- >Will Bitcoin, Cryptocurrencies Ever Achieve Wide Adoption?
Will Bitcoin, Cryptocurrencies Ever Achieve Wide Adoption?
One of the most enduring questions in the cryptoverse is this: When, if at all, will Bitcoin and cryptocurrencies achieve widespread adoption? It’s a question that’s borne of curiosity, but also one that reflects the significance of such an eventuality.
The premise behind Bitcoin, as Satoshi imagined, is financial autonomy. Money is a central part of life’s very existence – and the idea that governments get to control this is unsettling. If cryptocurrencies were to achieve wide adoption, we wouldn’t have to contend with these problems – at least not on the scale we do today. Billions of people are yet to discover the liberating, sovereign, and empowering nature of cryptocurrency.
Wide, mainstream adoption – whatever you want to call it, matters. So let’s explore how that is shaping up.
Hope Mutie | Jan 7, 2021
What is Holding Bitcoin From Wide Adoption?
Every time there’s talk about Bitcoin and cryptocurrencies breaking into the mainstream, there’s always the inevitable buts and ifs. The greatest of these critiques is unscalability. While existing money transfer systems like Visa can handle 1700 transactions per second (TPS), the two foremost cryptocurrency networks i.e., Bitcoin and Ethereum can currently muster a minuscule 7 and 15 TPS, respectively. If crypto networks can’t compete with such existing payment systems like Visa, we’ve got a problem.
Then, there’s the tiny matter of public perception. Cryptocurrencies do not exactly enjoy a darling reputation in the public eye. Whether it’s due to a skewed media representation of them, scams that give a bad name to the whole industry, or their wild volatility swings, many people are very wary of cryptocurrencies. Again, unlike FIAT currency that is managed and stored by banks, owning cryptocurrency demands that you possess a cryptocurrency wallet (if it’s non-custodial storage). Hardware wallets, 12-word recovery phrases, multi-sig, etc are all good, but not many people are enthusiastic or eager to do the work.
Finally, there is the fact that crypto transactions are irreversible – once you send or lose money, it’s gone. This lack of a walk back option and managing your own funds introduces a layer of complexity for cryptocurrency that doesn’t exist for traditional money. Things like this lead many people to avoid the world of crypto altogether.
Scaling Bitcoin with Lightning
Crypto wizards have been busy coming up with solutions to address some of these issues. For instance, Joseph Poon and Thaddeus Dryja created the Lightning Network (LN) – a second layer technology that allows users to transact off-chain and, in doing so, drastically speeding up transactions.
The LN works by having two parties open up a payment channel, and only the opening and closing transactions being recorded on the blockchain. Since not every transaction is recorded, it dramatically reduces the backlog of transactions that have to pass through miners, helping tackle unscalability. LN technology is currently being tested in crypto networks like Bitcoin and Litecoin.
Solutions like these are far from being the magic bullet to crypto networks’ scalability woes, but they will go a long way to enhance scalability. At the moment, the LN is still under active development and is being rolled out phase by phase. Once complete, it promises to handle up to 7,000 TPS, probably more, for Bitcoin and a slew of altcoins.
Scaling Ethereum with ETH2.0
For other networks like Ethereum, the remedy lay in re-imagining the whole thing. Founder Vitalik Buterin and team have been creating a range of solutions for Ethereum 2.0, which went live on December 1. The components will be implemented in phases, ranging from the present to 2021 and even beyond. Ethereum 2.0 will feature several scalability solutions to speed up transactions and massively improve user experience. These will include state channels, which are a lot like the Lightning Network and allow users to transact off the chain and only broadcast to the main chain when it’s time to exit the channel. This helps keep things light, increasing scalability.
Ethereum 2.0 will also employ sharding. Sharding is a partitioning method that’s been used in computing for decades. Now the technique is being employed in cryptosphere to split the transaction workload with the aim of scaling blockchain networks. Ethereum will join multiple other crypto platforms already utilizing sharding, including Elrond, Zilliqa, Harmony, and Cartesi.
Wide Adoption is Not a Pipe Dream
When you look at the status quo, it’s easy to think crypto’s wide acceptance is a fantasy at best. But when you look at how things are on the ground, it’s not foolish to hope for that reality. We’ve got major retailers and companies all over the globe accepting cryptocurrencies – from Microsoft to AT&T to Virgin Galactic to Namecheap. Hundreds, perhaps even thousands more worldwide, from food services to jewelers to travel services, accept crypto.
Big-time outfits like Goldman Sachs, Bank of Canada, and Wirex are just highlights in a sea of traditional financial services that provide crypto services to customers. Even JP Morgan now supports Bitcoin businesses like exchanges – a notable u-turn from its initial implacable stance on anything crypto. For traditional money services to support crypto in one form or another is huge, especially given that the banking establishment sees crypto as a threat.
Fintech companies like PayPal and Jack Dorsey’s Square Cash App are letting users interact with crypto. PayPal users will now have the ability to buy, sell, and hold Bitcoin, Ethereum, Litecoin, and Bitcoin Cash right on their PayPal wallets. On Square’s Cash App, users can buy and sell Bitcoin. Paypal’s support for crypto is particularly noteworthy, owing to its massive user base of 350 million customers and 26 million merchants.
What Constitutes Wide Adoption Anyway?
Everybody talks of the “wide adoption” of cryptocurrencies, but there isn’t an agreement on what exactly it constitutes. In other words, when will we know that crypto has broken into the mainstream? Apparently, 50 million is the magic number. When that number of people has adopted a technology, it’s said to have gone mainstream. If we’re going by this yardstick – then crypto already attained that status since Blockchain.com wallets have 60 million users and counting at the time of writing. And that’s just roughly a third of all crypto wallets globally.
But that metric alone isn’t nearly sufficient to gauge the extent of crypto adoption. A large number of users having created crypto wallets doesn’t begin to capture any real impact of the tech. So, we can’t go by that. Perhaps we can be bolder with that when crypto wallets reach 1 billion users. Maybe crypto will have gone mainstream – and this is an audacious sentiment – when the traditional finance system finally breaks, and crypto takes over the reins.
Cryptocurrency ushers in a revolutionary way of interacting with money. But tech is yet to branch out in a manner we consider widespread enough. That’s got to do with its own flaws, but also the reputation it has taken, and the ambivalent regulatory environment it finds itself in. It would mean a great deal for crypto to attain widespread adoption – so here’s to hoping that possibility is not too far off the horizon.