I agree.

Consumers (buyers) won't use it until they

• are aware of it
• understand how it works
• trust it

To achieve this, there needs to be a lot invested in marketing crypto payments to consumers (and, retailers too!) as well as educational programs.  I see a similar task as American Express and Bank of America, pioneers in card payments, did in the 1960s to get consumers and retailers aware of it.

For certain, Instant Value Transfer is a primary benefit to consumers of cryptocurrency.

Also, its for everyone because it doesn't require either the buyer or seller to have a bank account.

Lastly, it's a breakthrough for private and public accounting because it provides evidence for a purchase.

So, cryptocurrency has a lot of benefits. 

The question remains... with all these benefits why isn't is use more widespread?

Some governments don't like the idea of cryptocurrency because they can't control the money supply, which is their "monetary policy".  I suspect most governments don't care because they don't see cryptocurrency being a threat to their monetary policy because to date there has been very little use as a medium of payment. 

On the other hand, if there was a cryptocurrency that was regulator friendly where it provides advantages to the government over their fiat currency, perhaps governments would allow, even encourage, the use of cryptocurrency.

I agree that before cryptocurrencies will experience widespread use as a medium of payment that governments, and more specifically, their regulators allow, if not enthusiastically support, cryptocurrency as a medium of payment.

There needs to be innovation because I'm not aware of any blockchain and its associated cryptocurrency that is "regulator friendly".

I suppose it depends on what you consider a success.

Sure, cryptocurrencies are used for payment.  Out of the nearly 80 trillion USD per year, crypto payments represent a fraction of one percent of this.  This fact is the source of my conclusion.

The point of this post is to explore some of the obstacles that prevent its widespread use.

I agree that a foundational problem is one of design.  I'm not aware of any blockchain and an associated cryptocurrency with an adequate design so the cryptocurrency can be widely used as a medium of  payment (exchange).  So, there is room for innovation.

And for certain, virtually all ICOs and their cryptocurrencies aren't intended to be used as a medium of exchange.

Still, there are some cryptocurrencies that were designed to be a medium of exchange beginning with bitcoin.  None have achieved widespread use.  This thread is helping showing some of the obstacles preventing it.

No doubt that cryptocurrency has many uses other than a medium of payment.  There is also no doubt it was invented to be a medium of payment, and for this purpose it hasn't achieved widespread usage.

I agree that there needs to be innovation.  I have yet to find an existing blockchain and associated cryptocurrency that is well-suited as medium of payment.

There are numerous criteria evaluating an ICO project.  Certainly one of them is assessing the team's ability to deliver the technology.

If you have a strong technical background, reviewing technical assets such as specifications, code, and test cases are important milestones you can verify.

Many, perhaps most, ICO investors don't have such a background.

What probably is a better criteria is the background and track record of the team.  This will show whether they have a consistent record of delivering significant software projects.  Any ICO investor can assess this.

I agree that cryptocurrency is being used as a medium of payment.  There are hundreds of businesses that accept cryptocurrency.

I wouldn't consider this "widely accepted".

Of the nearly 80 trillion USD per year in global payments, cryptocurrency is a fraction of a percent of this.  Perhaps when this approach 10% I would consider it widely accepted.

I'm exploring what about cryptocurrency is preventing it from having wider use.

I agree.

When "Satoshi" invented blockchain the application "he" designed to use "his" invention was a medium of payment.  There are a variety of flaws in this design that creates obstacles for its use as a medium of payment.  Many of these obstacles posters highlighted in this thread. 

And, these and other design flaws are found in other blockchains and their cryptocurrencies.  So, they aren't isolated to Bitcoin.

My sense is there still needs to be a lot of innovation to arrive at a blockchain and cryptocurrency suitable for a medium of exchange that sees widespread use.

There is a lot of nuance determining whether something is a security.

There are plenty of things you can buy with expectation it will go up in value that aren't securities.  This expectation is one of several criteria.

The emphasis in this ruling is whether after Network Launch the network is decentralized, where it isn't controlled by a "third party".  He said in the case of the Bitcoin and Ethereum networks these were adequately decentralized, and therefore, wasn't controlled by a third party thus making these not securities.

In contrast, Ripple and EOS are controlled by a central authority, which means they may be considered securities.

I agree.

This is the unfortunate aspect of the law.

And, the unintended consequence is many of blockchain projects will move outside of the United States so that they can raise capital prior to Network Launch.

