Mass adoption of Bitcoin is the ultimate endgame for many developers and advocates of the most popular crypto asset today. The real visionaries of the space hope for a world in which the national government’s power is eroded by trustless forms of currency and governance enabled by blockchain technology. Under this scenario, individuals around the globe would make near-instant, cheap payments for goods and services without intermediaries, using second layer Bitcoin scaling protocols such as the Lightning Network. And the corporations requiring the most secure transfers would likely dominate activity on the mainchain. Naturally, with a huge percentage of the planet’s wealth being stored in Bitcoin, the would be many times greater than it is now. For example, if Bitcoin was to exceed the market capitalization of gold ($7.8 trillion), the price of a single Bitcoin, presuming that all were mined and none was lost (but they are), would be around $371,430.
When you consider that the US stock market alone was valued at over $30 trillion last year, you can see that there is a heck of a long way to go before Bitcoin really begins to challenge for the position of a global currency. These figures are dwarfed by other stores of value such as property and derivatives too.
Bitcoin’s market capitalization is around $88 billion at the time of writing. Most central bankers around the world barely even acknowledge its existence and when they do, they are largely dismissive of it. Perhaps they are trying to belittle Bitcoin to mitigate their replacement with a fairer, freer monetary system. Or, perhaps they genuinely are not concerned about this experiment in decentralized finance. Either way, we are still very much at the ignore/laughing phase of the following maxim:
First, they ignore you. Then they laugh at you. Then they fight you. Then you win.
Barriers to Bitcoin’s Rise
There are, of course, many barriers that Bitcoin must overcome before it can surpass all fiat currency and other asset classes. Regulators around the world seem more intrigued by Bitcoin and other cryptocurrencies than they are threatened by them. There have been very few efforts to ban Bitcoin, and only digital assets launched in ways that make securities laws applicable to them have been seriously policed thus far.
Of course, that could all change. Regulators might be taking a backseat to see how the industry develops. There may be harsh legislative measures enforced against Bitcoin if it grows enough to threaten existing power structures. However, for now, lawmakers are keeping their cards close to their chests.
It remains to be seen how effective such efforts to clamp down on digital currency could even be. It is a fair assumption that the more the Bitcoin virus spreads, the more difficult it will be to eventually contain. Being decentralized in structure, it would likely take a massive combined international effort to even come close to policing Bitcoin.
Potential regulatory concerns aside, there are other stumbling blocks for Bitcoin. Another digital currency project could prove better-suited to providing a government-free, decentralized means of transacting value. There is no shortage of hopefuls either, as you will see browsing the listings at popular digital asset price comparison site Coinmarketcap. Ultimately, the market may decide that a different asset fits the purpose of a global reserve currency. Whatever rises to the top will also likely face the same regulatory hurdles previously mentioned, however.
Such a shift to another digital asset, or even an abandonment of the entire idea, could also be caused by a massive bug in the Bitcoin code. Although none has been successfully exploited yet, it is not out of the realms of possibility that such a vulnerability in the code could be found and be responsible for the demise of Bitcoin.
Bitcoin Mass Adoption: Not Anytime Soon
Despite the obvious hurdles, the road to Bitcoin mass adoption is progressing nicely. There are innovations occurring each year in terms of both infrastructure and the asset’s fundamental value. More trading desks launched by huge names in the world of investments are beginning to offer Bitcoin products. And with the likes of Fidelity being hugely interested in the space, it seems doubtful that any regulatory clampdown is coming anytime soon.
Meanwhile, the Lightning Network is rapidly expanding and creating additional use cases for Bitcoin all the time. The ability to send micropayments at scale is certainly one of the necessary prerequisites for a global currency, and teams of developers are constantly working on solutions to bring such features to Bitcoin.
Bitcoin has already gone from being an interesting experiment in cryptography amongst cypherpunks to a tool for dark web criminals to transact value, to its current transformation into a new asset class. Although still wildly volatile in terms of price, if Bitcoin was to succeed in becoming a respected, bona fide asset class, its usefulness in retail would automatically increase too. Essentially, the more money makes its way into Bitcoin because of its superior qualities as a store of value, the more likely people are to use it to buy things. Daily volatility will drop to a negligible level once the market cap begins to challenge those of other national currencies. If Bitcoin gets this far on its quest to mass adoption, it is difficult to imagine it failing.