How Can We Achieve Crypto Mainstream Adoption?
Crypto Basics

How Can We Achieve Crypto Mainstream Adoption?

4 months ago

Even though institutional investors and countries are taking an interest in crypto, the industry is far from mainstream adoption. What would it take to make it happen? Let's find out!

How Can We Achieve Crypto Mainstream Adoption?

Daftar Isi

Disruptive technologies like electricity, cars, and TVs all travelled the same road to mainstream adoption: a road that crypto seems to be travelling as well. The Wells Fargo Investment Institute recently reported that the rate at which people around the world are adopting crypto is remarkably similar to that of the internet. And as we’ve watched the crypto space grow faster and faster, the talk of “crypto mainstream adoption” has grown louder and louder as well. On top of it, now that governments worldwide are starting to regulate crypto, institutional investors who were previously unwilling to invest are jumping in as well.
Some suggest crypto’s $1.5 trillion growth last year means that mass adoption has either happened – or that we’re really close.  And yet, despite cryptos' soaring development and seemingly unstoppable progress, a lot of folks haven’t yet warmed to cryptocurrency. For now, it seems that it is mainly younger generations who are buying crypto while older generations sit cautiously on the sidelines. It probably doesn’t help that regulators and central bankers, like Andrew Bailey, are warning potential investors to be “especially cautious” when considering buying Bitcoin and other cryptos.

But before we dive deeper, let’s first agree on what mainstream adoption actually means.

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What Is Mainstream Adoption?

So, what do we mean by “mainstream adoption” and how would we know when we get there?

It is a very difficult question.

Is it the number of people who actually use crypto? Would “the majority” of people around the world using crypto be enough to convince you that it is mainstream? And what is the majority? Is it 51% of all the people in the world? Well right now, Bitcoin has the same number of users that the internet had in 1997 - only about 115 million, or roughly one in every seventy people on earth. A study from Crypto.com estimates that nearly 300 million people own crypto, including Bitcoin, which is about one in every 25 people.
While one in twenty-five is a bit closer to “most people,” it is still a long way. So for now it seems that judging by HODLers alone, we’re not quite there yet. However, another recent report from crypto.com projects that a billion people will be using crypto by the end of 2022.
A billion users by the end of this year does sound possible, and it would be an incredible achievement for all of us as a community, but it still falls short of the “50% of all people” mark. But if we step back for a second, let’s be honest, half of humanity might be too high a benchmark, especially when you consider that the internet only reached this benchmark just in 2017. Even now, only 65% of us use the internet every day. In fact, when the Web1 era ended and Facebook was making its start in the world at the end of 2005, only 16% of people worldwide had access to the internet, yet most people would say the internet “was already mainstream” before then.

So might it make sense then to set the bar lower at say, 30-35%?

The Ongoing Crypto Adoption

If you’re thinking “crypto adoption seems a little confusing,” that’s probably because it is confusing, and there isn’t really a good or agreeable way to know when we get there. However, there are some compelling arguments that we actually have already reached mainstream adoption, if we look at what’s happening around the world:

For instance, in September last year, El Salvador became the first country to officially make Bitcoin legal tender. A short while later, a poll by YouGov showed that 27% of US residents supported Bitcoin as a legal tender and that 80% of younger people aged between 18 and 44 have a positive attitude toward Bitcoin.

Institutional investors warmed up to crypto last year as well. A leaked memo from Goldman Sachs indicated the investment bank was running a crypto trading desk, and an analyst from JP Morgan told clients that crypto is set for much greater acceptance from mainstream investors and companies in 2022.
Crypto has also been getting a lot of love in the business sector: Tesla, Microsoft, and Wholefoods are accepting crypto payments, and fintech companies like PayPal and Square have opened the door to floods of new retail investors. And yet, despite all this encouraging news, only one in 25 people use crypto, and its global market cap is barely above Amazon’s.

So let’s make this more actionable and look at what is standing between crypto and wider adoption.

