Assessing Uptake of Cryptocurrencies
Cryptocurrencies are all the rage, but do people really understand them, are people using them and do they have a future?
Cryptocurrencies were one of the hottest topics of 2017 as Bitcoins dramatic rise captured newspaper headline. But beneath all the hype, is it really gaining the traction we think? Do people truly understand the concept and are they using it? Assessing the global level of uptake, it turns out, is more difficult than you might expect.
Just an asset?
Even so it’s an important issue. Most of the coverage surrounding cryptocurrencies has focused on their trading value. Even most governing authorities still classify it as an asset rather than a currency. This is where we see it going mainstream. The New York Stock Exchange is looking at creating a platform for trading Bitcoin and Goldman Sachs is starting a futures trading service in Bitcoin. The big boys are piling in and for one very good reason — their customers are demanding it.
But if cryptocurrencies are stuck as an asset — with no tangible use or value of their own — they have a massive problem. To see why you have to dig back into the history books and the Tulip Mania of the 17th Century. At this time, Europe lost its collective mind about tulips. They became an enormously sought after commodity and their value soared, but because they were a trading asset rather than an item with its own intrinsic value, their days were numbered. The market collapsed taking its investors with it.
To go further than the headlines there needs to be a significant number of people who are aware of cryptocurrencies and are aware of it.
There are certainly plenty of them. There are thousands of cryptocurrencies in the world with more popping up all the time. At least 39 of them have a market capitalisation of more than $1bn. Research from Cambridge University suggests 3 million people owned a cryptocurrency of some kind in 2017. Unsurprisingly enthusiasm is greater among younger people. Research from the Cryptocurrency Exchange suggests a third of millennials are planning to invest in cryptocurrencies.
Mind the gap
So there is a significant number of people who hold cryptocurrencies and would like to spend them, but there’s a big gap in the number of places which can help them do it. You couldn’t walk out the door with bitcoins in your pocket and buy enough things to live on. Furthermore the extreme volatility affecting cryptocurrencies makes it very difficult to set a price. The value of a Bitcoin might be dramatically different tomorrow than it is today.
Even so, things are beginning to change. More merchants are accepting cryptocurrencies. Earlier this year one of the biggest payment cryptocurrency gateways Coingate signed an agreement with Paris-based ecommerce company Prestashop to create 8,000 new merchants which would accept cryptocurrencies.
More and more retail outlets are joining in. Expedia, Shopify, Microsoft and the US jewellery chain Reeds Jewellers all accept cryptocurrencies. You can even use bitcoins to order a Pizza through the service Pizza for Coins.
Cryptocurrencies are a small phenomenon at the moment but there are signs that this is a solid and growing market — one which will have a tangible use beyond simply being a method of trading. Indeed, if we’re looking for the real future of cryptocurrencies, we have to look beyond the headlines being generated by Bitcoin and at how it is being used by people in the real world, and here we have a real place for them.
Faster payments
Cryptocurrencies and the technology underpinning them, the Blockchain, will have an enormous role to play in a world in which fast payments need to be made across international borders. That’s why major banks have turned to Ripple to manage international payments. The faster time and lower cost create enormous benefit.
They are also being used in platforms like our own which allows people to upload content and be rewarded with digital tokens which can be exchanged into other currencies. It’s a way that people around the world can collaborate and earn money for doing the things they love which is paid instantly.
It is here where the true value of cryptocurrencies lies and where we will see the greatest uptake in the future. Bitcoin may be making all the headlines at the moment, but this is where their their impact can be and it’s where they are already changing the world.
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