Blockchain and cryptocurrencies are revolutionary technologies that are promising to completely change many facets of our lives, from banking to logistics to operations. However, while ICOs have raised billions of dollars so far, there are still many things that need to be done in order to increase cryptocurrency adoption. Christina Comben from Coincentral is providing us with a list of barriers that prevent the widespread adoption of cryptocurrencies so far. I provide a summary of the reasons here.
Lack of clarity
Outside of technical experts, there is lots of confusion as to what blockchain is, what are the differences between Ethereum and other blockchains, like Stellar, and how Bitcoin exactly works. This confusion causes insecurity amongst parts of the public, and makes it less likely that these technologies will adopted on a massive scale.
I personally believe that lack of clarity in the space is a major hurdle, and this is the reason I decided to create The Tesseract Academy, educating non-technical decision makers in deep technical topics such data science and blockchain.
Too many cryptocurrencies
If you go to coinmarketcap, you will fin around 1800 cryptocurrencies. This only compounds the confusion that already exists. With so many cryptocurrencies around, how someone should choose one to use, or invest in? It will take quite some time until the best ones survive and get adopted by a significant user base.
Further to the aforementioned problems, most cryptocurrencies are not very easy to use. For example, if you have ever used etherwallet you have seen how far the experience is from online banking. This is fine for technical experts, but what about elderly citizens or people who are not technically adept?
This is a technical problem, which will probably be solved in the near future. However, right now scalability remains a serious issue in all blockchains.
Scams and hacks
There are many ICOs that have been proved to be scams, or exchanges that have been hacked. It is difficult to convince people to adopt new technologies when they don’t seem more secure than the traditional ones.
Volatility is a serious problem in cryptocurrencies. I have written in the past about the challenges of predicting bitcoin prices. I have also written about the importance of setting up a proper token economy, and making sure that the business model of a startup that is planning an ICO is sound. That being said, we saw bitcoin moving up to $20k and then crashing down to $6k. This kind of volatility is unheard of in any other market, making investors and the public very cautious.
Bitcoin was used in the in order to buy and sell illegal goods on silk road. Cryptojacking (the use of bots to mine bitcoin) is turning into an epidemic. Bitcoin is also used in ransomware attacks. This doesn’t help the image of cryptocurrencies, since many people will associate them only with illegal activities.
Cryptocurrencies are still not regulated in most countries. This keeps many investors away, who are waiting to see what will happen, as many things could change in the near future.
Bitcoin has a very serious impact on the environment, with miners consuming huge amounts of electricity worldwide. This is not an issue for consensus algorithms such as Proof-of-Stake and coins that use it, but it still an issue for Proof-of-Work cryptocurrencies.