02 / 17 / 21
Why Crypto Adoption by the Masses Remains a Challenge
Since the launch of Bitcoin in January 2009, it has continued to grow in use and adoption. It is currently estimated that 19% of all people in the world have bought some crypto to date. At one point in January 2021, the crypto market cap reached about $1 trillion, a feat thought unachievable when BTC launched.
Today, many countries are beginning to accept crypto and a number of them have crypto regulation in place. The number of crypto wallets has also been growing steadily with over 50 million crypto wallet users in the world today.
Several major payment companies such as PayPal and Square today support Bitcoin payment. The creation of a Bitcoin payment gateway has always been seen as crucial to the mass adoption of crypto. However, despite all these developments, mass adoption of crypto is far from being a reality. Several factors are to blame. They include:
In the US, for instance, there is no comprehensive crypto regulation at the federal level. However, proposals have been made to regulate crypto, although none has passed thus far. In other regions, such as China, crypto trading has been outlawed, although crypto mining is still tolerated.
Some regulators have taken a tough stance against crypto, such as the decision by India’s central bank to ban banks from facilitating crypto transactions. It is worth noting that the nation’s Supreme Court reversed the decision. While some have chosen to make it harder to trade in crypto, some nations like Germany, South Korea, and Japan, have established clear regulations for the crypto sector.
In general, the regulation of crypto globally remains murky. Consequently, it has made it complicated for startups to thrive. Additionally, it has made investors wary of investing in the crypto sector due to compliance risk. Until comprehensive regulation for the crypto sector is enacted, similar to that of the global monetary system, mass adoption of crypto will be difficult.
High Entry Barrier
While a lot of effort has been made to lower the entry barrier into crypto, it remains high. In most cases, it requires some basic technical knowledge, which is off-putting. For instance, many people have a hard time grasping the concept of private keys, public keys, and wallets work. Until the entry barrier is lowered enough for people without technical knowledge, mass adoption of Bitcoin payments will remain a dream.
The Problem of Scalability
The scalability of most blockchain networks is an issue that has yet to be resolved. During times of high traffic, networks can become slow and network fees can rise astronomically. Crypto is billed as enabling lower fees and faster speeds. However, if mass adoption is to be achieved, the issue of scalability needs to be comprehensively slowed.
Another issue that plagues the crypto market is high volatility. It makes it hard to price things in crypto. One solution being worked on is the use of a crypto currency payment gateway. With these gateways, users can instantly convert their crypto to cash to enable payments. However, that only adds a layer of complexity that most ordinary people would rather forego. While high volatility is attractive for day traders, it is not as attractive for merchants who want to price their goods profitably.
In recent years, several high-profile hacks have hit crypto exchanges and investors have lost millions of dollars. Current crypto custody solutions are insufficient for institutional investors, who would not wish to risk their money to bugs in the code. Solutions are being developed. However, as long as high-profile hacks continue to happen, mass adoption will remain difficult to achieve.
None of the issues mentioned above are insurmountable. Indeed, solutions are already being worked on to resolve them. However, until these solutions are developed, the mass adoption of crypto is many years away.
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