Experts in the Bitcoin landscape and traditional finance specialists often debate to what degree mass adoption of the world’s largest cryptocurrency has begun.
Bitcoin is a key factor in the investment strategies of many institutional and retail investors. Mass awareness of Bitcoin has largely arrived, as the percentage of people who are at least familiar with the idea of Bitcoin is high. However, there are gulfs between those with awareness of Bitcoin, those who own the cryptocurrency and those who use it as the currency it was designed to function as.
Considering the impressive functionality Bitcoin already possesses and the historic highs its value has hit, it can be startling to remember that mass adoption is still underway and will represent massive growth in value and applications.
As is the case with any emerging technology, those who immerse themselves in the landscape prior to mainstream adoption put themselves in a powerful position as cryptocurrency becomes more entrenched in the financial world. Let’s take a look at the path of adoption that Bitcoin is on, the tools that can make Bitcoin even better and what the implications of a hyperbitcoinized world could be.
Degrees of adoption
According to a report from 2022, around forty million Americans have either traded crypto or have expressed interest in doing so. Another report from one year earlier stated that more than a quarter of Americans own bitcoin.
While these numbers are impressive, they don’t refer to a clearly-defined standard of what adoption truly means. For example, those who buy bitcoin simply to hold as an investment strategy are certainly Bitcoin users, but they can’t be said to have embraced the full potential of Bitcoin as the world’s most promising system for value transfer and storage.
As such, the percentage of users who have adopted Bitcoin in a significant way—making it central to both their saving and spending needs—is far lower than the numbers cited above. The fact that so few people are using Bitcoin to its fullest potential is another reason to feel optimistic about the future of Bitcoin adoption, as the room for growth is immense.
Bitcoin as more than an investment strategy
Compared to many other assets, Bitcoin adoption happens on a sliding scale rather than in a binary fashion. For example, when personal computers gained popularity and affordability, computer adoption could be easily measured by whether one had a computer. When someone purchased a computer, they could be said to have fully adopted computer usage.
Bitcoin adoption, however, tends to occur in waves that increase in frequency and size. A user may experiment with trading for $20 worth of bitcoin, and then may begin exchanging more and more of their fiat currency for bitcoin when they become more comfortable and optimistic in the network’s infrastructure and the third-party tools that facilitate its use.
Particularly in the developing world, Bitcoin can empower a staggering number of people who currently do not have access to traditional banking. Across the world, decentralized finance is a pathway towards regaining the privacy that has been eroded by over-intrusive tech giants.
Bitcoin can help usher in a new area of financial liberation by helping users sidestep the issues associated with the traditional online payment ecosystem, including high fees, red tape, long wait times and a lack of control over one’s funds.
Comfort and confidence
One sign that some experts associate with widespread adoption is the ability to utilize cryptocurrencies without a full technical understanding of how they work. This point may seem counterintuitive since users with a high degree of knowledge about Bitcoin are good for the development of the landscape, too.
The reality, however, is that to become attractive to a more substantive portion of the population, Bitcoin needs to be accessible to those without extensive knowledge of the ins and outs of blockchains, peer-to-peer networks or even financial systems.
This can be compared to how smartphone adoption did not rely on users understanding the infrastructure and underlying technology that made these devices possible. It was smartphone usability that propelled these devices into each of our pockets, not a sense of their potential or an abstract belief in what they represented. Tools that help make Bitcoin streamlined and intuitive for users of all backgrounds will have a key role to play on the path toward full-on adoption.
Promising factors regarding bitcoin’s global adoption
Bitcoin is the best hard money asset
Bitcoin is a quickly evolving ecosystem. Developments and trends in the larger cryptocurrency space can be difficult to anticipate; few could have predicted the dramatic rise in popularity of NFTs, for instance, or the surge in awareness and value attributed to memecoins. In El Salvador, Bitcoin has established itself as the country’s legal tender—a degree of adoption that would have been unthinkable a few short years ago.
However, Bitcoin’s growing global adoption is unsurprising, when one keeps in mind that Bitcoin is the most solid and technologically-advanced form of hard money that exists. Though developments, value swings and news stories associated with Bitcoin can be hard to predict, its future is fixed and predictable.
