Top 5 challenges of global cryptocurrency adoption
Despite the overwhelming buzz that surrounds Blockchain technology, mass adoption is still prevented by a number of obstacles.
- Lack of legal framework and Regulations
As regulatory bodies take their first steps toward reining in the market, the Blockchain ecosystem is experiencing some instability.
Regulations are a double edge sword. Due to the decentralized nature of cryptocurrencies and the lack of power structures, many view regulations as a tactic to slow down or inhibit innovation and personal financial freedom.
On the other hand the lack of standard best practices surrounding most ICOs and cryptocurrency related businesses, create confusion and scare away blockchain developers, forcing them to move to 'Crypto friendly' countries.
In terms of legislation, a search for "blockchain" in the legislation-tracking database Legiscan, pulls up 42 results. New Jersey, Illinois, Wyoming, Virginia, Hawaii, Arizona, Colorado, California, New York, Vermont, Tennessee, Maryland, Delaware are among the states that are currently considering bills around blockchain and cryptocurrencies.
According to The Columbia Science and Technology Law Review
"Regulatory responses to emerging technologies, and to blockchain in particular, range from excitement to suspicion to indifference. "
The bills proposed a puzzlingly inconsistent tax treatment of virtual currencies: on the one hand, it required cryptocurrencies to be treated for tax purposes as currency rather than property. Since the federal government has not exercised its constitutional preemptive power to regulate blockchain (as it generally does with financial regulation) or even expressed intention to do so, regardless of the interest of federal agencies,states remain free to introduce their own rules and regulations.
Some have attempted to do that, however haltingly.
- Awareness and education
Bitinfocharts Bitcoin Distribution shows that we currently have approximately 21-22 million Bitcoin Addresses.
That is still only 0.3 % of the global population. The reality is that currently it is still hard to use Bitcoin and almost no incentive to use as money for most people.
User friendly mobile applications and general public education will be paramount to facilitate mass cryptocurrency adoption.
Good news is that many of the cryptocurrency projects are actively working on Merchant Payment Solutions,
"Blockpay, a Germany based payment solution accepts a variety of digital currencies such as Bitcoin, Steem, Ethereum, Dash and other Smartcoins "
Some of the BlockPay’s features include Automated Bookkeeping, Loyalty and Reward Programs, Customer Analytics, QR Code and NFC support and more. It also seamlessly supports traditional payment options like cash, credit and debit cards as well.
Bitcoin Private is currently actively working on their Merchant Payment Solution
- Scalability
Demand on scalability is becoming increasingly urgent.
Understanding the Problem: One of the major problems of the blockchain is that an increase in the number of nodes reduces its scalability.
This may seem counterintuitive to some people. More nodes = more power. So more speed, right? Not exactly.
One of the reasons a blockchain has its level of security is because every single node must process every single transaction. This is like having your homework assignment checked by every single professor in the university. While this may ensure that your assignment is marked correctly, it will also take a really long time before you get your assignment back.
The nodes are your professors. Each transaction is your assignment. Sure, we can reduce the number of professors (nodes) until we are satisfied with the speed. But as the assignment (transaction) backlog increases, we will need to further decrease the number of professors. This will eventually lead us to rely on the a few "trusted" group of professors. A centralized Group. This defeats the ideology of blockchain decentralization
To sum it up, blockchains must choose between Two of the Three following attributes:
SECURITY
SCALABILITY
DECENTRALIZATION
Currently we already have several solutions proposed to solve the scalability issue. Some of these solutions are : lightning networks, sharding and staking.
- Volatility
For Bitcoin to function as a means of payment it has to become relatively stable, otherwise it would be a logistical nightmare for both businesses and consumers.
BitFlyer’s COO Andy Bryant argues that volatility is a symptom of evolution, one that won’t last much longer. He points out that compared to the foreign exchange market, real exchange and global gold market, bitcoin is a small ship in a sea of larger vessels. He goes further to explain that compared to other asset classes, market moves create outsized price shifts. He expects volatility will reduce when bitcoin becomes fully mainstream
- Energy consumption and mining equipment cost
Mining equipment and energy consumption costs are still relatively high. We are seeing a massive rise in hybrid coins (PoW / PoS)
Mining is still viable, but it requires more than just building a mining rig, pointing at a mining pool and forgetting about it. The real work seems to be deciding on the mining rig, and picking the coins. I encourage everyone who is interested in mining to connect with the local mining community and network with other local miners.
Overall it is an exciting time for the crypto world as we stand on the cusp of mass adoption. I believe cryptocurrencies have the power to change the way the world operates.
We still have a long way to go, but blockchain technology and its list of uses continues to grow every day.