When the first Bitcoin was mined in 2009, there were plenty of people who believed that cryptocurrency would redefine the global conception of money over the subsequent decade. If we knew then what we know now about how digitization has changed the world, the idea would have seemed all the more plausible.
However, history shows that things panned out differently. The global cryptocurrency market cap stands at $1.25 trillion. That is certainly indicative of a market that is significantly larger than the fringe activity for tech geeks that it was in 2009. In fact, more than 27 million Americans – about one in eight of the adult population – own cryptocurrency.
Nevertheless, we are some way from the future that some envisaged, where fiat currencies have been consigned to history and we use Bitcoin to pay the mortgage, buy groceries and fill the car with gas. Let’s explore both the opportunities that mainstream adoption could bring and the barriers that are making it a challenge to bring about.
A solution searching for a problem
Some of the cleverest inventions in human history have floundered for the most frustrating reason; they do not have a compelling selling point to get consumers excited. We end up with the phenomenon of a great solution that is desperately looking for a problem it can solve.
Now, crypto is not exactly like that, but it is close. We will look at some specific examples in just a moment, and crypto evangelists can reel off benefit after benefit when asked. Perhaps it is more accurate to say that there is no sufficiently compelling reasons to drive mass adoption of crypto unlike, for example, the multiple tangible benefits that have led to an 80 percent plus market penetration of smartphones over the same period.
Regulatory confusion across the globe
Tech geeks understand crypto inside out. Finance professionals have a grip on the fundamentals. When it comes to lawmakers and politicians, it is another matter. Across the globe, governments have launched committees and symposia by the dozen in an attempt to get their heads around the finer points of crypto and, specifically, what to do about it. That involves such areas as classification of virtual assets, taxation, anti money laundering controls and a whole lot more.
It is fair to say that most governments around the world spent the first few years of crypto studiously pretending it didn’t exist and hoping it would go away. 14 years on, that is not going to happen, and different countries are at different stages in drawing up their crypto regulatory framework.
In general, it is a piecemeal affair. For example in the US, the Securities and Exchange Commission, the Financial Industry Regulatory Authority the Commodity Futures Trading Commission and the Chicago Mercantile Exchange are all involved in some aspects of crypto regulation, although personal cryptocurrency transactions between private parties are not regulated by anybody.
Against this backdrop of uncertainty, it is hard to envisage mass adoption becoming a reality – and that is before we even think about the biggest stumbling block of all.
Online casinos are early adopters of crypto
Before we think about more stumbling blocks, however, let’s present a little balance by looking at a specific area in which crypto has come very close to mainstream adoption. Seven to eight years ago, a handful of sectors took the plunge and became early Bitcoin adopters. One of the very earliest was the online casino sector. In fact, the first Bitcoin casino opened its virtual doors in 2014, and America’s gamblers have never looked back.
The best evidence of mass adoption is that in the US, the phrase “Bitcoin casino” has become almost obsolete. Take a look, for example at this US online casino site listing, taken from an independent casino review website. You will notice in the “deposit methods” column that practically every casino website accepts Bitcoin. It might not have replaced Visa and Mastercard but it has become equally ubiquitous. So how has this come about?
The answer returns us to our initial point. Online casino players in the USA had a problem and Bitcoin presented a solution. Part of the problem was that in many US states, the regulatory framework for online gambling was even more opaque than the one for crypto. Put simply, casino sites were there and in all but a couple of cases there were no specific laws against using them. There was, however, the potential for banks to get into hot water if they knowingly processed payments to or from gambling businesses.
Third party apps like PayPal knew a potential minefield when they saw one and chose to stay out. That left limited choices for many US consumers. Then along came Bitcoin casinos, solving the biggest problem at a stroke and simultaneously bringing extra little benefits including lightning fast transactions, little or no commissions, unbeatable security and complete anonymity. Online gamblers took to Bitcoin like the rest of us took to smart phones.
A gamble in more ways than one
Even for the online casino players, however, Bitcoin and altcoins are not without their cons. Many would joke that simply holding on to crypto for longer than five minutes is quite enough of a gamble without spending it in a casino. They are, of course, referring to Bitcoin’s famous volatility.
Around 2017, that volatility was manna from heaven for the few people in the right place at the right time. People like Cameron and Tyler Winklevoss precipitated the invention of the phrase “Bitcoin billionaires”, and a year later, many more, whose names are not recorded, felt an equal and opposite reaction as the price of Bitcoin suffered its first great slump. It is a cycle with which we are all familiar by now. Last year saw the price of Bitcoin drop from $65,000 to $15,000.
Right now, that volatility presents the biggest barrier. However, experts predict that as regulatory issues are clarified, crypto volatility will drop. Don’t hold your breath, but crypto’s finest hour could be still to come.