Bitcoin has no elasticity, which means the supply of Bitcoin is not and never will be affected by changes in price. After all, only 21 million Bitcoin will ever be produced. In times of global instability and rapid inflation, Bitcoin’s status as hard money is made even more attractive by how it exists entirely in the digital world, making storage and security solutions ideal.
Bitcoin is always improving
While Bitcoin is often thought of as enabling anonymous transactions, it isn’t fully private by nature. Transactions and address balances are visible on the blockchain to anyone interested in viewing them. While Bitcoin addresses could be thought of as anonymous because they don’t themselves directly link to users’ identity, these addresses can be linked to users indirectly through personal information collected by merchants.
Third-party tools that bolster Bitcoin’s privacy and security represent important developments aiding adoption. coinjoin methods are one way Bitcoin’s privacy can be tightened up. With coinjoin, separation is created between each bitcoin’s past, present and future by pooling and mixing bitcoins to obscure their provenance. Wasabi offers an open-source and easy-to-use Bitcoin wallet that lets users easily utilize customizable coinjoin features.
Factors inhibiting Bitcoin adoption
Government fear and cynicism
Some of the aspects of Bitcoin that make it a powerful and empowering tool are the same aspects that make governments wary of it. Bitcoin cannot be readily regulated and it has the potential to weaken the ability of governments to create monetary policy and influence the economy.
Some forward-thinking governments have utilized Bitcoin to improve circumstances for both the country and its citizens. In particular, 2022 has seen Ukraine benefit enormously by embracing Bitcoin during their hardships. The government has accepted donations and other aid in Bitcoin and citizens have used it to facilitate cross-border transfers, as a hedge against inflation and to mitigate the effects of an unstable national currency.
For the most part, major countries including the United States and China have taken consistent steps to restrict and regulate the use of Bitcoin, as its decentralization poses a risk to their economic control over individuals.
Bitcoin-resistant governments often point to the link between Bitcoin and crime as being at the root of their skepticism. However, many Bitcoin and finance experts have pointed out that the link between Bitcoin and cybercrime is largely overblown.
In 2020, a report from Chainalysis stated that the percentage of cryptocurrency transactions linked to criminal use has been decreasing overall to around a third of one percent of all cryptocurrency transactions today. Meanwhile, the UN estimates that between two and five percent of global GDP can be linked to crime and money laundering—a far higher rate. For this reason, government hand-wringing about Bitcoin’s facilitation of illicit activities can be read as ill-informed at best and deliberately misleading at worst.
In an investigation of how government bodies identify black market transactions, the Wasabi team discovered that governments view anything that was purchased in a “non-compliant” way as a black market transaction, regardless of what was purchased. However, common practices among blockchain analysis firms recognize that black market transactions require more stringent classification.
Technological barriers to entry
There’s an unfortunate trade-off that often happens for new users of Bitcoin wherein monetary sovereignty is traded away in exchange for ease of use. Newcomers to the Bitcoin landscape are often looking for the path of least resistance. These all too often come in the form of heavily-marketed centralized exchanges that can be more closely aligned philosophically with big banks than they are with the modern-day cypherpunk vision.
Users with knowledge of blockchain technology tend to be aware of how to keep their Bitcoin secure, and of the importance of maintaining ownership over their private keys. On the other hand, users who make use of and trust these popular centralized exchanges for storing their bitcoin sacrifice much of the decentralized freedom that Bitcoin represents.
Adoption of Bitcoin in the future can be greatly aided by tools that provide users with a smooth and streamlined experience without leading to increased centralization. Non-custodial wallets like Wasabi that don’t make users give up their private keys are an important development, as they help Bitcoin adoption grow while protecting Bitcoin users from the relentless creep of centralization and regulation.
Wasabi Wallet’s Role in Bitcoin’s Growing Adoption
Beyond the financial benefits of pivoting to Bitcoin, the philosophical implications of a global population that’s vested in increased agency online is a reason to be optimistic for the future. Bitcoin is an inherently idealistic proposition—a decentralized currency that puts users in control of their funds and, by extension, their privacy.
A belief in Bitcoin’s widespread global adoption needs to be rooted in the realities it faces, particularly in terms of security and privacy. After all, Bitcoin’s adoption will only be a success if it retains its ability to be a crypto-anarchist-minded tool that protects users’ secure financial transactions.