Will Cryptocurrencies Ever Become Mainstream?

mainstream

More investors and big companies join the crypto space every day. Most of them are here to speculate on the price and gain some profits. Can cryptocurrencies become someday mainstream and be more than just a speculative investment?

As long as cryptocurrencies are not scalable, they can’t become mainstream. Another factor is trust. Only a few trust the system because they understand it completely. Another important factor is acceptance. When no merchants accept cryptocurrencies, I can’t buy goods and services.

Trust & understanding

Most people are no programmers or know how to read code. They can’t read the Bitcoin source code or are not willing too read it. Also, they think that the current money system works anyway. At least as long until everything collapses and we go into a recession and feel poor.

People trust for instance the dollar or euro more because everybody else accepts it and uses it too. They also understand how to use the money system. Think about it. Understanding everything about Bitcoin can be difficult. Especially in the beginning.

We need better systems to educate people. We learn from birth on how to use our currencies. We trust the system until something happens and proofs us otherwise.

Most people also don’t want to leave the system because they are lazy. They live in their comfort zone where everything works “fine” and they don’t have to change things. Even when the change could be beneficial, but they don’t know it yet.

Acceptance from merchants

Another big problem for cryptocurrencies is that most merchants won’t accept them. More and more online shops do, but a lot of them still don’t do.

Merchants are too scared of volatility. It’s common for Bitcoin and other cryptocurrencies that they have price changes of 5% every day. This means if a merchant charges $1 for a product, there is a chance that he only has $0.95 the next day.

Stablecoins could solve the problem. They are usually backed by 1 dollar. So, 1 Stablecoin equals to 1 dollar.

More and more merchants are accepting Bitcoin and other cryptocurrencies. The question is when will there be enough where we hit a critical mass. In other words, when does the trend become so big that everybody needs to accept crypto?

Scalability

The biggest challenge for blockchains is scalability. For instance, the Bitcoin blockchain currently could handle about 7 transactions per second. That’s not much.

Also, this number never changes even when more users join the Bitcoin network. Why? Because one block is mined around every 10 minutes and is on average 1 MB big.

So, why do we don’t change the parameters? Let’s say we change the block time from 10 to 5 minutes. What would happen?

As a result, we would lose decentralization. Fewer nodes can afford the equipment to keep up with the growing blockchain of Bitcoin. As you can see, it‘s a trade-off every time.

The same thing would happen if we change the block size from 1MB to 2MB. The blockchain would grow twice as fast. Besides, we wouldn’t solve the scaling problem, because we would go from 7 transactions per second to 14.

The blockchain itself is not scalable. But, the Lightning network does. Through the lightning network, thousands of nodes could make microtransactions off-chain. This also carries risks. It adds more code to the protocol and allows for more attacking points.

Purpose

The significant question in the future will be the question, what do we want crypto to be. Should it be a store of value? Something we can pay with? Something where we can build decentralized applications (dApps) with?

There are many projects out there that have different use cases. The question will be, what cryptocurrency can scale. Its a question of what crypto can handle million and billion transactions per second. Also, it shouldn’t destroy decentralization.

Let’s say we create a blockchain that could handle 1 billion transactions per second. But, there is a catch. Only big companies like Google or Microsoft can take part in the network. The reason for this is because they have the required hardware for it to handle all transactions. That would kill the purpose of cryptocurrencies.

Crypto – the online money

Also, most people are seeing crypto as a payment method for everything in the digital world. That is the first logical step because cryptocurrencies only live in the digital space. That’s where they got created and where they live.

They can’t be printed and converted like FIAT currencies. Crypto has major advantages when it comes to online payments. For instance, they are a trustless system and don’t need a middleman. Also, you can transfer assets around the globe without extra fees.

Politics & banks – The biggest thread to crypto

The biggest threat to cryptocurrencies is politicians or banks. They fear to lose power. They lose it because crypto gives power to people. It gives it through transparency and decentralization.

Even if one country decides to ban crypto, others will see the benefit in the long term and take advantage of it. Also, the major advantage of crypto is the decentralized network.

Even if you ban selling and buying crypto, cryptocurrencies would still survive. You could also ban mining, the result wouldn’t change. Decentralization lets cryptocurrencies survive. Other nodes who are in other countries would still operate. They keep the network secure and functioning.

It is also pretty hard to regulate crypto for the entire industry. Governments could only regulate it within the country.

A big problem that occurs with that is for instance inappropriate data on the blockchain. You can’t censor it.

Everything we use nowadays is censored: Twitter, Instagram, Facebook, Google. They have good reasons for it. There are disturbing things out there on the internet nobody wants to see.

Without censorship, everything would come up to us. The question will be, should be censor certain information on the blockchain. Who would decide that? The majority of the nodes?

We have to answer all these questions. We also have to overcome the technical difficulties before crypto can go mainstream. Until then, crypto is an experiment.

The future of crypto

Crypto is meant to be money. They have to overcome some major challenges like scaling problems or speed. If there is a project that does solve that issue, be prepared for a revolution in the next years.

We see new groundbreaking projects and concepts arising every year. They change the whole cryptocurrency market and start big trends. Crypto shows us what can be achieved through decentralization and a loyal community.

It’s not a matter of if crypto will be mainstream, it’s rather a when will crypto be mainstream

Maximilian Groß

Further Readings:

FAQ

Will blockchains ever become mainstream?

Blockchains have different use cases. We have to figure out where blockchains fit the best and can replace traditional systems. Yet, we didn’t achieve it and experiment with different projects. It’s just a matter of time when we will find out where the blockchain technology fits best and more companies and organizations start using it because of its benefits.

Maximilian Groß

I'm a software engineer. I'm the owner of FireStake.com and know the crypto space since 2016. Furthermore, I share everything I learn about crypto on this blog.

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