Obstacles Standing Between Us and Mainstream Adoption

We all know that crypto has an incredibly wide range of industry-specific use cases, and definitely has the potential to make the world a better and fairer place. But before any of these industries adopts crypto and the world adopts it as a whole, there are a few obstacles we need to overcome:

#1 Education

Right now, there really aren’t that many people who understand crypto.

Even if they buy and sell it, they don’t really understand it. Until people understand crypto and how it might benefit them, they are not gonna use it to its full potential.

While we, at CoinMarketCap Alexandria, are doing our best to educate everybody on why crypto is the best thing since sliced bread, there is no getting around the fact that educating everyone is gonna take a while. However, as the leading crypto education platform, we are doing our best!
Still, we have reason to be cautiously optimistic. For example, both New York University and Stanford are now offering college courses in crypto, and so are European universities – all of which might inspire the next generation of crypto pioneers. Of course, politicians, governments, and regulators desperately need to learn about crypto as well, which is among the largest obstacles standing between crypto and mainstream adoption. Yet when we consider that six members of US congress bought and sold crypto last year - and congress had a crash course on crypto in December – it is possible that by the end of 2022, governments and regulators could become comparably smaller obstacles. Moreover, now that Gary Gensler, who previously taught courses in crypto at MIT, is the chair of the Securities Exchange Commission in the United States, we have good reason to believe that favourable crypto regulation is coming our way any day.

#2 Accessibility

Once people understand Bitcoin, blockchain, NFTs, and other aspects of crypto, they are still not willing to use dApps and DeFi unless the services are accessible.

What does it mean to be accessible? It means easy to use, affordable, and without too much technical lingo.

Making crypto accessible means making it as easy as possible for the average consumer to buy Bitcoin or use a dApp. A good litmus test would be that if your grandma or 6-year-old nephew can work out how to use a dApp in a few minutes or less, it is accessible. Why is it necessary? Because the more people use crypto, the more money there is in crypto. And the more people and money are involved in crypto, the more institutional investors will be inclined to invest. The more money institutional investors put into crypto, the faster dApps and services grow, and the faster the world adopts crypto.

#3 Interoperability

As I am sure you are already aware by now, cryptocurrencies run on blockchains. One of the big drawbacks of today’s blockchains is that they struggle to talk with one another. If the web – or the world – is ever to run on blockchains, those blockchains have to be able to exchange assets and information between one another, which is called interoperability.

Interoperable blockchains, like COSMOS and Polkadot, have come on leaps and bounds in the past year, so we’re expecting to see many more networks soon. When we get there, fully interoperable blockchains will allow developers to create powerful new services and apps; apps which are capable of things we can’t even imagine right now. So as blockchains interoperate more efficiently, more and more business sectors will find uses for crypto, further fuelling the drive toward mainstream adoption.

#4 Infrastructure

Why did it take decades for cars to overtake horses as the transport of choice? Simply, because the infrastructure – that is, roads that were good enough to drive on – didn’t exist. And right now, crypto is suffering from the same problem.

If crypto is ever going to scale – which it needs to in order to replace some sectors of traditional finance – we need a lot of improvements in infrastructures. Think back to the early internet which ran on the phone lines. It took ten minutes to send a low-resolution JPEG, and that was if you didn’t run out of data. Whereas now you can have Netflix, Fortnite, and fifty tabs open on Chrome simultaneously on your laptop while sipping a latte at the local Starbucks.

What made this possible? Solid, dependable, and scalable infrastructure.

As time goes by, and demand for crypto builds, more and more money will inevitably go toward infrastructure. Just as increased demand for the internet saw national upgrades to copper wiring and then fibre networks, increased demand for crypto will lead to more and better infrastructure.

#5 Volatility

People love a get rich scheme…but they also don’t like losing money. Unfortunately, for a lot of people, Bitcoin, Ethereum, and all the other cryptos still seem like an unnecessarily risky endeavour. Because when you compare cryptocurrencies to stocks, bonds, and savings accounts, crypto is the wild and unpredictable asset class.

