Cryptocurrencies are the latest trend taking over the world and despite the fluctuating markets, more and more investors are looking at new ways to integrate this digital asset into their portfolio. However, there has been a general consensus around the world that cryptocurrencies will not take over the world in the long-term, with many individuals across the globe remaining resistant to the technology. Here, we’re taking a closer look at the main issues which are preventing cryptocurrencies from being adopted by the masses, and what can be done to solve this.
There are a number of countries around the world that are remaining resistant to the rise of cryptocurrencies. America, Russia and China are three of the key players around the globe that are struggling to accept this growing trend, despite the UK and many European countries, amongst others, being strong advocates for cryptocurrencies. Despite this, trading has become more widely available with many European-based exchanges and social networks beginning to expand to offer opportunities of trading cryptocurrency to American markets, with Chinese markets becoming the second target. Despite not having legal support, we could see a movement where the people corner governments into accepting cryptocurrencies. The more available cryptocurrencies become, the more likely we are to see widespread adoption.
Despite many believing that cryptocurrencies offer a much faster form of payment (which is more often than not, true), there have been a number of instances where confirmation of transaction can take several hours to complete. Some specialists are under the impression that Bitcoin in particular has a scalability problem, and it was never truly designed to become as widespread as it has within such a short space of time. As such, if Bitcoin cannot solve this scalability problem, then it will never become widespread. Nevertheless, there are a number of new cryptocurrencies that are coming into play which have the potential to tackle the scalability problem that Bitcoin faces and become a far more streamlined digital asset than what Bitcoin can offer its users. The scalability problem is also causing a number of fees to begin hitting the world’s most popular cryptocurrency, and as such, individuals who were originally interested in the digital asset could begin turning to other options. If Bitcoin can begin to solve some of its scalability problems, then we could see the cryptocurrency being adopted by the masses – although this could take a significant amount of time to solve.
One of the main issues with cryptocurrencies is their volatility. 2017 saw a Bitcoin boom which drove the market up, and the start of 2018 ended up seeing the bubble burst causing prices to come crashing down once again. Volatility can send shockwaves through markets, and as a result many people are opting to steer clear of these particular cryptocurrencies. In order to have a sustainable future made for mass adoption, cryptocurrencies will need to demonstrate a low level of volatility for a significant period of time. However, with country’s like Japan beginning to recognise cryptocurrencies as a legal form of payment, and starting to implement some forms of decentralized regulation, it is likely that the market is going to begin to calm. The more people invest in cryptocurrencies, the more stable they will become over time. With a number of banks beginning to look into these digital assets, the finance world could be a major player in maintaining its value instead of seeing it skyrocket and then fall shortly after.
Despite blockchain technology ensuring cryptocurrencies themselves are entirely secure, this is not always the case when it comes to the exchanges that they are being traded through or the wallets that they are being held in. Almost all cryptocurrency enthusiasts will have heard of the Mt. Gox hack which resulted in $460 million worth of Bitcoin being stolen. Other high-profile exchange hacks include:
- The DAO Hack – $50 million
- The Bitfinex Hack – $72 million
- The NiceHash Hack – $80 million
It is because of this risk that many individuals are concerned about integrating cryptocurrencies into their every day life, due to the fear of the money they are investing being stolen. In order to solve this potential problem, the introduction of decentralised exchanges may be necessary. These decentralised exchanges can utilise the security of blockchain technology to create a transparent and manipulation-free environment for trades to take place. Ensuring that a number of users control these exchanges, instead of a single entity, will help to further enhance an exchange’s overall security, helping to improve mass cryptocurrency adoption.
While it could be some time before cryptocurrencies are truly adopted on a mass scale, there is a lot of potential for this to happen as long as the above problems are resolved sooner rather than later. Digital assets are said to be the future of currency, and while this is yet to be seen, it is highly like that this will be the case.