June 12, 2020 |James Messi
I think most would agree that cryptocurrency has seen a huge level of adoption in the last few years but it’s far from the level of mass adoption. It will take a number of factors to see mass adoption which I hope to outline.
Use cases of fiat currency
If you ask yourself ‘Why do people use fiat currency?’ the answer is clear; you need dollars to take part in almost every aspect of daily living.
Examples of use cases:
1. Pay taxes
2. Buy groceries
3. Pay for a haircut
The more widely accepted and used a commodity is the better medium of exchange it is. Until we see more shops offering payment via blockchain assets we won’t be at full adoption level. Additionally, the main source of demand for dollars is the threat of taxes. If you don’t pay your taxes, the government will forcibly imprison you. This creates a demand for dollars. Some good news for those hoping for adoption is that in Ohio, businesses could take advantage of a program allowing them to pay taxes in bitcoin. The program has since been suspended but some would argue that it’s still too early to see that level of adoption. Perhaps in years to come, they’ll reopen the program and more people will use the opportunity.
Blockchains are complex systems
Put simply, blockchain is an incredibly complex piece of technology that is difficult to explain fully to an economics student, let alone the average joe on the street. Until a plurality of people understand the clear benefits of decentralized distributed ledger technology, widespread mass adoption of blockchain technology can’t be expected in the short term.
The best way to address problems of understanding is widespread education. There are a number of mediums that can be used to achieve adoption whether that’s traditional school channels or online tutorials. A mainstream education channel could be argued to be the most effective. I would say the best way to ensure supply is healthy levels of demand. When the use case for Bitcoin goes up, more people will seek to use it. Those same people will likely educate themselves through existing channels like youtube videos and tutorials on the platforms they use to buy the cryptocurrency.
Digital currency user error
One of the major points of contention for people who are new to crypto is the loss of funds that occurs when you sent money to the wrong address. Crypto addresses are long and unique. Even a single misplaced digit can lead to an irreparable loss of funds.
Many steps have been taken to address this problem and QR codes can be a great way of paying for things. The problem thus far has been that you’ve needed to move money from a number of different platforms to get to the fast payments app. In the process, you often don’t have the option to use QR codes.
Cryptocurrencies are volatile
In order for crypto to be used widely by the public for things like taxes, purchases, and everyday uses, the volatility must decrease. Volatility leads to a number of problems:
1. Overpaying for goods
2. Increased fees
Overpaying for goods
Every year on May the 22nd, the blockchain space celebrates ‘Bitcoin Pizza Day’, we just celebrated the 10th anniversary. 10 years ago Laszlo Hanyecz bought a couple of pizzas for a good price at the time but now would have been $45 million. The hope is that the price of Bitcoin will rise but hopefully not by the scale which has been seen in this example. If this kind of volatility continues, people will delay payments. If payments are delayed on mass, then the total circulation of Bitcoin would go down and when the volumes are low the volatility is likely to increase.
When you buy a good or service with Bitcoin the platform often locks in a price for a certain period for customer service purposes. This means that the cost of price fluctuations is eaten by the platform or provider themselves. In order to ensure their profit margins they often have to increase these profit margins. It’s a tough balancing act to maintain their profit margins whilst also being competitive with the consumer.
When volatility falls it’ll be less necessary for large fees for fear of competition from outsiders. For example, the existing companies may keep fees high but that would incentivize new firms to enter the race and provide the service at a more competitive price. Therefore, the best thing that could happen that would reduce fees is mass adoption.
What we offer at Beaxy
A good way to play your part in mass adoption is by joining up with Beaxy.
Starting an account on Beaxy is a great first step. The process is simple. Simplyand fill out your information.
Once you’ve registered, pass your KYC verification. We put a video together on how to help you. You can find that video here.
Finally, connect your bank and you are ready to make your first purchase! We hope this article has been helpful in explaining the relevance of Bitcoin to your retirement account. For any additional information you may want, don’t hesitate to contact us at support.beaxy.com