When a crypto enthusiast explains crypto and blockchain to someone who is still ‘unenlightened’, many people agree that these technologies are fascinating. Once one masters the ability to explain the tricky tech in easy terms, the possibilities that crypto and blockchain promise are almost undeniable.
A revolutionary idea that will change money as we know it and reform the global economy for the better is something that anyone can relate to. But once they realize blockchain’s potential, people often ask one crucial question, “So when are you going to make THAT happen?”
Crypto Adoption Essentials
Blockchain and cryptocurrency adoption, at least in the initial stages, is the responsibility of those who build and create, which is fair enough. Why would anyone be interested in the work-in-progress product?
We’ve all heard of Bitcoin, the magical internet money, but most people have no idea what to do with it. Even when gifted, Bitcoin ends up in the wallets of eternal hodlers or, if the amount is worth the effort, will be traded for fiat the next time the coin price soars.
For a cryptocurrency project that focuses on changing the monetary system, the goal is pretty clear. It needs to prove it is better than fiat money and thus show that the new currency can be a medium of exchange, a store of value, and a unit of account.
At the same time, a blockchain project that seeks mass adoption should prove the tech is comprehensible and valuable for the average user.
But before we start reasoning, let’s answer a simple question.
How Many People Own Crypto?
Based upon Finder’s statistics, within the last year the number of US citizens owning crypto has increased significantly from 7.95% in 2018 to 14.4%. Although 14% might not seem too impressive, one-year results showed an increase of 81% which means that approximately 36.5 million Americans own at least one digital asset.
Moreover, the number of active addresses and addresses that have $10 or more worth of crypto in their balance has also gone up over the course of 2019, judging by the Coinmetrics Annual State of the Network report.
Overall, stablecoins did extremely well last year, and as for Ethereum, the number of addresses with $10+ almost doubled, and Bitcoin did four times better than ETH.
Crypto as a Medium of Exchange AKA Buying Stuff With Crypto
Based on a report by Kaspersky Labs, in 2018, around 10% of people paid with Bitcoin or other cryptocurrencies for goods and services online. A year later, the number of people who pay for their online purchases with crypto increased to 13% – not a groundbreaking improvement, but sustainable growth.
As it usually happens, the offer followed the demand and since 2013, the number of e-commerce and regular retail merchants that accept cryptocurrency has increased by more than 700%, according to Coinmap.org.
Apart from executing e-payments, another sought-after cryptocurrency feature is the ability to send and receive international payments at low costs, according to the 18.2% (which comes down to 6.6 million people) of respondents of the same report made by Finder.
Crypto as a Store of Value
Now, let’s move on to crypto’s status as a store of value. Apparently, this is what cryptocurrency has been really good at during the last year. Collateral-backed stablecoins boasted high-demand. Among the most insightful crypto enthusiasts, staking replaced ingenuous hodling largely thanks to the rise of DeFi projects.
More and more citizens of developing countries with severely unstable economies see Bitcoin as a safe haven. Venezuela, Argentina, Iran, and some other countries leave people no choice but to convert their funds from local currencies to Bitcoin as it happens to be even less volatile.
If we look at the numbers, the situation is pretty obvious: Cointelegraph reported that during 2018 more than 35,000 Bitcoin was bought with Venezuelan bolívar via LocalBitcoins. In 2019, based on the charts provided by Coin Dance, the number surged to over 50,000 BTC.
Crypto as Unit of Account
Before we can legitimately call Bitcoin money, the cryptocurrency has to prove it can also serve as a unit of account, and that has turned out to be a real challenge for crypto.
Being a unit of account means that goods, services, and other transactions can be denominated in Bitcoin and not in fiat currency. According to recent research made by BitMEX, Bitcoin is still very far from reaching this goal. The research was based on comparing Bitcoin outputs throughout its existence.
The report says that at the moment more than 70% of Bitcoin outputs are using 1 Satoshi 0.00000001 BTC, which is less than one-thousandth of a dollar cent. This precision is clearly unnecessary for fiat-denominated payments. At the same time, when you take a look back in the year 2012, the number of such outputs was evidently lower, around 40%. Starting from 2019, about 0.6% of outputs spent an even number of Bitcoins, while in 2012 it was 10%.
The researchers concluded that the main reason behind this math is the increasing dominance of fiat payments and that “the Bitcoiner dream of achieving unit of account status is nowhere in sight, at least for now.”
Now, let’s not talk about big companies integrating blockchain-based solutions to increase their performance, although there are quite a few of them out there. The most useful for an average consumer partnership of 2019 was probably the one between Travala and Booking.com. So if you’re planning your next vacation, you might as well pay for it in crypto now.
And in case you want to go beyond hotel accommodations, you can always check the vendors accepting crypto on Coinmap.org.
Worldwide Crypto Adoption
Turkey, Brazil, Colombia, Argentina, and South Africa turned out to be the leaders of cryptocurrency adoption at 2019 according to Statista. The survey of ING showed that Turkey was on top of the list in 2018 too, and perhaps the country’s unstable economy and inflation are to blame.
It is uplifting to see so many Latin American countries on the list, but what about Africa and most of Asia? The regions where cryptocurrency can benefit the most and work its ‘bank the unbanked’ miracles apparently still have no idea this possibility even exists.
Notably, Japan is considered to be one of the largest Bitcoin economies worldwide, however, only 3% of the Japanese population admitted to owning cryptocurrency. This could only mean that most of the transactions are made within exchanges, which can hardly contribute to the mass adoption that we all long for. And this brings us to the final thoughts.
The Bottom Line
Cryptocurrency and Bitcoin adoption does not depend on how high Bitcoin can go. People seeking quick profits will never contribute to mass adoption as they tend to sell their funds when the price goes up.
Ironically, Bitcoin holders aren’t making a positive contribution either as they are typically not so keen on parting with their digital assets and purchasing goods and services with them. After all, the ultimate goal of holders is to sell once Bitcoin hits the$100k mark.
So what drives crypto adoption in the first place? Probably building applications that help people with their everyday needs would be a good start. And the rest will come naturally.