is no match for Visa’s network.
- Costs: mining fees for BTC and others are high. This makes BTC, but also other coins unsuitable for micro-payments
We’ve tackled a lot of the first phase issues. And we have moved on to the second phase: The Tech Based competition. What we see here is that a lot of start-ups are popping up and are working on a solution for a problem. A lot of times the so called problem does not exist or the solution doesn’t actually fully solve the problem or is solving the wrong problem.
Besides the fact that a lot of start-ups aren’t fully focussed on the right solution, there’s also an other issue that marks the immaturity of the blockchain/crypto industry.
New crypto/blockchain companies tend to take too much time looking at what others are doing. It’s always good to check the competition and act on what they are doing, so you can improve your Go To Market Plans, or optimize your USP’s. However, in this immature ‘business’ it seems the way to deal with the competition is a Tweet war: making your peers and their projects look bad or just fight because there’s a difference of opinion on a (un)related topic.
While this is a normal and maybe even a necessary step; we’re all growing and learning in this new industry, mass adoption can only be achieved if the community put their differences aside and work together, use each other’s strengths, to reach the next levels of maturity.
There are no hard lines between the steps. It’s more of a watered-down transition. This means that right now we are already experiencing factors of all steps (except the last one, perhaps).
There are already companies working on solutions based on real use cases. We can distinguish two main trends when it comes to crypto (payment) solutions. There are companies that are trying to entirely replace fiat with crypto. Others are embracing both and are creating a bridge between these two worlds. The latter trend, although fewer companies are involved (because it’s really complex), is by far the most likely to succeed. These companies understand that crypto and fiat shouldn’t be different worlds. These worlds should be combined; crypto should complement fiat and vice versa.
The signs are there
With all new impactful developments, governments and (in this case) financial institutions, are struggling on how to deal with them. Their primary reaction is to regulate, create legislation and make rules. Just last week this headline hit the news: “Rakuten Bank Now Allows Millions Of Its Customers To Buy Crypto”. Although this is good news, the word that stands out is “Allows”. It’s a first step, a sign that the impact of crypto is undeniable. But is not yet the full embracement that we’re looking for.
There are other hopeful signals too. For example: JP Morgan has launched its own digital coin to “exchange value, such as money, between different parties over a blockchain”. The fact that an old bank like JP Morgan (it dates back to 1799) is going to use crypto to process (international) payments at a higher speed, is a sign of a revolution to happen.
The next stages of mass adoption will happen faster than what we’ve been experiencing up till now. The long bear market helped with that. The empty, meaningless projects and the ICO scams have been filtered out. Companies that are working on cryptocurrencies are looking more and more for partnerships.
Some companies (for example Vendit) realize that the only way to achieve mass adoption is through a marriage between fiat and crypto. Fiat is not the enemy. Crypto alone is not the solution. Bringing the two together will build the future of payments.
Vendit is a company whose goal is to achieve the mass adoption of cryptocurrency. Vendit will accomplish this by creating a platform with functionalities that can be used in real everyday life by real everyday people.
More about Vendit:
Demo of the app (YouTube)