Contrary to what many people think, Cryptocurrencies offer many advantages over other mainstream payment mechanisms. They:
- Eliminate the need of a bank account
- Require very little participation of the users
- Don’t require an expensive technology infrastructure upgrade
- Can run on smartphones and other low cost devices
Subway, Latin House Grill Burger & Taco Bar, Grouper, Cups and Cakes, Shopify are some of the merchants that have got onto the Bitcoin bandwagon in online world as well as offline world. (Read our post "27 Physical & Ecommerce Merchants accepting Bitcoin now, and counting"). Also, according to our research, around $240 Million Invested in Bitcoin Startups since 2012, Shows Tremendous Growth (Read here)
Despite these factors, the adoption of crypto-currencies has been below par and not more than 3 mn people globally have used crypto-currencies ever. This is a very small number, given the fact that total number of financial services users globally is more than 4 bn.
How can the crypto-currencies break the barrier of low penetration and become the mainstream method of payment globally?
Our assessment is that for any financial service to achieve mainstream adoption, it should be almost risk-free. Mainstream users don’t tolerate risk. The potential users in the developing world would like to transfer a major chunk of their income via this medium and they would never adopt a service that cannot provide strong and credible assurances that their money is safe. The ‘secret’ aspect of crypto-currencies makes it sound unreliable, and has been used by criminals in the past to transfer money illegitimately. Does it still have the perception of hiding the attackers? Reducing the level of secrecy will bring some accountability to theses new currencies for the end users, and will help remove the “gray” perception to some degree.
The second aspect that will make them acceptable for the masses is the feature to make fundamental changes to its design. Today, because of its decentralized nature, it is easier to make a new crypto-currency than to correct the features of the existing ones. Thus, the only crypto-currencies that can survive in the long run will be those that can build a large community that is willing to tolerate its faults and get them corrected. The best way to create such a community is to win over users of the mainstream financial services! Just grabbing existing crypto-currency users away from other services is not a sustainable strategy.