Almost 10 years have passed since Bitcoin was announced. It did not take long for the first recorded cryptocurrency transaction in exchange for goods to take place. On 22 May 2010, Laszlo Hanyecz bought two Pizzas for 10,000 Bitcoins, a fact celebrated by cryptocurrency enthusiasts in the form of Bitcoin Pizza Day every year. The original message exchange leading up to this historic purchase can still be found on the Bitcoin forum.
Cryptocurrencies have come a long way since then, with CoinMarketCap currently listing 1629 different currencies. However, in terms of adoption for day to day use, we are not much further than back then. Yes, there are things that can be bought in cryptocurrencies, but let’s face it: you have to look very hard to find the correct venues to spend crypto. Getting through life without fiat currency is still not possible.
There are a number of reasons for this lack of adoption. Let’s analyze the most important obstacles.
Cryptocurrencies first evolved to provide a digital economy free from government and banking interference. This libertarian utopia was clearly not meant to last, and all governments are watching the crypto space carefully. However, there is a distinct indecision in this. It seems authorities are not sure how to handle recent developments. Users are unsure how assets are classed, how their cryptocurrencies should be taxed, and many merchants are unsure about the legality of the whole thing. It seems like a clear message from regulators is required.
Banks do not like cryptocurrencies. There is no point in denying this. It is currently very difficult to get a bank account for a business involved with cryptocurrencies. Even accepting crypto as a form of payment in addition to fiat may get you into trouble with your bank. There are many recent cases of accounts being closed or start-ups being denied access to banking for this reason.
Many people see cryptocurrencies as an investment. Buying Bitcoins and holding on to them until the price goes up is equivalent to storing bars of gold in a cellar. Markets are frequently manipulated by big players. Currencies are meant to be used for buying stuff. Until we stop treating cryptocurrencies as assets, they will remain assets and not currencies.
Let’s face it, no one can do accurate pricing with a currency that can rise or fall 25 % in a single day. Cryptocurrencies can be used as a form of payment, but it is hard to use anything other than stable fiat currencies as a unit of accounts. The volatility issue may be directly related to the speculation obstacle.
Whilst cryptocurrencies have come a long way in usability, it is still difficult for the general population to understand blockchain technology. Using wallets and managing keys is not trivial for the non-technically minded. It is also easy to get wrong, even for experts. Plenty of crypto enthusiasts that should know better have lost money due to lost or exposed private keys.
The Path to Adoption
Cryptocurrencies are still relatively new. Although adoption has not arrived as quickly as many of us would have hoped, it can be achieved. Once regulators make up their mind one way another, banks will also be easier to work with. As more people start using crypto, volatility will decrease, which, in turn, should reduce speculation.