2020 is the best time to talk about mass user adoption in crypto. After a decade of development and innovation, a year of hype, and two years of stagnation, now is finally the time to “reap the fruits” of our efforts.
Whether you’re a long time “hodler” or just now discovering cryptocurrency, in this article, I’m going to break down the characteristics of the most used cryptocurrencies and use the same patterns to discover what other coins have the potential to fill in the void and hit the mainstream as soon as this year
What cryptocurrencies have seen real adoption between 2017-Q1 2020?
We already know that cryptocurrency can be seen as a safe haven asset, so it’s understandable that people might turn to it when the financial system fails. We’ve even already seen two massive cases of currency devaluation in Venezuela and Turkey. In both of these cases, cryptocurrency was the solution for saving people’s very livelihoods.
- While in Turkey, Bitcoin has seen real adoption, with 53% of people believing it the “future of online spending”; Venezuela, on the other hand, preferred DASH. Regardless of their choice, crypto found its way into people’s wallets.
In one month, the Dash wallet app for Android devices registered a 562% increase. And this percentage doesn’t include those using Dash Text. While 85% of the population owns a mobile phone in Venezuela, not all of them are smartphones.
Dash Text is a service where people can send and receive the cryptocurrency by SMS. As a result, merchants had to adapt and accept payment in Dash. Based on Dash’s reports, more than 2,500 merchants in the country are accepting the cryptocurrency as a payment.
The above chart shows examples of crypto adoption in regions where cryptocurrency is facing mass adoption despite the government trying to create a hostile environment for the digital assets.
On the other side of this spectrum are Japan and South Korea. In April 2017, Japan made Bitcoin a legitimate means of payment and South Korea legalized cryptocurrency usage not so long time ago. Since then, Japan has averaged 11% of the global trading volume for Bitcoin, while South Korea accounts for approximately 30% of total cryptocurrency trading worldwide. Running down the numbers:
- 3.5 million citizens own cryptocurrency in Japan
- 30% of all salaried workers own cryptocurrencies in South Korea
Do we need to face a global crisis or global legalization of cryptocurrency before we can see these numbers at a worldwide level? Of course not.
These are extreme cases and we shouldn’t make a rule out of them. But if we think that credit cards and mobile payments are good enough for us to digitize our money, we should try to zoom out a bit further and move our attention to those who are not fortunate enough to have access to banking or even a smartphone with Internet access.
And I’m not just talking about Venezuela. There are way too many countries where poverty is on the rise and cryptocurrency can be the easiest and cheapest way for these people to manage their finances.
More than 600 million people are living in extreme poverty today. Out of which, 13 million are in South Africa. What’s so special about this region? While one person manages to live with only $59 a month, it’s very likely that the same person owns a phone, as 91% of adults own a mobile phone.
Moreover, 79% percent of the population has used a smartphone to receive or make payments on mobile phones. However, South Africa is a country that didn’t embrace cryptocurrency.
What do we need to do in order to bring cryptocurrency to the countries that really need it? Imagine that all those 600 million would start using cryptocurrency. And these are also part of the extreme cases, where poverty reached high levels.
How about everyone else who is unbanked? We can easily anticipate a snowball effect where cryptocurrency could reach mass adoption in less than a year’s time!
What cryptocurrencies have the potential to reach such rapid user growth?
There are more than 5,000 tokens traded on the open market right now. It’s impossible to guess which of these will be “the one to win them all”. The only thing we can do is to look at those assets which don’t inherit the mistakes of most cryptocurrencies that failed on adoption.
After studying the market, I was able to handpick three projects whose characteristics are in line with users’ needs. Here they are:
ONFO – The most recent project out of my picks, but it comes up as the most innovative out of all of them. First, ONFO is a stablecoin. Just for this fact it can already serve as a suitable means of payment by design.
Second, and this is where things get interesting, it chooses network mining as a way of distribution. To start using ONFO, you only need to create an account and share your referral code with everyone you know. You don’t need to invest your own funds, you don’t need to have access to mining equipment, you just need a way to distribute your unique code (text, social media, word of mouth, wherever, however) That’s the only way to grow its network and, with it, cryptocurrency adoption.
