I agree that an important obstacle to widespread use is the public has very little understanding of cryptocurrency.  On the other hand, most people I ask have heard of Bitcoin.  So, there is some awareness of cryptocurrency.  What needs to happen is a way for the public to understand what cryptocurrency is, how it works, why they should trust it, and most importantly, what advantages it has over traditional payment mechanisms.

I'm not aware of any country that has prohibited using cryptocurrency as a medium of exchange.  So, I don't believe it is illegal. 

What is lacking is government support.  I'm not aware of any country that enthusiastically supports crypto payments.

You highlight "fear of hacking".  In speaking to people about crypto payments, often they ask about "hacking".  The trouble is, none of these people understand what "hacking" means.  They just hear the word in the news and know it is something bad and has something to do with technology.

Before crypto payments will see widespread use people need to,

• understand what it is
• how it works
• why they should trust it

Very few people know what cryptocurrency is, how it works, or why they should trust it.  Most importantly, people need to understand what about it makes it better than traditional payment mechanisms such as cash, cheques, or cards. 

You highlight a benefit to merchants about crypto payments... it's guaranteed payment with no way for the buyer to reverse a payment, as is the case with card payments.

It's been nearly 10 years.

Credit cards were introduced in the the late 1950s.  By the late 1960s, they were used widely (certainly a larger percentage of payments than crypto payments).

Of course, any new payment technology will take time to gain acceptance.  My question is based on the observation that we are nearly ten years into this payment technology invention, and therefore, by now it should more widely used.

No government has forbidden consumers or merchants from using or accepting crypto payments.  So, they aren't a obstacle per se.

Now, gaining governments enthusiastic support because there is a cryptocurrency designed to make applying their regulations easier and more efficient would be quite helpful.  I see this being the opportunity.

People don't care about what cryptocurrency is behind a crypto payment.  What they care is that there is some advantage to them for using crypto payments, that it is easy to use, and that enough consumers and merchants use and accept it.

That means there must be innovation on the mobile payment applications and POS systems to make these things happen.

Yes, I agree there needs to be innovation to make it easier for consumers and merchants to use and accept crypto payments.  It needs to as simple as paying with a credit/debit card.

And, your point about exposure is right on.  There needs to be promotion of how crypto payments work, why people should trust these, and most importantly, what about crypto payments is better than traditional payments such as cash or card.

Collaborating with regulators will result in a design for a cryptocurrency that meets the needs of regulators.

Yes, ideas like this help address the price volatility problem.

I agree that the best tactic to avoid exposure to extreme price volatility is a cryptocurrency payment application capable of converting from fiat currency to crypto and from crypto to fiat currency in just a few seconds.

Consider an application that works like this.

1. There is a smartphone application that is a closed-loop payment system.
2. Like all closed-loop payment systems, consumers upload fiat currency from their bank accounts or credit cards to this smartphone application.
3. The smartphone application holds this fiat currency until consumers are ready to buy something from a merchant that accepts a specified cryptocurrency.
4. When it is time to make a purchase the smartphone application converts the fiat currency into the cryptocurrency.
5. At the point of sale (POS), consumers use the smartphone application to display QR Code (or, barcode) that the merchants' POS systems can read.
6. The POS system registers the sale and accepts a crypto payment from the consumers.
7. Merchants now have cryptocurrency they can spend.
8. Or, merchants can convert this cryptocurrency into fiat currency

The amount of time between #4 and #8 can be a few seconds.  The result is neither consumers nor merchants are exposed to price volatility.

No doubt, extreme price volatility is a significant obstacle.

All fiat currencies are volatile in that their values change constantly.  Very few fiat currencies experience extreme price volatility.

So, for a cryptocurrency to be widely used it must avoid having extreme price volatility.

Naturally, all countries have a currency (fiat currency).  And yes, most people are accustomed to paying with fiat currency.

People will change only when there are advantages in using an alternative payment method such as crypto payments. 

So, a question is, "what about crypto payments is better than paying with traditional payments such as cash or card payments?"

From the buyer's perspective, crypto payments provide a way to make electronic payments without requiring a bank account or a credit card.  For people that do not have access to banking services, or do not want to use banking services this is an important advantage.  There are other advantages.

From the seller's perspective, crypto payments eliminate cash payments.  Most merchants find cash undesirable because of the cost of processing cash and the security risk.  Crypto payments are much less expensive than card payments.

In many countries most payments are not cash.  For decades electronic payments and cheques have far surpassed the number of cash payments.