Yes, it will take some time and a lot of effort to get the public to understand how it works, why they should trust it, and why it is better than existing electronic payments, especially credit/debit cards.

It's similar problem to the early 1960s when Bank of America introduced the "BankAmericard".  They and American Express were trying to get the public to understand what a "credit card" was, how it worked, why they should trust it, and why it was better than using cash or cheques.  It took years and hundreds of millions USD in advertising to make it a widely use medium of payment.

I agree.

What most governments want is way their regulators such as tax authorities and custom agencies can effectively regulate commerce paid with cryptocurrencies.  Existing blockchains make this virtually impossible because,

• they conceal the identity of payer and payee
• they conceal the nature of the transaction, where it is impossible to know what was purchased, what, if any, taxes were paid, or the tax nexus of the payer (buyer) and the payee (seller)

As far as US security law, there are two phases of raising capital for a project.  The "Network Launch" is what separates these phases.  Network Launch by definition is when the the network is operational allowing the public to purchase and use tokens. 

Provided there is a use for the token (which, presumably, is what the token designers designed to token to do) the token becomes a utility token, and thus isn't a security according to US securities law, and this announcement confirms the SEC understanding.

Prior to Network Launch there aren't tokens because the network is under construction.  In this phase, investors can purchase rights to a number of tokens at Network Launch.  These rights are considered securities.

So, an ICO is really organized into two phases:

Pre-ICO - prior to Network Launch
ICO - after Network Launch

In the early days of Pre-ICOs, such as the Ethereum ICO circa 2014, the offering to purchase rights to tokens were open to anyone.  This was a violation of US securities law.  It's only recently that the SEC has realized this, and now is enforcing the law.  Just ask the folks at Munchee.


The result is for Pre-ICOs organized under US law are no longer open to anyone.  This locks out a lot of savvy investors such as blockchain enthusiasts who aren't accredited investors.  These investors must wait until Network Launch.  At this stage, the ROI is typically dramatically less than early rounds during the Pre-ICO phase.  Of course, it's also dramatically less risky thus the lower return.

The law surrounding ICOs is new and evolving.  Everytime the SEC makes a ruling, it helps attorneys understand the "rules of the game", and in turn help their clients.  This is quite helpful.

I agree that existing blockchains lack the performance necessary to support a successful payment network on the scale of Visa International.

I know there are projects to extend Ethereum so that it can handle this type of load. EOS claims that someday it may be able to handle this load.

I'm not aware of any blockchain designed from scratch to meet this requirement.

Sure, there are some examples where it is used a medium of payment.  Still, this represents only a fraction of a percent of payments.

My question is, what is preventing cryptocurrency from being more widespread as a medium of payment.

This suggests that there is a "Catch 22 Problem"... for retailers to accept a cryptocurrency, they must see sufficient demand from their customers;  customers won't use a cryptocurrency until there is sufficient supply of retailers that accept it.

That tells me that part of the solution to getting cryptocurrencies used as a medium of payment is beyond the design of a cryptocurrency.  It takes "killer apps" that are compelling to both consumers and retailers, AND an energetic community of businesses, enthusiasts, and others to promote and support these applications.  This community may be the most important part of the solution.

I agree that for widespread use there must be a cryptocurrency that is "regulator friendly".

For that to happen, there needs to be a cryptocurrency designed with a thorough and broad understanding of the numerous regulators involved across numerous jurisdictions.  I don't see much discussion about this.

It can move any value of money from anywhere to anywhere in the world in moments for essentially no cost.  For those involved with global payments this seems like magic!

Actually, the SEC is quite supportive of blockchain and cryptocurrencies.  They are working hard to create the rules that provide the infrastructure that will allow widespread use.

These rules are extremely useful.

The SEC's priority is protecting unsophisticated investors who aren't savvy enough to detect ICO scams AND can't afford to lose their money in such scams.  There are a lot of ICOs that are scams.  So, these "bans" are helpful.

Now, by declaring cryptocurrencies NOT a security, this SEC ruling opens the way for any investor, regardless of their sophistication or ability to afford losing their investment, to buy cryptocurrencies as an investment. 

It also opens the ability to use cryptocurrencies as a medium of payment as well as other uses.

That seems quite helpful to crypto development.

By declaring ICOs a security, it restricts investors residing in the United States to only "Accredited Investors".  This means only Accredited Investors may invest in ICOs.  That's unfortunate to savvy investors who are quite capable of distinguishing a scam from a legit ICO as well as can responsibility restrict their investment budget, BUT who aren't Accredited Investors.