BY SHIRLY VALGE FOR ADELLO MAGAZINE
Many people treat everything related to the blockchain with distrust, keeping in mind cryptocurrency projects, which for the most part turn out to be scams. However, this decentralization technology is only the foundation for the development of many business sectors, as it can ensure the transparency of operations without the participation of third parties. Let's learn about the rise of the blockchain in detail.
Blockchain Adoption Is Only a Matter of Time
According to Exploding Topics, about 1 billion people around the world (that is, about 12.5%) use cryptocurrencies in 2022, while 85 million of them are Bitcoin holders. For comparison, in 2019, the number of owners of this most popular cryptocurrency in the world was half that, which literally describes the doubling of demand for cryptocurrencies in general in just three years. Indeed, Fortune Business Insights claims that by 2029, the global blockchain market value will grow to $163.83 billion (currently, its global capitalization is about $7.18 billion).
Also, Stash claims that the vast majority of crypto holders are residents of India, Nigeria, Vietnam, Australia, and Ghana. This is due in no way to loyalty to the crypto industry of the local government, since in India, for example, the use and purchase of cryptocurrencies is prohibited. Fortunately, there are only 6% of countries with such restrictions.
Cryptocurrency inquiries from financial advisors are also on the rise: last year, 9 out of 10 received questions about cryptocurrencies from their clients. All these factors indicate a positive growth in confidence in the crypto industry, regardless of the influence of local legislation and other factors that, in theory, could weaken the credibility of digital currencies per se.
At the same time, the entry threshold into the world of cryptocurrencies is quite high. This is due to the complexity of blockchain technology, as well as the prevalence of cryptocurrencies only in certain business sectors. Yes, blockchain and cryptocurrencies, as many other technologies like the Internet, are significantly ahead of the time in which they appeared, and it may take years for their global adoption. However, nothing is impossible – any, even the most complex technology can be adapted for mass use, you just need to show people that it can be as easy as paying with banknotes or a credit card.
And that's exactly what I've been doing for the last few years at Velas. Since my team and I are active users of this innovation as well, our main focus is to offer solutions that simplify the process of interacting with blockchain and decentralized services for companies and their clients.
It is important to understand that most of the way has already been overcome: more than ten years have passed since the appearance of the first and the most popular cryptocurrency, Bitcoin, and even the most notorious skeptics have ceased to perceive these digital assets as a bubble. On the other hand, in 2022, it is hard to imagine how one of our parents or grandparents will regularly pay with cryptocurrency, for example, in a bakery. Can this barrier be removed today? Undoubtedly.
Even though the crypto industry is still undergoing its formation, many large business players have already demonstrated their interest in it. In particular, according to the Blockdata report, 44 out of the top 100 public companies by market capitalization across six major sectors use blockchain to some extent.
These include META, the LVMH concern, American Express, Bank of America, Shell, Roche, etc. Some of them introduce NFT, some offer their users to pay with crypto, and some even use blockchain technology outside the context of digital assets.
Moreover, we have our own cases of big players getting involved, such as Velas, which recently entered into a long-term partnership with Ferrari to develop digital solutions for the Scuderia fans.
Be that as it may, the official adoption of the blockchain by such well-known companies proves the viability of this technology for the vast majority of business sectors.
Whether society wants the globalization of digital currencies or not, it will anyway happen in the nearest future in many countries, through the introduction of central bank digital currency (CBDC), a new form of publicly available e-currency. In fact, this is an analog of the usual monetary unit, which is used as fiat money and serves as a legal payment method.
In fact, an e-wallet for CBDC is no different from a regular bank mobile application and Apple Pay or Google Pay. Therefore, nothing will change for the end user with the advent of the new currency.
The popularity of CBDCs is growing all over the world for many reasons. In particular, the COVID-19 crisis triggered a shift in payment habits towards digital, contactless payments, and e-commerce due to the later disproved risk that banknotes could carry the virus. In this regard, cryptocurrencies developed by private organizations or informal communities have experienced significant development and an increase in value. In response, the vast majority of countries have begun to consider the introduction of digital currencies at the official level.
Obviously, if even states have taken up the introduction of digital currencies, very soon they will become as common as fiat. Thus, the matter remains small: to ensure the simplicity of software solutions operating with crypto.
ICOs were the first step toward the mass adoption of cryptocurrencies. For more than five years, initial sales have attracted millions of newcomers from all over the world to the crypto industry, allowing them to buy cryptocurrencies at a minimal cost. While many projects, unfortunately, turned out to be scams, today, thanks to ICOs, cryptocurrency is no longer perceived as something “alien”.
Cryptocurrency currently experiences acceptance at the state level: the governments of many countries have finally concluded that crypto can no longer be outlawed and have begun to develop new laws related to its regulation. The next, final stage of crypto popularization will be its adaptation for all segments of the population, which consists, first of all, of the creation of convenient user interfaces for the software where it is used.
Below, let's look at several other factors that contribute to the introduction of cryptocurrency into the everyday life of the average person.
Since it is still quite difficult to buy some cryptocurrencies through fiat, the first ones still do not experience much distribution. This is primarily because the vast majority of states are still wary of crypto, protecting their residents from investing in scam projects. When this barrier is overcome (in particular through the legal regulation of the crypto industry), the crypto will be used by ordinary people much more often.
The above-mentioned CBDCs can become a "law-abiding" alternative to cryptocurrencies. While they can coexist with each other without any mutual detriment, some countries see the latter as direct competitors to their plans for CBDC introduction. For example, ICOs are prohibited in China, and crypto trading is strictly regulated.
To start understanding crypto, many people have to study relevant web resources for a long time. In addition, sometimes this studying does not give proper results, and new investors lose their money due to the wrong choice of subject for investment. Thus, to attract new target audiences, the crypto industry must ensure transparency.
The management of 64-character private keys consisting of an arbitrary set of letters and numbers becomes another factor against the mass adoption of crypto. It is almost impossible to remember them, so for storing them in a safe place, you need to additionally use a password manager, which in theory, can become a single point of failure. That is why the modern crypto industry needs to simplify access to crypto wallets so much.
To date, cryptocurrencies are poorly integrated into the modern financial system and are often used only for financial speculation. Even if the cryptocurrency market grows constantly, it still represents a kind of financial “chaos”: insider trading methods are actively used in the cryptocurrency market, market manipulations with cryptocurrency rates are carried out without any censure or punishment (let’s remember, for example, the so-called pump&dump technique), cryptocurrencies are used to circumvent various prohibitions by financial intermediaries to evade taxes and finance illegal activities and other prohibited activities, etc. Thus, the crypto industry needs to adopt a set of laws to stop being attractive to criminals.
The volatility of the vast majority of cryptocurrencies is already in the past, which is primarily due to the introduction of stablecoins. However, having learned from the bitter experience of unsuccessful investments, some representatives of the target audience still doubt the stability of the crypt, and this obstacle needs to be removed through an explanation of how stablecoins work.
According to the Findstack survey, about 31% of respondents are worried about fraud related to their cryptocurrency assets. That is why the crypto industry needs additional tools and approaches that can guarantee investors the safety and integrity of their investments.
So far, projects using cryptocurrency have a limited range of integrations with third-party solutions, which reduces the convenience of their use. Therefore, when digital giants start to actively implement cryptocurrency in their products, this type of asset will become more widespread.
As you can see, neither government restrictions nor the risks associated with the volatility of the crypto no longer stop those who want to dive into the blockchain industry. Cryptocurrencies are going through their final stage of mass adoption, and what projects that operate with them now can do is ensure the comfortable use of their products.