Will cryptocurrencies like Bitcoin and Ethereum ever become mainstream?

Since 2009, Bitcoin has grown tremendously and has rivaled traditional financial services as well as fiat currency, but will it ultimately take over? Since the last two years lots of cryptocurrencies have exploded, and for a number of good reasons. A lot of money has been poured into them, in fact the total market capitalization will reach $1 trillion dollars soon, so you should definitely look into what all the fuss is about.

As most of you might know, digital currencies like Bitcoin and Ethereum are based on the blockchain technology. This technology is superior and revolutionary in many ways and will have many successful applications. But rather than getting worked up about the tech, let us have a look at the reasons why they might or might not be a good idea.

The Problems It Solves

1. It can prevent fraud
   While it is still in its infancy, the underlying blockchain technology of cryptocurrencies records all transactions which can prevent fraudulent actions. For cryptocurrencies, blockchain has the potential to serve as a secure accounting information system.

Here is how it works. In a blockchain the management and authorization of transaction information is given to a network of computers. These computers in the network together verify transaction based on specific rules. To avoid failure, the verification of this transaction is done by all the computers on the network (decentralization). Such a system not only prevents fraud from criminals as transactions can be tracked, but even prevents the collusion of individuals, who in a centralized system can manipulate and override accounting and transactions. This is definitely what is needed in today’s broken world of greedy individuals.

1. It could solve the problems caused by Inflation

Excessive inflation can have a major impact on people’s finances as it can decrease the value of their savings and thus their purchasing power. For economic reasons the government has to manage inflation and thus resulting in rising prices which always been a curse for both individuals and businesses. The root of this problem is that the government has the power to print more money when needed.

History has shown that even governments make mistakes by mismanaging the money supply. For example, between the two world wars the repayments Germany had to make led to a decision to print more and more money which brought down the price so much that just buying a loaf of bread required a wheelbarrow of full of cash and savings were destroyed overnight. This raises the question whether fiat currencies which are backed by governments are all that reliable.

Is this really one of those problems which has no practical solution? Most likely not. Cryptocurrencies can potentially be a solution to this problem. As they are not owned by anyone and as their circulating supply remains fixed, if it were to become the official currency governments would be forced to abandon inflation as a tool for economic management. Cryptocurrencies make us imagine a day when the role of politics in a country’s economy is eliminated and legitimate fiscal management is carried out.

1. It provides individual ownership of assets
   When you own your nation’s fiat currency, you technically owe that amount to the government and the currency bill is actually the receipt that you owe money to the government. Basically the government and the banks are the third party that can exercise their power over your assets. Your account can be closed without notice for a possible violation of the bank’s terms of service or for any other reason which requires you, the account holder to go through a lot to get yourself back on the system.

By using cryptocurrencies, you are the sole owner of your assets and you have complete control over them unless you give ownership to a third party service.

1. Its structure can be modified
   Cryptocurrencies are not stagnant. They are based on code and can be updated. For instance the technology of Bitcoin in 2025 can be very different from what we see today. With updates like the Segwit2X fork and the Lightning Network which are taking place right now, they are definitely changing. They are not like a house during the housing bubble or like a dot-com company during the dot-com bubble. They are transformable.

Teams of dedicated people who are intensely motivated by the idea of decentralization of money and of course the ambition of making money are contributing to this growth and that is a great incentive if you ask me.

1. It will make global business easier with lower international transaction fees
   Cryptocurrencies like Ripple are already solving this problem. Billions of dollars worth of money moves around the globe everyday. In fact, American corporations have an estimated $2.5 trillion in cash overseas.

The cross border payments these days which are mostly made by wire transfers are time consuming, expensive and hazy. Cryptocurrencies will make these payments a lot more easier saving time and eradicating high fees required to carry out these transactions, thus making global business a lot more easier and create a thriving global economy.

The Problems It Faces

1. It lacks simplicity
   After being involved in cryptocurrencies for almost a year, I noticed that for an normal person it is a real inconvenience to send currency from one digital wallet to another. And it is even more ridiculous for small payments. For instance, if I have to pay $20 for my meal at a local restaurant, it is absurd to send 0.00035 Bitcoin (or any other digital currency for that matter) as a payment. All these decimal places make no sense to even tolerant people who are smarter than average.

If the working of cryptocurrencies cannot be taught to your grandmother or to a 5 year old child they are complicated enough to be ignored. Difficulty of use and lack of simplicity remain the main reasons why widespread adoption seems so far away.

This is the main reason, which keeps any cryptocurrency from widespread adoption. This simple shortcoming renders all the awesome technology behind it unproductive.

1. Its prices are volatile
   Let’s say you plan to buy some shoes with Bitcoin. Considering the volatility of Bitcoin’s prices, why would you spend $50 on shoes knowing that those $50 could become $500 one day if you held on to that Bitcoin? This kind of volatile change of price can discourage a lot of people from not using their virtual currency at all.

If cryptocurrency has to be a reality, there needs to be a smooth rise in it’s value.

1. There is no guarantee of its valuation
   The decentralized nature of cryptocurrencies could either be a curse or a blessing depending on the way people think of it. Like any other store of value, a cryptocurrency will be a commodity at the end of the day. It will only have value if people decide to give it value.

Hypothetically, if large groups of vendors and businessmen decide to dump away all their cryptocurrency, its value will decrease, hurting those who are heavily invested in them. On the off chance if people and corporations invest all their money in them, their prices will boom, which is exactly what is happening right now.

Conclusion
I personally think cryptocurrencies are a decent technological innovation which will solve several problems we face today. Bitcoin may or may not fail, but it’s technology — the blockchain, will certainly not.

When all is said and done, these digital currencies still have a long way to go and unless some company solves the problems outlined above, their adoption could be a long lost dream.

The biggest challenge to write this article was to use diction that even non tech people could understand. I hope that my writing was straightforward. Do let me know in the comments if I could improvise. Extra claps if you liked the memes! Thanks!