So, I'm not certain what you mean by "official means of payment" because neither electronic payments nor cheques are an official means of payment, and these are widely used.

Cryptocurrency payments or "crypto payments" are a type of closed-loop payment.
http://www.intelligentvenues.com/faqs/what-are-the-differences-between-open-and-closed-loop-payment-systems/

Just like any other closed-loop payment system such as a credit card, it uses a system of ledgers to track amounts among accounts of consumers, merchants, and banks.  These too use a system of electronic codes that pass through a computer network.  Functionally, crypto payments work like credit card payments.


Now, I don't believe anyone has.  Card interchanges such as American Express or Visa do offer fraud and other protections to consumers.  Crypto payments do not. 

I do not believe this is something consumers are aware.  So, I doubt this is among the top reasons why crypto payments are not widely used.

Revolutionary payment methods rarely are introduced.  The credit card was invented in the late 1950s.  It took the invention of the debit card before card payments saw widespread use.  Card payments surpassed cheque payments in the 1990s.
https://www.marketplace.org/2011/08/18/business/news-brief/short-history-debit-card

It will  take a combination of promotion and innovation before cryptocurrency will see widespread use.

Some governments are concerned about ICOs because these are securities offerings and therefore should be regulated by Securities Law.  Many ICOs evade Securities Law and this is why some governments have prohibited ICOs.  This isn't the same as prohibiting the use of cryptocurrency as a medium of exchange.

I'm not aware of any government that has prohibited the use of cryptocurrency as a medium of payment.  So, that means that no cryptocurrency is illegal to use as a medium of payment.

I agree that governments enthusiastically supporting a cryptocurrency as a medium of payment will help in people trusting using this cryptocurrency.

I doubt any government will make a cryptocurrency their legal tender, as they will insist this be their national currency.

Some governments may create a digital currency, not based on blockchain technology, they will designate as legal tender to augment their traditional currency (banknotes and coins).

And, for certain cryptocurrency is being used as a medium of payment.  That's not the question.

Instead, the question is what are some of the obstacles preventing widespread use.  Crypto payments represent less than 1/100 of one percent of payments in global commerce.  I don't consider this "widespread use".

I agree that gaining support from governments for using a cryptocurrency as a medium of exchange is essential to achieving widespread use.  To gain such support, there needs to be a collaboration between regulators and cryptocurrency designers so that the design of a cryptocurrency makes it more efficient and effective for regulators to apply their regulations.

Yes, this thread his highlighted several obstacles.

I agree to be done properly, there is still a lot of innovation required.

Cryptocurrency can move any amount of money from anywhere to anywhere in moments for essentially no cost.  So, I'm skeptical that speed is an obstacle to widespread use.

Now, some cryptocurrencies such as bitcoin and ether are too slow for payments as both have a low transaction rate (less than 10 transactions per minute) and long confirmation times (bitcoin takes nearly an hour).  Other cryptocurrencies are better suited for payment because they have higher transaction rate and shorted confirmation times.

And, perhaps there will be a new cryptocurrency designed to have extremely high transaction rates... much higher than card interchanges such as Visa International, and where confirmation happens within a few seconds.

Without question, extreme price volatility makes a currency undesirable as a medium of exchange (MoE).  At times BTC has been more stable than the USD.  Of course, there have been times of extreme price volatility.

The best tactic to allow a cryptocurrency to be used as a MoE is to design it such that a buyer and/or a seller can quickly convert from fiat or to fiat currency in moments such that there is no exposure to price volatility.

Consider if at time of purchase the buyer can upload from their bank account or credit card a sum of fiat currency and the wallet immediate converts this into this cryptocurrency, and then transfers this cryptocurrency to the seller's point of sale system, where the POS system converts the cryptocurrency into a fiat currency (let's a different currency than the one the buyer loaded into the wallet).  This sequence could happen in a span of a few seconds.

I'm not aware of any jurisdiction that has prohibited using cryptocurrency for payments.  Some have banned ICOs and other security related uses cryptocurrency. So, I'm skeptical that prohibition is an obstacle.

I'm also not aware of any jurisdiction that enthusiastically supports a cryptocurrency. Until there is a cryptocurrency that helps governments apply regulations, I doubt there will be such support.

What needs to happen is a collaboration between cryptocurrency designers and regulators.

As a senior citizen or child mature enough to buy a bag of figs, I want to use my internet accessible smart device to purchase a bag of figs from a produce merchant that accepts digital payments using her internet accessible smart device so that I don't to have to risk my personal safety carrying cash.