Adoption is one of the major points of discussion in the Cryptoverse: how much do we need bigger adoption, from whom, how to obtain it, and what effects would growing adoption have on the ecosystem? All these questions are relevant, but the answers – at least for now – remain just theories and possible outcomes. We focused on one of the major, specific adoption questions and got expert opinions on it: what would encourage an average person who is satisfied with the current monetary, financial system to start using Bitcoin?
Cryptonews.com had an opportunity to discuss this point with some of the major figures in the cryptocurrency and blockchain industry, who attended the Baltic Honeybadger conference held this September in Riga, Latvia. We’ve asked the question, and these are the answers they’ve given us.
Watch the interviews or read a quick summary below.
What would encourage people to use Bitcoin
A triggering event caused by friction in the system
The current system is certainly not perfect and constant issues are bound to make a person feel frustrated. “I think that the main reason someone would start looking into Bitcoin,” says Jameson Lopp, Chief Technology Officer (CTO) of crypto security specialist Casa, “is because of a triggering event, and usually it means they’ve done something where they encountered friction in the system.” The CTO gives an example of a first-hand experience with declined credit cards, the reason being that they are not in “the right country.” Another example is a grey or a frowned-upon industry, such as sex or cannabis industries, which are “still mostly locked out of the financial system in America” and which will “start looking for alternatives.” However, there is no real incentive to look into alternative options for “the people who fit nicely in the bucket of the existing financial system,” says Lopp.
The wire transfer system and the need for payment tools
People, particularly business owners, will find many aspects of the existing banking system disruptive. “Banks are not fun to deal with,” Chief Strategy Officer (CSO) at the Canada-based blockchain company Blockstream, Samson Mow, told us. “You can have your account frozen at any time. Even if you’re not touching crypto.” As an example, Mow gave an issue a gaming company, Pixelmatic faced about a year ago, when, despite the submitted paperwork, its account was frozen “just because they [the bank] were backlogged in doing a new KYC [know your customer] check.” These sorts of issues are very disruptive, he says.
The wire transfer system “is very bad,” says Mow, and while Europe has SEPA (Single Euro Payments Area) transfers, “elsewhere you’re doing normal wire transfers; you have SWIFT codes, routing numbers, intermediary banks, and fees on both sides,” he explains, adding that “it’s really a no-brainer if you’re dealing with that system and you see Bitcoin – it’s so simple.”
Speaking of business owners, Alex Petrov, Chief Information Officer (CIO) at blockchain technology group Bitfury, told Cryptonews.com that in the existing financial system, most people are using the technology just for payments, and “Bitcoin will be approximately the same – so, running a mining operation, running financial operation, is like running a business operation,” he says. Petrov further explains that “if you would like to provide financial services, you’re creating the business, and most of the users don’t need to create the business – they own their own businesses, so they need just payment tools to perform the transactions, and receive the invoices.”
Focusing on the store of value aspect of Bitcoin
Director of Business Development at Kraken, Dan Held, said that he thinks people should use crypto to store value. ‘Store of value’ doesn’t mean ‘price-stable’, he explained, but that it’s “hard to seize and immutable among other factors, so BTC represents a really good asset that people should use if they feel fearful about someone more powerful taking their value away from them,” says Held, adding that he’s not sure if the asset is useful for payments at the moment. These BTC’s characteristics are “tremendously valuable for people in any country, but especially in the countries where the governments or the economic systems are much worse off than Western developed nations,” he concluded.
Founder of Bitcoin Advisory, co-founder of the Satoshi Nakamoto Institute, Pierre Rochard (he has also recently joined Kraken, where he’ll focus on education and open source development), thinks that it doesn’t make sense to make Bitcoin compete on just payment. Instead, it’s important to focus on the savings aspect of the crypto. The current payment system is excellent, he thinks, which comes with some bad trade-offs, such as worse privacy and user autonomy, as well as less self-sovereignty, but also with some good trade-offs, such as consumer protection, reversible payments, the stability of the day-to-day value of most fiat currencies, “and also just the convenience of it and the instantaneous aspect of it.”
The realization that BTC’s value has gone up over the last 5 or 10 years is what attracts people to Bitcoin the most, he says. There has been a lot of volatility, so it all comes down to “is the return greater than volatility,” know as the Sharpe ratio, and BTC has a higher Sharpe ratio than many other assets. “Owning BTC means you’re going to make a higher risk-adjusted return than any other asset,” Rochard told Cryptonews.com.
People theorize that Facebook’s Libra or central banks-issued crypto could become the currency for payment, but Rochard thinks that these entities will “make existing centralized fiat systems more efficient,” so that they can say that they use crypto for a small part of it. However, “it won’t be the main thrust of what they want the future of the payment system to look like,” given that centralized governments and private corporations want everything to be centrally controlled and fully transparent to the government. But “even though governments and private corporations are going to be creating stablecoins, they can become a payment system rails that people actively use,” he says, adding that “ultimately, they’re going to cripple themselves by the fact that they do have a centralized control over it.”
The need to change the current sinking base layer of civilization
Bitcoin doesn’t appeal to people who are satisfied with the current system, but to those to whom it’s a necessity, explains Bitcoin Core developer and entrepreneur, Jimmy Song. It’ll take time for the general public to understand the benefits of Bitcoin, but people also need to realize the importance of money in any civilization – that it’s its foundation. “Bitcoin is money,” Song says, and “every civilization that we know of had some sort of money.” It’s needed for a civilization to function, or some of its vital aspects would be missing, such as the division of labor. Hence, he finds, “money is a base layer of civilization.” The current base layer, however, is “constantly sinking,” so “by changing that base layer, you improve civilization significantly.” And while the transition to Bitcoin as “a better money” will be long and painful, “once it’s over, I think everyone will appreciate how much it’s changed everything.”