The tiresome topic of mass adoption

Mass adoption is the declared goal of many crypto enthusiasts. Several conferences have already been organized, numerous companies have been trained and thousands of fancy apps have been programmed. All in the name and effort to make people more crypto fit. The masses will jump onto blockchain and cryptocurrencies at some point, but if the masses aren’t willing, blockchain and cryptocurrencies will go to the masses instead!

In view of the obviously sluggish mass adoption of crypto, the comparison to the early-state internet is made time and time again. Who else doesn’t remember the year 1994, when the internet was only used by freaks and nerds and hardly anyone knew what this global communication network could be used for one day. Similarly, bitcoin and the crypto world are still in its infancy and will undergo the same growth process as the internet did, many believers claim. 

However, many a crypto-lover is driven to the brink of despair by this game of patience. After a few years of crypto experience it is not uncommon for the following question to arise: will Bitcoin ever prevail and succeed?

Define success!

Of course success is always relative. The Bitcoin network has existed flawlessly for more than 11 years with an impressive uptime of 99.98 percent. Bitcoin still behaves exactly as programmed and what is was programmed for. Approximately every ten minutes a new block is created that aggregates bitcoin transactions and keeps the bitcoin blockchain growing. Bitcoin is probably known to almost everyone on our planet today and regulators, states and supranational associations are feeling urged to grapple with it. If this is not a success from Bitcoin’s perspective, then what is?

Success today is predominantly measured in “use cases*. Applied to Bitcoin, it’s success becomes particularly evident at the edges or poles of today’s financial transactions. Its strength lies in being successful precisely where the traditional world of finance fails or comes with a mere overkill. Today, 0.01 centimes can be sent around the world in seconds using Bitcoin. Microtransactions of this kind are never profitable for traditional financial service providers. Possible interesting applications and business models in this new area are only just getting started. 

On the other end of the spectrum, bitcoin also shows its strength. Just recently, a bitcoin amount worth one billion US dollars was sent in a single transaction. The transaction received its first confirmation in just a few minutes. And the cost of this money transaction was a measly $80. A similar transaction in the traditional world of finance would probably have entailed higher fees, would have been finalized only after a few weeks of complex compliance checks and could be technically more easily censored or reversed.

Bitcoin is the antithesis

Especially with larger bitcoin transactions, suspicion always arises quickly: It’s got to be illicit money. In other words, money that is used to buy drugs, circumvent capital controls or evade taxes. Often this suspicion is not wrong in fact, but the moral judgment is not quite as black and white as many believe. Bitcoin is, of course, used to finance evil doings. This is unfortunate and should be prevented effectively (with an emphasis on effectively) and in the best possible way. But one should not lose sight of the fact: Bitcoin is also a reaction against a financial system that is getting increasingly out of control today. Financial repression, negative interest rates and institutionalized debt financing – practices that, when viewed soberly, can appear just as morally questionable. It is understandable that different people are therefore led to bitcoin because of their moral compass and consider it a possible escape valve. 

The moral compass that can lead one to bitcoin is still alien to many today. Will bitcoin remain forever the niche product that is highly effective for borderline cases that it is today (remember, success is relative)? Perhaps. But perhaps not. Bitcoin might indeed be destined for even greater things. However, this does not mean that bitcoin will one day become the everyday currency with which we will all pay for our daily coffee. This is an inadequate metric, even though it is now regarded as an indicator for measuring mass adoption.

In fact, something like the desire for mass adoption is based on a false understanding of the real world. When has something like a particular technology achieved mass adoption? Where exactly is the threshold that leads one to believe it has? The approach of mass adoption is far too static a concept, based on a binary view of growth, that has nothing to do with the dynamic reality.

Bitcoin grows by the day

Bitcoin is a market-emergent, organically growing phenomenon. More and more people are turning to bitcoin and having their own personal pennydrop moment. There are countless stories of people who want to pay foreign graphic designers, developers or video producers through conventional financial service providers. Only to discover that they give them a hard time. Not only does one, again and again, discover that the fiat money sent never arrived, but a fee was charged for not executing the financial transaction. Such examples drive those affected directly into the hands of bitcoin.

It is experiences like these that allow more and more people to try out the Bitcoin system. Bitcoin is used when it is actually needed, not more, not less. But trying it out often leads to bitcoin being increasingly held as a means to hold on for times when it is the only option working. An angel instead of a vicious cycle. And that is what can be called real adoption!

This article was made possible with the kind support of Bitalo, the first crypto exchange in Germany completely regulated by the BaFIN (https://bitalo.de).

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