The Road to Mass Adoption: Are Cryptocurrencies Solving Today’s Problems?
New technology can be ‘cool’, ‘interesting’ and ‘accessible’ but it doesn’t mean a market-worthy mass of people will use it
Many (very sound) theories out there provide promising arguments on which cryptocurrency is ‘the best’. At Luno, we believe in survival of the fittest. That is to say: the cryptocurrency which fits best with the evolving human needs of our global financial system. But a few smaller ones may stick around to meet niche needs. These snowflake altcoins are well suited to specific uses, though they’re not right for everyone.
However, when we decide which cryptocurrencies to list on Luno, one of our requirements is that they have a clear potential for mass adoption and are already showing consistent, long-term market traction. Basically, we need to be sure lots of people want to use them and will keep using them. That means that altcoins we might support have to solve a real problem.
What is mass adoption?
It’s often said that technology adoption follows a bell curve with defined stages as different people start catching on.
It usually begins with innovators: those on the cutting edge of technology who are in the know about brand new developments. They’re followed by early adopters, who tend to be young, well-educated and able to take risks before the early majority move in; think hipsters, but less concerned with the price of avo-toast and more concerned with technological advancements. Although slightly more risk-averse, these people are nonetheless open-minded and susceptible to the influence of early adopters. Next, come the more sceptical late majority, then the ‘laggards.’
By this point, mass adoption has probably been achieved within the relevant market.
Mass adoption is the point where a technology is thoroughly embedded and integrated into our lives, making it almost impossible to avoid.
It’s at this point where it’s ubiquitous and usually cheaply available. It’s usually at this point that the real (read: annoying) hipsters scorn said technology in favour of some long-gone nostalgia.
What does it take to reach mass adoption?
The entrepreneurial spirit is often about ‘scratching your own itch’ or meeting your own needs. But it’s not enough for it to solve one person’s problems.
For a new technology (any technology, not just cryptocurrencies) to gain widespread adoption and market traction, it needs to have a clear and unique use-case which solves a problem for a large number of people.
For example, telephones achieved mass adoption because everyone needs to communicate with each other, and they’re far more efficient than older methods like sending physical mail. Combine that need with low cost, easy-to-use technology and phones were able to take over the world.
It also needs to be a pressing issue, rather than an excuse to use the Blockchain when it’s not even necessary, or people won’t be willing to adopt it widely.
Humans are creatures of habit and we won’t change those habits without a strong enough incentive.
Just look at our incessant need to keep watching Dwayne ‘The Rock’ Johnson movies. Unless a cryptocurrency can save a lot of time and money, or have some other tangible form of utility, people are unlikely to go to the effort of adopting it. After all, learning about a new cryptocurrency and how to use, spend, and store it, is a lot of work.
Seeing as so many new altcoins are launched every single day, any particular project faces fierce competition and needs to truly stand out from the crowd to get noticed by more than a handful of people.
Many altcoins are simply an excuse to benefit from the hype surrounding anything using Blockchain technology and aren’t truly needed.
There’s still much to do and plenty to simplify. There’s currently one too many geeky terms being thrown around and too much emphasis on how the technology works. Granted, it is a new technology and it is important to attract brilliant minds to help build the infrastructure, but the end user doesn’t need to know about the hash rate or side chains. Take the internet for example, do you know how it works? Let’s face it: Poor usability and interfaces overwrought with intricate complexities of ‘the blockchain’ are only deterring people from adopting it.
For cryptocurrencies to reach mass adoption, there are additional requirements.
There needs to be easy access to objective education to help people learn about it. The price of the currency can’t be too volatile or it will be difficult for people to use it. Plus, the network itself has to scale well and handle an influx of users. More importantly, it needs to be easy to use.
Community is everything
Unfortunately, it looks like high school never ends.
Not truly, because only the most popular altcoins are likely to flourish in their environments. It’s simply not enough to be ‘a little better’.
An altcoin needs to hold relevance for a large number of people. It needs to solve a problem which doesn’t already have a working solution.
And, in a glorious script-flip, Bitcoin nerds are the popular ones at Real Life High School.
In this industry community is everything.
Bitcoin might not be the best cryptocurrency if we look at objective measures like speed, cost, and user-friendliness. But, being the first, it has a substantial surrounding community of crypto-geeks who believe in it.
That means stronger surrounding infrastructure. More awareness. More developers working to improve the software. More revisions and updates. More media coverage. More trust and stability. More motivation for regulators to take a sensible approach. More high-fives in the corridor on the way to the next class.
It would take a lot for any new altcoins to usurp that advantage built up over a decade. So while we’re always open to adding new cryptocurrencies, Bitcoin arguably has the strongest shot at mass adoption. In one recent survey, 43% of people viewed Bitcoin as most likely to gain broad adoption, and 17% said the same about Ethereum.
Earlier this year, Ethereum founder Vitalik Buterin clarified his stance that easy access is essential for adoption, more so than other initiatives:
“I think there’s too much emphasis on BTC/ETH/whatever ETFs, and not enough emphasis on making it easier for people to buy $5 to $100 in cryptocurrency via cards at corner stores. The former is better for pumping price, but the latter is much better for actual adoption.”
This is a crucial point — a cryptocurrency needs to be easy to use and understand to have a shot at mass adoption.
Essentially we’re not looking to be dazzled by brilliance or baffled by bull; we just want cryptocurrencies that work.
ICOs (Initial Coin Offerings) are facing their moment of reckoning as the hype dies down and reality kicks in.
November 2018 funding totalled just 65 million USD, compared to an average of three billion USD per month during the first quarter of 2018. At least twelve ICOs that raised over 50 million USD have yet to release anything and with a market awash in ICO tokens, they’re unlikely to meet much success if they do. Others are facing legal action for disguising securities as tokens. So it seems that most are not solving real problems.
We know it might be frustrating if Luno doesn’t support your favourite altcoin, but it’s a decision we’ve made to protect our customers. Our customers rely on us to be the safest and easiest way to buy Bitcoin and Ethereum. So we don’t want to devote too many resources to projects that don’t support that goal.
In addition to requiring the potential for mass adoption, any coin we list needs to be decentralised, secure, backed by a trustworthy team, and wanted by enough of our customers. Most important, it needs to align with our central vision of upgrading the world to a better financial system.
We always encourage you to do your own research before you consider buying any altcoins. Which cryptocurrencies do you believe have the potential for mass adoption?
