There is hardly any doubt about the popularity of cryptocurrencies in 2021. In the domain of cryptocurrencies, Bitcoin is the most popular and the largest cryptocurrency by market capitalization. The popularity of Bitcoin soared, with its value reaching an all-time high of $20,000 in December 2017. Following that peak, the value declined in the following years, although the coin continues to figure high in terms of its appeal among prospective buyers.
Having said that, the adoption of Bitcoin is not as wide as its anonymous inventor Satoshi Nakamoto might have desired. Not only Bitcoin but other cryptocurrencies are also struggling to go mainstream as the majority of people continue to use fiat currency for their day-to-day activities. The banks and financial institutions are the preferred choices of the masses, and this is despite a host of advantages associated with Bitcoin and other digital currencies. In this article, we will specifically look at some of the primary challenges that Bitcoin faces in its quest for mass adoption.
Obstacles to Bitcoin Mass Adoption
- Bitcoin Is Very Volatile: The highly turbulent nature of digital coins, including Bitcoin, is one of the primary reasons obstructing its mass adoption. The volatility in value is quite apparent as Bitcoin keeps on fluctuating in its price on a daily basis. This is true not only for Bitcoin but also for most other cryptocurrencies, although Bitcoin tends to be a little more volatile. This is obvious from the fact that the price of Bitcoin was close to $20,000 in 2017, although prices eventually came down to $8000 at the beginning of 2020. Again the valuation started gathering pace towards the end of December 2020, and now the value of Bitcoin is hovering at around $55,000. The high variability in prices always keeps the investors on tenterhooks. Stablecoins, which seek to combat the excessive volatility of cryptocurrencies such as Bitcoin, may have a role to play in the future to become an important medium of digital exchange with the general public. However, You can avoid this issue by using automated trading platforms like Bitcoin Circuit.
- Scalability: The scalability issue is also one of the factors blocking the adoption of Bitcoin. The processing capacity of the network is limited that means in case of a large number of transactions happening at a particular point in time, the system gets stuck and takes a longer time to complete the transaction. This is because information on the Bitcoin network is processed through blocks, and due to the limited frequency and size of these blocks, scalability remains an issue to contend with.
- More fiat to crypto on-ramps: Converting cryptocurrency to fiat currency and vice versa is not at all a convenient process even in today’s globalized world. In order to convert conventional money into Bitcoin and other cryptocurrencies, one has to go through banks or financial institutions. The policies of these institutions are not very conducive towards Bitcoin, and often the conversion will also result in a huge drop off for customers. The regulatory mechanism is not easy either, and this makes the adoption of Bitcoin quite a challenging task for prospective users.
- Better regulation: Regulatory agencies and frameworks are another stumbling block in the adoption of Bitcoin across the globe. While some countries have more flexible approaches, policies, and attitudes toward digital currencies, others have gone on to take a very hostile position. Countries like China and India are still vehemently opposed to any kind of transaction in crypto, although it is expected that over a period of time, these policies will change to make way for Bitcoin.
- Ease of use: It is very important for the cryptocurrency industry to keep updating methods of storage and transaction with Bitcoin and other digital currencies. It is a fact that transacting through Bitcoin is not easy especially for a person who is not exposed sufficiently to the internet and the crypto scene. Managing private wallets and keys is a very crucial aspect of Bitcoin storage, and the process could be complicated for a semi-literate person. Therefore, it is required that the cryptocurrency industry enhances the user experience.
The potential of Bitcoin far exceeds the number of current participants who buy it. Challenges to the Mass Adoption of Bitcoin need to be addressed, whether through training the general public or the creation of tools to facilitate the use of cryptocurrencies. Bitcoin will always be at the mercy of supply and demand and was made this way by design.
Will Bitcoin ever break out? Probably. But it’s not going to happen tomorrow. Bitcoin still has some significant barriers to entry, kinks that need to be straightened, and lots of PR to do.