The mass adoption question is a tricky one. Those of us who HODL Bitcoin or other altcoins know that the network effect is the key to value growth of our coins. Simply put, as we, especially those of us who may have come to Bitcoin in the past year, seek to make our riches on cryptocurrency, we need demand for it to go up.
I know this is why critics call it a Ponzi scheme. In order for us to make money, some new sucker has to buy it at the higher price we require for our gains. But that’s the cynical view. What we are really doing is recognizing the laws of scarcity. The more something is valued for its utility or some other feature, and the less of it there is, the more it will cost to acquire. That reality of human exchange is baked into Bitcoin.
Which brings me to my essential question: what is it going to take for the average person to use cryptocurrencies every day? You can even make the question more personal than that. Take one of your favorite people–in my case, it’s my wife–and consider why that person would start transacting in cryptocurrency. My wife knows quite a bit about cryptos. Maybe not the ins and outs of the various coins or their use cases, but she understands the ideas behind them. She’s not opposed at all to Bitcoin. She doesn’t think it’s crazy or foolish. She likes to tell me what she’s read about price action or even some interesting news about adoption. But she doesn’t use it.
And why should she? There is’t a single merchant in her normal course of buying things that accepts it. She doesn’t fly much. She doesn’t use AirBNB. She doesn’t use Overstock. She doesn’t buy things on the dark web. Again, she’s not opposed to using cryptocurrency, but at the moment, her debit card, cash and credit cards are meeting her needs. She knows how to access them, secure them, transact using them, and reconcile them. The current system is meeting her needs just fine.
Adoption is going to be a sea change for her. It will require brain power she isn’t accustomed to investing into her routine transactions. Don’t mistake me, she’s got it in her, but she’s not used to using it. It reminds me of what happens every time we visit a new country. We spend time weeks before a trip gearing up for the mental gymnastics we are going to need to buy basic things there. If it’s a country where we can use our credit cards, things get a little easier. But if we will need to purchase things with cash, it’s like taking a course in alien technology. We are reduced to cognitive toddler, where we are unable to do basic math because we don’t understand the unit of account. It isn’t just her. It’s me too.
This is how it’s going to be for every single person during the mass adoption phase. Transactions are going to require herculean effort. And most people aren’t going to to do it willingly. They must have a vested interest.
And there is the key: in the video related to this post, I cover four (five really) reasons people will adopt. One was on the list: economic collapse or currency reset due to a debt crisis. The other was not: the tokenization of favorite things.
Either way, people will have that vested interest to make the change. In the case of an economic crisis that sees the failure of fiat, they will do it because they want to eat. They will quickly learn all of the necessary steps to acquire and secure their cryptocurrency. They won’t have much of it, but they will value every bit of it they possess. I would rather not have to face such a dire situation, but we all know it’s a possibility, and I think those of us who know what is going on behind the scenes know that it is necessary.
It’s the other scenario that I find interesting. Already things are being tokenized without many of us realizing it. I will be talking about this more in another post, but game maker Nintendo has already tokenized their ecosystem. What if the association that certifies speech therapists (one of the many roles my wife owns) tokenized their certification and professional development system? All educators are already familiar with continuing education units. What if those became tokenized. In essence, the more professional develop my wife might do, the more tokens she would receive. Those tokens could be exchanged for specialized workshop access or books from the association shop. Perhaps she could also buy tokens to access the same benefits. She would have full control over them and could exchange them with others for resources they had developed. All of this would happen in the context of her organizational structure.
To extend the illustration, many retired people like to spend the winters in the Rio Grand Valley region of Texas. They come down for the warmer weather but also for the birds. What if the region issued a special token that could be purchased and then used to access things in the local community like theaters, parks, certain restaurants, and social services? I bet they would use it if they saw that they were easy to acquire and then exchange. It would create a loyalty connection to that community and likely ensure their return. The value proposition would have to be better than a credit card (perhaps it got them into a rec center or other resource that doesn’t take money). Putting a premium on the use of the token would bolster its adoption.
My feeling is that all other things being equal (i.e. cash and credit still exist), the idea that Starbucks or McDonald’s accepting Bitcoin is not going to motivate anyone to jump on board. There’s still too much work involved for that to happen.
Adoption will require buy-in. It can either be forced or it can be motivated based on a strong preference for an associated activity.
Tell me what you think.What will it take for your wife, or mom, or granddad who can barely use his phone to adopt cryptocurrency?