Take Facebook, for example. The tech titan once worth nearly a trillion dollars just saw its stock plummet by 26% in just one day, and is down nearly 44% since September last year. During the same period, Bitcoin’s actually up a few percentage points. But in all fairness, Bitcoin has had a much bumpier ride than Facebook up until now.

Why? Because Bitcoin’s price relies on supply and demand; how many coins are currently in circulation, and how much are buyers willing to pay for those coins.

Mainstream media outlets, crypto influences, and industry moguls can all send buyers rushing to exchanges to buy up the next hot coin. But they can also cause a new coin to crash and burn with a passing comment or two.  Take Elon Musk for example, who as we all know, can send Bitcoin or Shiba’s price soaring moonward or spiralling downward with a single Tweet.

However, rest assured that this problem won’t be around forever…or at least, crypto probably won’t be as volatile as it is now in ten years’ time because as crypto’s market cap grows, the influence any one person or media site has over crypto will diminish. We just need to be patient.

#6 Energy Use

We can all agree that fossil fuels, industrial agriculture, and transport pollution are all having an effect on the environment. So how bad is crypto’s carbon footprint exactly? It is difficult to say exactly how bad crypto’s energy problem is, but let’s just say that it’s not looking good.

Bitcoin in particular appears to be using immense amounts of energy, which is seriously damaging crypto’s appeal to younger, more climate-conscious generations. The Cambridge Bitcoin Electricity Consumption Index, which measures Bitcoin’s energy usage, recently estimated that Bitcoin mining uses more energy in a single year than quite a few countries, including Norway, Sweden, and Argentina. While this might seem intense, keep in mind that all of the fridges in the United States alone use nearly 85% of the energy used by the Bitcoin network. Similarly, the energy used by all of the TVs and lights in America eclipses the quantity of energy used by Bitcoin. Furthermore, comparing Bitcoin’s energy usage to the amount of energy used by a single country isn’t exactly an apples-to-apples comparison as, well, Bitcoin isn’t a country. It is sort of like comparing Amazon or Apple’s carbon footprint to that of Norway or Sweden; that is to say, it just isn’t a meaningful comparison.

Unfortunately, it’s difficult to effectively compare Bitcoin or any other crypto’s energy usage with anything other than another cryptocurrency like Ether or Litecoin, so for now, the apples-for-oranges comparison is what we’ll have to put up with. But in Bitcoin’s defence, a lot of the energy used to mine it comes from renewable sources like solar and hydropower; a fact which the CBECI overlooks in its calculations, and the media regularly neglects to mention. After all, energy is one of the largest expenditures for any Bitcoin miner, so using expensive fossil fuels is rarely a wise financial decision.

Besides energy, there are also 31,000 tonnes of annual e-waste from crypto to consider, which is made up of graphics cards and other computing equipment, of which only about 20% is recyclable.

This is a narrative that Bitcoin and crypto desperately need to shake and behaving indifferently toward the environment really isn’t fashionable right now. If crypto wants to find acceptance in the mainstream, it has to clean up its environmental impact and find more climate-friendly ways to mine or else risk being overlooked by the younger, more climate-conscious generations.

Wrap Up

If you’re wondering where crypto is right now compared to where it might be in ten years or so, think back to the original Apple App store. You might remember that there were just a few fun and weird apps like a candle you could blow out and a lightsabre you could wave around, but there weren’t many useful apps available. Now, of course, it’s a different story. Who could have predicted that in 2022, you could run a whole business using interoperable banking, accountancy, and logistics apps – all from your smartphone.

Of course, we believe that crypto’s just the same.

But how to respond to the “Bitcoin’s a bubble brigade” or those who believe that crypto is destined for obscurity? Well, when asked by those in the habit of asking “of what use is it?” about every new invention or discovery, the scientist and discoverer of electromagnetism, Michael Faraday, would reply “of what good is a new-born baby?”

Well, crypto is still a baby of sorts, and we can only imagine where she’ll end up.

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