Bitcoin’s popularity has skyrocketed since its introduction in 2009. While many were skeptical during its early days, Bitcoin’s price has surged, mainly due to increased confidence among investors and users. In fact, many market pundits believe it is only a matter of time before Bitcoin is widely accepted as a mainstream payment method.
The prices of cryptocurrencies have seen exponential growth over the years (with a few shortfalls). So, while we know that Bitcoin definitely presents benefits for trading, does the crypto giant have what it takes to be used as an everyday currency?
Below are a few factors that might contribute to its mass adoption.
Factors That May Add to Bitcoin’s Mass Adoption
Store of Value and Market Appreciation
One of the key factors driving cryptocurrency adoption is its store of value. In other words, the ability of the digital currency to be stored, retrieved, and exchanged at a later date. Some people put their money in Bitcoin with the hopes of a price increase in the long term. Gold and silver are also examples of stores of value.
“Bitcoin might be the greatest store of value in the history of the world.” Says veteran trader and crypto analyst, Tone Vays. “Its ‘unconfiscatability’ property is unmatched. That is its true store of value, as gold is confiscatable and all other assets even easier.”
In addition to its potential as a store of value, Bitcoin’s consistent price appreciation could accelerate mass adoption. An Economist Intelligence Unit survey indicated that 85% of participants indicated that they know about cryptocurrencies and are also considering moving towards digital payments.
Scarcity
Bitcoin’s limited supply is another factor contributing to mass adoption. Bitcoin’s maximum supply is fixed at 21 million coins, 18 million of which have been mined to date. On the other hand, an excessive supply of fiat currency reduces its value and leads to inflation.
The United States Federal Reserve, for example, printed over 1.5 trillion dollars to combat the economic downturn caused by COVID-19. This caused more investors to turn to Bitcoin’s fixed supply as confidence in the US dollar waned.
Regulations
While cryptocurrencies were mostly unregulated in the early days, they have come under the radar of some regulators. As regulations grow tighter, cryptocurrencies are expected to become more acceptable to governments, which also bodes well for mass adoption.
Divisibility
Bitcoin units can be divided up to 8 decimal places. The divisibility factor contributes to mass adoption as the digital currency can be used for very small transactions (microtransactions). This has the potential to change business models, where small payments were not previously financially feasible.
Portability
Thanks to cryptocurrency exchanges and wallets, cryptocurrencies can be transferred almost instantly using portable devices, like mobile phones. You can send money to someone else within minutes and with minimal fees. Meanwhile, transferring fiat currencies take several days using current financial systems.
What Factors Are Hindering Bitcoin’s Mass Adoption?
Price Volatility
Price volatility is one of the major factors hindering the mass adoption of digital currencies. Bitcoin and other cryptocurrencies have the potential to make large price swings in a single day, or even in a few minutes.
Government Bans
Cryptocurrency trading is banned in some countries as governments claim that they are being used in criminal activities, like drug smuggling and money laundering. Some initial bans, however, have been lifted as they undergo strict review processes.
While cryptocurrencies still have a long way to go before they are adopted by the masses, it is still relatively early. Continuous development, however, is underway to help make these digital currencies more accessible to the general public.
