The Single Biggest Barrier to Cryptocurrency Adoption is Fear
Fear is a powerful motivator. Corner an animal and it will attack. Scare enough people and they will launch a war. Even though cryptocurrency will never die, fear cannot be ignored and yet most crypto projects fail to address fear and that is leading to the increased centralization of the decentralized movement. Fear is stopping adoption and centralizing cryptocurrency. It is time to calm the fear.
The Experienced Are Wrong
Normally the most experienced person in the room is right. With emerging technology, especially blockchain, that does not seem to be the case. If you have been in crypto since before 2016 you probably think the reasons most of the world still do not own crypto are because of scaling, transaction speed, or fees. Perhaps you would say most people are avoiding buying cryptocurrency because it is complicated. But what is really going on has not changed from the start: most people are simply scared of Bitcoin.
The average person is scared to gamble their money in what is seen as volatile, risky, possibly a fad, a bubble, or worse, a tool for criminals. It is socially acceptable to bash Bitcoin in public and not socially acceptable to praise it. Add in the complex blockchain technology that backs it, the uncomfortable onboarding processes like Coinbase, choosing the right wallet, or understanding price movements in a 24-hour global market and people just walk away out of fear. Their lives are fine as they are, why take the risk?
The Inexperienced Are Right, for Now
If you have owned cryptocurrency for less than six months, you know better than most why people stay away. But like any group dynamic, you too will lose sight of the entrance way the deeper you move into the crypto forest. As you discover alts and ICOs where ROIs have been above 10,000% in the past two years, and forks of “free” coins, and airdrops, and faster, cheaper, more secure blockchains, you too will start to believe that adoption will be solved when crypto moves at the speed of thought. But adoption is currently being solved, not by better blockchains or by better profits, no, adoption is being solved by centralization and the only question is, where does that leave the cryptocurrency community?
Coinbase is Winning the Adoption Race
To understand how to accomplish a certain goal it is a best practice to examine those who have already reached that goal. In this case, the biggest winner of the crypto adoption race so far is Coinbase. Coinbase launched in 2012 as a gateway to Bitcoin for U.S. residents. Coinbase overcame many difficulties and now its sheer size in the U.S. market has transformed it from a useful service to a market influencer. For example, Coinbase recently launched its public process for adding new tokens to its platform. In a manner similar to the U.S. government or Walmart, Coinbase is demanding a certain level of quality from new coins in order to gain access to their 20 million customers. I believe Coinbase’s standards will now spread and raise the bar on future projects, that is how market influencers change the game.
The Rise of Ripple
Much to many people’s dismay, Ripple is another example of a project that is winning the adoption race. This organization deployed editable, permissioned blockchain because that is the type of blockchain that is a good fit for banks. Even though Ripple is not well liked among most of the more experienced crypto users, the fact is that XRP is spreading blockchain to more organizations that have failed to adopt Bitcoin, Ethereum, or any of the other 2,000 choices available to them.
Coinbase and Ripple: Centralizing Forces
The question becomes, what do Coinbase and Ripple have in common and the answer is: centralization. Coinbase is essentially a centralized, regulatory complaint cryptocurrency exchange that launched early in the richest market in the world. Like all centralized exchanges, when storing Bitcoin on Coinbase the user must relinquish their private keys. Turning over your private keys means it is possible for someone else to take your Bitcoin and send it where they chose. That is not the freedom that crypto brings. Ripple’s service allows banks to send money through cryptocurrency but uses permissioned nodes to verify transactions and allows for asset freezing and transaction reversals. It accomplishes all this by a high degree of centralization. This too is not the freedom that crypto brings.
In both cases, two of the fastest growing publically facing crypto projects have achieved rapid growth by centralizing the decentralized blockchain. Why is this working? It is working because people are scared of Bitcoin and they want someone they can trust to help them manage it. In the U.S., they want someone they can sue if their money is lost. This is all about fear and until the crypto world realizes that the public is afraid, they will continue to work on faster blockchains instead of trusted crypto. Continuing to spend time on scaling instead of calming fear is a mistake and it is leading to the centralization of blockchain projects.
The Solution: Trusted Agents
Coinbase and Ripple are winning the adoption race but decentralized crypto can too. What the crypto community needs are trusted agents that can help monitor the safety net without actually being the safety net. A project like MilitaryToken™ which I am part of, is a great example. MilitaryToken™ is onboarding new crypto users but not through centralization, through outreach. The same way many people come into crypto, through a trusted friend is the same way crypto will reach a wider audience.
Blockchain is built to be trustless, to not need safe people to keep it safe, but that is not working well when it comes to adoption. The winners of adoption race are organizations like Coinbase which hold your private keys and Ripple which uses permissioned crypto. The adoption race is not working for crypto purists. I think that trusted agents can restore some balance to the industry or at the very least, provide onramps for new users while still keeping crypto freedoms intact. Give a man a fish and he eats for a day, but teach a man to fish and he starts a fishing company and sells fish to buy more Bitcoin.
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PhD, a Fortune 500 consultant, the Founder of VetStoreUSA, LLC., and a social scientist who has been studying the Blockchain Community since 2013 @BitcoinCensus