When will Bitcoin grow up?

When will Bitcoin grow up? ….. a roadmap for mass adoption

In this short essay I will set out what I consider to be the main barriers to widespread adoption of Bitcoin and discuss what the Bitcoin community is or should be doing to address these issues.

The hot topic at the moment, at least in America, is the regulation of Bitcoin exchanges. Although FinCEN’s jurisdiction does not extend beyond their own borders, it is reasonable to assume that wherever you are, if you are operating at the interface between Bitcoin and local FIAT currency, regulation of your business is inevitable. But even with regulation, the role of exchanges could become less important as the need to exchange in and out of a local currency diminishes. This situation will only arrive when Bitcoin becomes the day-to-day currency of choice for millions of individuals and businesses. This is the ultimate aim of Bitcoin and only then will its full potential be realised.

So how do we get there?

Having been involved with Bitcoin for a while, I consider myself reasonably knowledgable about Bitcoin and how the system works and feel confident of explaining most aspects to anyone who shows an interest. But as any Bitcoin enthusiast will tell you, trying to explain Bitcoin and its benefits to non-Bitcoiners is hard work. Worst of all are the people who have heard of Bitcoin but don’t like the sound of it because “it’s used by drug dealers and money launderers”. This poor public image which has been allowed to build needs addressing immediately and is the first barrier which needs to be overcome on the road towards our goal. Prominent members of the Bitcoin community, particularly those at the foundation, should increase their efforts to eliminate this perception. As Bitcoin grows in popularity, the smear campaign will only pick up pace and we as a community must be prepared to raise our game as well.

Although overcoming these types of prejudices is difficult, every now and then you get a result and manage to get someone to give Bitcoin a try. So, you sell them half a Bitcoin. And this is where we meet the second barrier - confusion. Many of you will have spent weeks or even months learning about the ins and outs of wallets, addresses, change, transactions, blocks etc. before getting hold of a single mBTC. But converts, having been told (by you) how simple it all is, are expected to navigate their way through all this in a fraction of the time. This problem can only be overcome by more user-friendly features and simpler interfaces being built into wallets (particularly mobile wallets). Among the most urgent requirements is a simple, non-technical method of safely storing Bitcoin, or at least the private keys associated with addresses, offline and away from potential thieves. Trezor, a new device which claims to do this, is an important first step in this regard and it will be interesting to see the future developments of this and similar devices. These are areas in which I have no expertise but I am confident that those that do have the skills will recognise these problems and work towards solving them.

So, being quite technically minded, your new Bitcoin-buddy has sorted all this out and now has 0.5BTC sat in his wallet. What’s he going to do with it? If you tell him to hoard it and the price drops he’s not going to be happy. If you tell him to spend it and the price rises he’s not going to be happy. And he will forever hate Bitcoin. Of course, the exact opposite could happen but either way, volatility is the enemy of mass adoption and is another barrier to be overcome. This is particularly true for businesses looking to use Bitcoin for their daily transactions. Of course, companies like Bitpay are going some way to try and smooth out these fluctuations and providing retailers some stability but there is an element of speculation in their business model and speculation partly feeds the volatility. I would prefer to see more developments which allow retailers to accept Bitcoin directly without having to use a third-party to process transactions and this is tied into what was mentioned earlier about wallets. Some sort of “Business friendly” wallets are essential if we want established businesses, both online and offline, to start accepting Bitcoin.

The volatility though, I fear, is here to stay for a while and I can’t see a way of avoiding it.

Finally, have you ever been to a large Bitcoin meet-up? If you have, you will know that Bitcoin attracts enthusiasts from all walks of life. When I go along to one I like to play “Bitcoin bingo”: anarchist, check. mathematician, check. IT professional, check. libertarian, check. investors looking for opportunities, check.
Each one of us has arrived at Bitcoin from a different angle, yet together we form part of the Bitcoin ecosystem. This blending of skills and ideas and the innovation it produces is vital for the development of Bitcoin and its march towards acceptance by the general public. But we have to recognise that there are many potential users who are put off by the perceived hassles of obtaining Bitcoin and the seemingly complicated process of storing and using Bitcoin on a day-to-day basis; both as an individual or as a business. So, for mass adoption to take place, we all need to play our part to convince people of the benefits of Bitcoin and continue to develop ideas which remove some of these barriers to entry. Will the rate and scale of adoption drive these improvements or do these improvements need to be in place before mass adoption can take place. I believe it’s the latter.