Tether – If you are already familiar with cryptocurrency, it’s impossible you haven’t heard of this one. It’s the oldest in my list and the most controversial one. Tether is also a stablecoin, however, its value is strictly pegged to various fiat currencies.
One USDT will always be equal in value to one US Dollar. While access to USD bills in some regions is a problem, having an equivalent on a blockchain removes the physical barriers for the cryptocurrency to grow as a global market. No volatility. Fixed price. It could serve as a substitute for any local currency. Currently, it has seen adoption only between traders.
Electroneum – Not too recent, not too old, this cryptocurrency has seen a spike in popularity not too long ago, but it never quite made it to the masses. Never say never, right? What’s unique with this coin is that it’s likely the only cryptocurrency designed just for mobile. Actually, to mine your own Electroneum you only need a smartphone.
The entry barrier is not as low as the previous two projects, but it’s still better than most of the others. From getting your own coins by only running the mining software as a background application to sending, receiving, and trading it for other currencies, everything happens on your mobile. It could see more adoption when higher-end smartphones will become more accessible.
What problems are these three cryptocurrencies solving?
High volatility – Do you think that Venezuelans or Turks started using Bitcoin and Dash for the “investment opportunity”? Of course not. Their only hope when the national currency was devaluating by day was that their crypto funds will at least still maintain its value.
If Bitcoin goes down 10% in one day and it stays there for one month, what should they do? Accept that 10% of their hard-earned salary is gone? They can’t become “hodlers”; they have to feed their family this month, not one year after when Bitcoin “might” go up 200%.
It’s better than a 40% devaluation on fiat, but we shouldn’t think like that. Crypto should be a way to facilitate payments not a place to gamble your money. Therefore, the price of the ideal cryptocurrency should be as stable as it can be in an open market, as ONFO and Tether proposed solutions.
Usability – In terms of volatility, Bitcoin and Dash are the same. But why did Venezuela prefer Dash? It’s easier to use. Bitcoin wallets are getting easier to use, there’s no doubt, but you still need to handle your own security, make sure you don’t forget your seed phrase, have a password on top of that, and if you typed the recipient address incorrectly your money is gone.
Actually, if you make any mistake, your money’s gone and there is no way to get it back. The ideal cryptocurrency should be even easier to use than its biggest competitors; banks, PayPal, and other payment services. Do you think crypto can ever achieve such a solution? Electroneum mobile app is an all-in-one solution, and ONFO comes with both an Android app and a web portal.
Access issues – There’s no point in offering good software with a well-thought-out user experience in place if most people would need a high-end device and a strong Internet connection to access it. While most people have access to a mobile device and Internet connection, even in the countries facing extreme poverty, these devices are usually outdated compared to the latest models available.
Devices which by default are keeping the usage of data low as that’s the maximum resolution they can output media. With no demand for high-speed Internet, there’s no supply either. And that’s how a cycle is being created. You could be thinking now: “What about Dash Text?”
Yes, that’s a good example of a good solution, but there’s big more problem that almost ALL cryptocurrencies are facing:
Entry barrier – In order to use any of the top cryptocurrencies, one needs to invest their own funds. Before even “touching” a digital asset, you have to be willing to spend your own money, converting them into something that you don’t even understand yet.
Ideally, people should be able to earn their first cryptocurrency without any financial or time investment. Crypto mining was designed exactly for this purpose, but most coins based on proof-of-network, like Bitcoin, have reached such a high mining difficulty that only mining facilities with thousands of specialized computers can be profitable. Out of all the mentioned coins, ONFO comes with the lowest entry barrier and it scores points on the other characteristics too.
That’s a big ask that stops many people that value money more than the current cryptocurrency enthusiasts. Also, let’s not forget about the transaction fees that can easily go up to $1-5 per transaction. There’s no surprise that nationals from the countries without banking services are still unbanked, even if cryptocurrency is already globally available. While considered a global market, cryptocurrency actually imposes a very high entry barrier.
Which cryptocurrency will finally break through and reach the masses is still a mystery. Anyway, looking at where crypto is right now, we can be almost certain that mainstream adoption is a question “when” rather than “if”. It can be anything; Bitcoin, ONFO, or something entirely new!