Cryptocurrency Adoption: A Critical Look at the Mass Market Psyche

In 2017, Bitcoin and altcoin were the subject of incredible media attention, with astronomical prices and widespread speculative sentiment driving the market. That frenzied activity, hyped though, was largely restricted to a small group of traders and talking heads. People wanting to cash in on the over inflated prices before the inevitable market correction were the exception rather than the rule. Mass market adoption remains elusive, for a series of reasons.

For starters, the cryptocurrency realm is inherently volatile. Everyday folks are skeptical of highly volatile financial instruments, for fear that they may lose the proverbial shirt off their backs. Speculative actions make it difficult to anticipate pricing vis-a-vis cryptocurrency. This boils down to a basic issue of trust. If the underlying asset can be trusted to retain its value and ultimately grow in value, mass market adoption will invariably result.

Grassroots level folks have no appetite for something that for all intents and purposes is not backed by anything other than supply and demand. Changing that way of thinking is an unenviable task in and of itself, but blockchain technology, Bitcoin and altcoin are making tremendous inroads into the mass-market psyche. Reluctance and aversion have given way to curiosity and interest since 2017.

Price volatility aside, bitcoin has slowly carved out credibility for itself by virtue of the fact that it has been around for over a decade. Those who summarily dismissed it as nothing more than a shell game have come around and now recognize the inherent value in bitcoin and the blockchain technology that underpins it.

As a medium of exchange, bitcoin is peerless. Anyone with an Internet connection can seamlessly, anonymously, and securely transact using the bitcoin blockchain. There are no middlemen involved, and no exchange rate mechanisms impeding value propositions across international boundaries. Bitcoin’s value can be pegged to the GBP, USD, EUR, or any other currency to determine market value in fiat. All of this needs to take place within the ambit of a trusted ecosystem – that being a decentralized, peer-to-peer, blockchain-based framework within which everyone can transact without government interference. For crypto to gain traction with the mass market, the private sector and the public sector must move towards normalizing the use of cryptocurrency, without let or hindrance.

Volatility Drove Interest in Crypto to Begin With

Those who argue that stability of pricing mechanisms in cryptocurrency will serve as a disincentive to people investing in it may be wrong. It is largely thanks to the volatility of crypto that people were interested to begin with. Yet, that adrenaline-rush is but one component and it serves the short-term interests of day traders and speculators, not the long-term interests of investors and adopters who want to make it part of their everyday lives. Analysts believe that mass market adoption is the only way to stabilize pricing, even for a contrarian currency option.

If Bitcoin and crypto are to be used as currency by everyone, they must be perceived as substitutes for fiduciary currency like USD, GBP, EUR, ZAR, and dozens of others. These changes are already happening right before our eyes, thanks to the provision of payment processing options available at leading e-commerce giants, banks, and money transfer corporations. Bitcoin, Bitcoin Cash, Litecoin, Ripple, Ethereum, and scores of others now have a place in the FinTech arena and in traditional banking enterprise.

Between 2017 and 2019, a plethora of online retail trading brokerages added cryptocurrency options to their platforms. This is evident across the board with many respected FinTech operations and trading brokerages allowing for trades and investments in cryptocurrency. As with any new technology, product or service, trust needs to be built. Everyday folks may not understand how the blockchain functions, but if they can be introduced to Bitcoin and Ethereum in a way that they understand such as trading and transacting with the digital currency, trust will be instilled. Increased investor and consumer optimism are helping to drive growth. Leading trading brokerages routinely highlight their cryptocurrency offerings as their featured products, and registered traders are lapping it up in their droves.

Plus, we’ve also got crypto entrenched in traditional banking, trading and financial systems now. For example, trading brokerages now offer a variety of CFD crypto options (contracts for difference) which are derivative trading instruments where traders can purchase contracts to buy or sell crypto CFDs. Even major online money transfer companies like OFX may soon consider offering cryptocurrency options to clients. Such as the pervasive appeal of crypto today that it is racing towards mainstream adoption. Plus, Ernst & Young has launched a tax resource for crypto holdings, and Starbucks has also announced that it has designs on digital currency possibilities. When big brand-name companies start talking up digital currencies, the mass market starts to take notice. This is true across the board, even at Microsoft, American Express, Overstock, Newegg, and Expedia.

Adoption of Debit Cards Linked to Digital Currency Assets

Cryptocurrency proponents routinely tout the prevalence of digital currency wallets linked to debit cards as evidence that wider market adoption is on the cards. The crypto payments industry is growing, as evidenced by the compound annual growth rates between 2014 and 2018. Consider that in the years 2014/15, the CAGR spiked 21%, followed by 600% increases by 2018. Even at the height of the crypto correction year in 2018, growth hovered around 90% (Year-on-Year).

True to form, cryptocurrency turnover was particularly high in 2017 (November and December) before precipitous declines in January, February, March, and April of 2018. 2019 has been marked by an increase in global monthly turnover of crypto payments, thanks to the bullish momentum which drove Bitcoin and altcoin in Q3 of 2019. We are seeing stabilization coming into play, with average transactions values across crypto platforms trending between $1,000 – $2,000 in 2018, with a spike taking place in 2019, spurring the recovery.

When it comes to adoption of digital currency payments options, developed countries are more amenable than developing countries. That being said, countries like China, India, South Africa, Brazil, the US, Canada, UK, Spain, Japan, Italy, Germany, Belgium, and France are all adherents of cryptocurrency. There are many reasons why people are eager to adopt cryptocurrency over traditional currency options, notably anonymity, security, costs, and speed of transactions processing.

Anywhere the Internet infrastructure is functional, cryptocurrency has an opportunity to thrive. The use of debit cards remains popular (prepaid cards loaded with digital currency), and they also permit account holders to use ATMs to withdraw their money. Crypto exchanges and companies that facilitate the use of crypto-based debit cards have seen multi-fold increases in turnover and this is driving adoption of this contrarian currency to mass-market level. The World Bank estimates that some 69% of people will have debit cards in 2020, and thanks to the convenience offered by this option, mass market adoption is a natural consequence.