The Everyday Cryptocurrency User Isn’t Here Yet

What is holding cryptocurrency back from mainstream adoption?

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Part I: Four Major Barriers to Mainstream Adoption

Question:

What is holding cryptocurrency back from mainstream adoption?

This question, out of all the others, is probably the hardest one to address for cryptocurrency users. Even if we can get past blockchain’s technical issues, our advancements will mean very little if we cannot get more people adopting cryptocurrency as part of their daily life.

For many early adopters of cryptocurrencies (Adopted ≤ 2015), cryptocurrencies, and blockchain in general, (hereinafter “cryptocurrenc[y/ies]”), are considered the biggest technological advancement since the advent of the internet [1].

We see it’s potential to change the world for the betterment of the common man, especially for those who have the least access to financial and personal services. For example, one of the boldest statements you will hear out of the cryptocurrency community is “bank the unbanked,” which is a mission statement to help people in primarily in developing countries who do not have access to banking and financial services [2].

Not only that, we also see it’s potential to have effects across multiple industries (e.g., supply chain, food) and how we even interact with each other (e.g., social networks) [3][4].

In our minds, cryptocurrency is meant to be shared with everyone, and as members of the cryptocurrency community, we feel that it is our prerogative to teach people about cryptocurrencies and how to integrate cryptocurrencies into their daily lives.

That’s why the lack of mainstream adoption so far is troubling, especially given the rapid mainstream adoption of technology in the past 20 years (Just think about how quickly we adopted the internet, personal computers, smartphones, and heck even smart TVs).

That’s why, in answering the above question, we decided to pinpoint the barriers we believe are holding back mainstream adoption of cryptocurrencies.

Hopefully, we can come up with some countermeasures and get past these barriers, because we really want to spend cryptocurrency at our local coffee shops.

Barriers to Mainstream Adoption

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Eight barriers we have identified that are holding back mainstream adoption (in order from most important/noticeable to least important/noticeable):

  1. Numerosity
  2. Volatility
  3. Know-how
  4. Criminal Association
  5. Misinformation
  6. Network Congestion
  7. Environmental Concerns
  8. Why "cryptocurrency?"

For Part I, we are addressing the four most important barriers to mainstream. Part II will address the four least important barriers to mainstream adoption.

The four major barriers to mainstream adoption, in our opinion, are (1) numerosity, (2) volatility (3) know-how and (4) criminal association.

Numerosity

This one is pretty simple. How many cryptocurrencies can you name off the top of your head? If you’re like us, I bet you can easily name more than 50, and this is where the problem lies.

Simply put, for prospective cryptocurrency users (PCUs), there are simply too many cryptocurrencies. As of writing, there are more than 2,000 cryptocurrencies in existence, and they all have their own specific niche/purpose [5].

For PCUs, it must be pretty tough learning what the differences are between Bitcoin, Litecoin, Ethereum, Neo, Komodo, NEM, Cardano, etc. before simply giving up because of information overload.

So even if you have a cursory interest, many people simply get overwhelmed by the sheer number, and cryptocurrency starts feeling more like a super hard class rather than a fun, leisure activity.

Criminal Association

The association between cryptocurrencies and criminal activity is well-known. For example, the association between cryptocurrencies and criminal activity is often mentioned concerning Silk Road, a dark web exchange where users could conduct illegal transactions, such as drugs, human trafficking, and even more, with the payment of choice being Bitcoin [6][7].

The number of hacks on major exchanges is also a cause for concern because hackers took more than $1 Billion dollars from exchanges in 2018 [8]. Last, but not least, there are also concerns over cryptojacking, the practice of installing malware on another person’s computer without permission to mine cryptocurrency, often monero [9].

However, these above incidents account for very little of the activity with cryptocurrencies, but when they hit, they hit. Furthermore, you can expect the cryptocurrency community to not appreciate such actions, and as with Binance’s recent actions concerning illegally-obtained funds from Cryptopia, to take countermeasures against such action [10].

Know-how

An even bigger barrier than criminal association is know-how. For PCUs, it is difficult acuqiring the necessary know-how to: (1) buy/trade US dollars for cryptocurrency; (2) acquire basic cryptocurrency competency; (3) key management; and (4) finality.

Many PCUs lack the necessary know-how to start buying and selling cryptocurrency for US dollars, which we believe is mostly down to lack of mainstream advertising (how often do you see a Coinbase commercial?) rather than a lack of such services.

Acquiring basic cryptocurrency competency is also tough for PCUs because most PCUs are not willing to spend the time to do self-research or may lack the necessary research skills to inform themselves about cryptocurrencies (e.g., where do I get cryptocurrency news, how do I make a transaction, what is a Block Explorer).

Relating to basic cryptocurrency competency is key management [11]. Key management can be extremely tough for PCUs (and even for experienced cryptocurrency users), because once a person loses or forgets their private key (or the list of words or phrases to make the private key), they will forever lose access to their funds [11]. Unfortunately for PCUs, they may not understand the private-public key relationship and the need for protecting their private keys [11].

Lastly, PCUs have to worry about finality, especially when making transactions [11]. Sending funds to another address on the network requires exact preciseness, even a single digit or letter off and you’ve sent your funds to the wrong address [11]. Generally, it is impossible to figure otu their identity or location of the mistaken recipient and they are under no duty to send your funds back [11].

This is one of the unfortunate downsides to using a decentralized and pseudonymous networks, and for PCUs because it makes them hesitant about making cryptocurrency transactions [11].

Volatility

Cryptocurrency price volatility also presents a barrier for most PCUs. Most everyday PCUs do not want to interact with any asset where volatility is very high (5–50% daily change can easily happen) because most everyday PCUs do not want the little spare income they have to depreciate value just 1 day after they buy some cryptocurrency.

Additionally, volatility can be scary simply because most everyday consumers are not experienced traders, and therefore are unfamiliar with the tricks of the trade and techniques to account for high volatility.

Handling volatility does relate once again to know-how, which we believe if most PCUs had knowledge of stablecoins, that they would be less concerned with volatility [12].


Originally published on 2019-01-28 on Medium.