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How it works
While more and more businesses accept cryptocurrency every day, there are still barriers to mass adoption of decentralized digital currency. Some of the very same things that carry the technology’s greatest strengths also stand as a barrier to wider adoption. However, there are things we can all do in the short term to encourage participation, and there are also things the industry must do moving forward for long-term success. We’re going to take a look at both.
Even though there are some systemic challenges for wider adoption of cryptocurrency, there are some things that individuals and businesses can do right now to help increase use and demystify the concept for a wider, not necessarily technically-minded population.
How it works
Simply telling your friends about cryptocurrency, how it works, and the many ways you can use it, is a key first step to widening adoption. For those who are technically minded, the concepts of a crypto wallet, private key, key storage, hot storage, cold storage, exchanges, and the like are all overwhelming.
Breaking these ideas down and helping people get over the fear of diving in is one of the biggest things we can do in the short term to help broaden involvement. This not only goes for end users, but business leaders, politicians, and journalists all need a better understanding as well to help bridge the gap between end users, early crypto adopters, regulators, and the media.
The media tends to misunderstand the cryptocurrency market, and focus on the risks and challenges rather than the potential. While new crypto based startups are working hard to develop user-friendly apps and payment systems using blockchain, those parts of the cryptocurrency market are under-represented in mainstream reporting.
One thing that businesses can do to help not only expand cryptocurrency use, but increase sales, is accept crypto payments more readily. I recently went to a major retail chain and tried to pay using my NFC based Google Pay app since I left my credit card at home. I ended up walking out of the store empty-handed, and the retailer lost a sale because their point-of-sale system did not accept NFC payments.
In this day, the more payment methods you accept, the more business you can expect to do. Many people are holding large amounts of Bitcoin, and are more apt to spend some of it in that form than exchanging it back to fiat currency first. You can open a market up to yourself by accepting cryptocurrencies as payment for your goods and services.
Another place that is lagging behind in accepting cryptocurrency are e-commerce websites. Purchasing products online is a booming and growing business segment and retailers like Amazon along with import/export giant Alibaba are leading the way. Experts have predicted that by 2021, the e-commerce market will grow to $4.88 billion.
There’s no other marketplace more tailor made for cryptocurrency payments, as integrating an online cryptocurrency payment processing system is a well established a easy to implement solution. If you run an e-commerce website, consider adopting a crypto payment system to increase your sales.
Cryptocurrency is so new that the above short term solutions can have a huge impact on adoption and user base. However, for real and sustainable long term growth there are things that must happen from inside the market to help grow use.
The wider public perception of cryptocurrency being the wild-west, financially, with little-to-no regulation and risk of theft or of startup companies going belly-up must give way to regulation, industry stability, and for some key lead solutions to come forward. User friendliness must be considered heavily in new crypto solution development.
Volatility in the market is a barrier to entry that must be addressed through regulation and stabilization. Many investors have entered the cryptocurrency market not to actively use the new currencies for payments, but as an investment strategy. While the idea of making a ‘bet’ on which platforms will sustain in the long haul, cryptocurrency was designed as a decentralized currency, not simply an investment market.
Some of the same volatility that the lack of regulation creates is also what is driving investors to be involved, so as regulations come down, and businesses expand their acceptance of crypto payments, use should return to the original intention.
Self regulation is necessary so that government entities, many of which lack a real understanding of cryptocurrency and are likely to protect existing financial institutions’ interests, don’t get the final say in how this new industry is regulated. Crypto business leaders must organize and become a part of the regulation process for the industry to succeed.
One of the key areas that cryptocurrency based businesses can focus on are decentralized apps, or dApps. Many of the first wave of crypto companies came at their solutions from a technology and programming angle first, leaving the user interface portion as an afterthought. This led to confusion in how to acquire, store, and use cryptocurrency.
Successful cryptocurrency based businesses moving forward need to focus on the user experience and highlight functionality over technology. When you look at successful tech hardware giants like Apple and Microsoft, they focused on the end user-experience first then adapted the technology to that experience.
Most cryptocurrency businesses so far have take a reverse approach, working on the underlying technology first and leaving the user experience as an after-thought. This is fine for technically minded users, but for wider adoption, the user experience needs to be simplified and enjoyable.
Some of the most promising ideas for dApps to bring real value to end users are crypto-based social media, voting systems, and peer-to-peer lending apps. In particular, peer-to-peer lending is a perfect way for people to leverage the decentralized model to take more control over their finances.
As cryptocurrency companies incorporate some of these ideas into future solutions and updates, volatility should decrease. But the state of the crypto investment market is not helping and crypto platforms that are interested in widespread adoption might want to consider the concept of stablecoins, which are pegged or tied to a fiat currency value.
While this may seem counter to the cryptocurrency idea of decentralization, you still have all the benefits of security, autonomy, and a distributed ledger – but you add in the stability of fiat currency valuation.
Maturation of the cryptocurrency ecosystem will bring about a reduction in volatility as well, and key currencies will come to the fore in terms of usage and adoption. Combining that natural reduction in volatility with new solutions that focus on use rather than investment gains will help speed the stabilization.
There is no doubt that cryptocurrency is here to stay, and will become an integral part of our financial lives. People want to have control over their own finances, and are tired of relying on financial institutions to dictate their financial future.
From investment to payment solutions to decentralized applications, blockchain backed cryptocurrency solutions will put the power to control one’s financial future back in their hands. While there’s plenty we can do today to help increase mass adoption of these new technologies, the industry must also work on long term solutions.
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