Since I've started following Bitcoin in 2013, I can distinctly recall crypto currency devotees and enthusiasts always stepping in during bull runs to spin a cautionary tale that went somewhere along the lines of "This is all great, but let's not forget that in order for Bitcoin to fulfill its purpose, we need to drive adoption and usage, otherwise it's just a store of value." But adoption, even with all the hype and excitement hit two main barriers:
1. The prolific release of altcoins and digital currencies, which spread adoption across thousands of tokens
2. Incredible advances in fintech-powered payment methods
Unless there is some serious consolidation or collaboration among crypto projects, we may find ourselves lagging behind the market and missing this window of opportunity to change the way finance is done in the world.
The Altcoin Rush
As interest in Bitcoin started to rise and the potential of the blockchain framework was evangelized, people's imaginations were sparked, many more people joined the movement and the originally small cohesive Bitcoin community began to be assailed by different visions.
Vitalik Buterin saw the potential for app development on Bitcoin's blockchain, but when he wasn't able to get enough buy in from the BTC community, he went off on his own and developed a Ethereum in 2013. The Ethereum platform, in itself, made it easier for developers to create their own currencies and decentralized apps, which made the switching costs from Bitcoin much lower. With the accelerating appreciation of virtual currencies and a much higher public interest in ICOs with promises of quick riches, we saw soft forks like Litecoin and other projects like EOS and Tron creating entirely new blockchains that fulfilled similar purposes to what the Ethereum blockchain was meant to do.
The tradeoff of the altcoin rush was adoption
Surely, there was an incredible amount of innovation and advancement in crypto currencies and blockchain technologies as a result of this 'altcoin rush'. However, the tradeoff was adoption.
The vast majority of the 'users' that flooded the crypto market were speculators, not enthusiasts, i.e. they had no intention of actually using the tokens for anything. The actual core enthusiasts that believed in Satoshi's vision of a decentralized economy were suddenly spread thin across hundreds of coins using different mobile wallets. Merchants who wanted to take advantage of the benefits of crypto currencies had to choose from an overwhelming selection of coins. And then, when there was finally some semblance of agreement and critical mass of retailers accepting a single coin (Bitcoin Cash) disagreements and lack of collaboration again screwed everything up.
Bitcoin Cash had done a wonderful job attacking Bitcoin issues around transaction approval time and had made significant advancements this year signing up merchants and sparking the creation of lots of cool wallets and payment solutions like Money Button. Then they go ahead and mess things up with hard fork on November 15. Not only did the instability completely turn merchants off, but it may likely have sparked the overall crash across all crypto. Not to be a Debbie Downer, but this last crash will have long term consequences as thousands of businesses and investors lost their shirts and may have been permanently turned off crypto.
If these issues caused by the fragmentation and lack of collaboration in crypto weren't enough, the rest of the financial market has been busy making mass adoption a looooot harder.
While we were sleeping
While crypto pundits were busy discussing the technical merits of Monero versus Cardano; while Craig Wright and Roger Ver were having their tussle, while Satoshi's true identity was endlessly debated; while thousands of ICOs raised billions without delivering any massive use case, Alipay was steadily taking over Chinese mobile payments without using blockchain. Good luck getting mass adoption of cryptocurrencies in China when the alternative is so easy and so ubiquitous. Similarly, since 2010 other fintechs have had massive impacts on how users across the world do payments and get access to financial services, like Venmo (US- 23 million users), Revolut (Europe), Paytm (India- 282 million users), Nubank (Brazil) and many others. These platforms built upon existing frameworks of banking and collaborated with existing payments standards like Mastercard and Visa instead of trying to create entirely new frameworks from scratch every time they had a small disagreement. Honestly, I'm terribly afraid of how amazing the next generation of Apple Pay is going to look. The promise of Bitcoin and the significant advantages it held over the financial frameworks of 2008 are quickly dwindling, and will soon be all but gone unless we take swift action.
Keep your eye on the prize
So, can we all please take a step back, have a drink, and take a look at the crypto landscape with fresh eyes? Can we, for a moment, set our differences aside? Can we do some clean up, consolidate here and there, and choose a couple of standards we can all get behind? Finally, can we just build the next generation of tools that will ring in the next era of financial services? Without collaboration and building upon the fantastic advances we have already made in Blockchain, we simply won't move fast enough.
Andre do Valle is CEO of DoWallet, a crypto aggregation marketplace that turns crypto investors into crypto users. Share your thoughts with him at firstname.lastname@example.org