The Real Barriers In The Mass Adoption Of Cryptocurrencies
When people discuss what is holding back the mass adoption of cryptocurrencies, the focus often goes to its current limitations in usability. There are not many traditional retail environments that accept cryptocurrencies as payment, transaction times can be quite slow depending on the platform, and the user interfaces for most wallets and apps are not as user-friendly as they should be for mass consumption. While these aspects are quite important to allow cryptocurrency holders to use and transact in crypto conveniently, the masses will have to actually desire to hold it in the first place. Even though usability is a legitimate concern, the real barriers holding back mainstream adoption of cryptocurrencies are fear (mainly due to volatility) and confusion (mainly due to crypto’s steep learning curve).
Fear
The 2017 bull market in Bitcoin brought many interested new retail investors into the cryptocurrency markets, hoping to profit off of the parabolic price growth in Bitcoin at the end of the year. As is often the case with retail investors, they were a bit late to the party, and the vast majority suffered heavy losses as a result of the subsequent bear market in Bitcoin in 2018. You may have heard stories of people mortgaging their house and investing it all in Bitcoin at $20,000 each during the peak of the hysteria, only to suffer significant losses of 50% or more during 2018’s bear market. It is these types of stories, and the very real volatility associated with it, that inspires fear among potentially new cryptocurrency investors and hinder them from not wanting to give cryptocurrencies a try. It is also this same fear that is likely responsible, at least in part, for the low volume that we see in the crypto markets today.
To be clear though, it is not just volatility itself that inspires so much fear, but negative volatility. To state the obvious, retail investors don’t like to quickly lose significant amounts of money because it negatively impacts their livelihoods and financial well-being. Almost all investments have some degree of risk and volatility, however, the volatility in cryptocurrencies is extreme and almost nothing has been done to offer the retail masses a solution to this major concern. Some could say that stablecoins are such a solution, but the retail masses want positive volatility, or potential profits, with limited downside volatility, or potential losses. Simply put, stablecoins are boring in this regard. The lure of potential profits is what brought many new retail investors to crypto at the end of 2017, and this lure will be necessary again to bring them back in the future. Hopefully though, the crypto market will be ready and able by then to retain more of them on a long-term basis by offering solutions that limit investors’ downside risk.
There are other aspects of the cryptocurrency markets that inspire fear among potential new investors, such as its association with exchange thefts, use in illicit activities, an abundance of fraudulent ICOs, and lack of regulatory clarity. All of these issues put a black eye on the industry and make potential new investors hesitant to dip their toe in the crypto pool. However, none of these fears are greater than the prospect of having one’s financial livelihood being negatively impacted in a significant way. The cryptocurrency market must address this fear if it hopes to achieve mass adoption in the future.
Confusion
While almost any relatively new industry will have its challenges in educating the masses about its advantages, the learning curve for cryptocurrency is particularly steep due to its technical jargon. Furthermore, since the cryptocurrency market is relatively young at 11 years old, there are vastly varying opinions on the merits of a given cryptocurrency, and those opinions are inconveniently spread out among many websites. Adding further to the confusion and inconvenience, new crypto investors currently have to perform their due diligence among many sites such as Coinmarketcap for prices, Cointelegraph for news, Youtube for videos, and sites like Bitcointalk and Reddit for forums.
The cryptocurrency market is currently immature and inefficient. Regardless of who labels themselves as an “expert” in this field, the fact is that no one has all the answers in this new and opaque asset class. For example, what is more important regarding a cryptocurrency, pure decentralization or business viability and convenience to its users? Is the number of transactions the best measure to try to determine a cryptocurrency’s value and demand? These are difficult questions to answer and the current status quo of people putting written opinions out there and others slowly commenting on it seems extremely insufficient. There needs to be more direct collaboration and debate regarding cryptocurrencies if we are to truly increase our collective understanding with this new asset class. There also needs to be convenience.
To achieve mass adoption and keep it, the cryptocurrency market must eventually give new crypto investors the ability to easily and efficiently learn about the field to limit the confusion that they encounter. Additionally, providing a supportive community where new crypto investors can interact with and ask for guidance from others could go a long way in retaining those new investors on a long-term basis. There are many newer investors that want to learn more about cryptocurrencies, but we as an industry have to do a better job of providing convenient and efficient ways to become knowledgeable in the field.
A Potential Solution: Bitdollar Fund
Bitdollar Fund is an incentivized worldwide investment club whose cryptocurrency assets are managed through investor elections. The Fund’s primary token, Bitdollar (BTD), offers the best blue-chip cryptocurrencies (Bitcoin, Ethereum, XRP) in one token with cryptocurrencies backed by physical assets (such as oil and gold) to reduce volatility. Through the use of the Fund’s secondary token, Crypto Pro (CPRO), more experienced members will get paid for their investment ideas by providing content, while less experienced members can learn and benefit. Within Bitdollar Fund’s incentivized investment platform, the best cryptocurrency investment ideas will rise to the top, so that the entire investment community will be well informed to make sound investment decisions during elections. Collectively, Bitdollar Fund intends to raise the level of debate on the merits and faults of major cryptocurrencies like never before.
How Bitdollar Fund Addresses Fear & Volatility
Within every Bitdollar (BTD), there are cryptocurrencies that are backed by physical assets, such as oil and gold, to provide returns that are uncorrelated with the broader cryptocurrency market in order to reduce volatility. It is these uncorrelated returns that provide the real benefit of diversification, as opposed to simply having a bunch of highly correlated cryptocurrencies in a portfolio. Within Bitdollar Fund, these asset-backed cryptocurrencies are referred to as non-core components and initially will make up 20% of every Bitdollar (BTD). Non-core components can make up anywhere from 10% to 50% of the Fund, and will typically be determined by the registered holders of Bitdollar during quarterly elections. The exception to this is in emergency cases where the President of the Fund can unilaterally change this percentage, up to twice per calendar year, in the event that action must be taken immediately and cannot wait until the quarterly election. The President would only take such action in the best interest of the Fund, and the Bitdollar Fund community could always subsequently adjust the percentage allocation for non-core components during the next quarterly election. Ideally though, Bitdollar Fund would have a low percentage allocation for non-core components (such as 10%) during bull markets to allow positive volatility and a high percentage allocation for non-core components (such as 50%) during bear markets in order to reduce negative volatility.
How Bitdollar Fund Addresses Confusion & Inconvenience
By incentivizing community contributions with Crypto Pro (CPRO), Bitdollar Fund will be able to collect and vet the best investment ideas and analysis in cryptocurrencies, all for the benefit of its broader investment community. Furthermore, there will be direct and incentivized team versus team debates that will occur on a quarterly basis, which will elevate the conversation regarding the merits and faults of cryptocurrencies like never before. Inexperienced members of Bitdollar Fund can use these resources, as well as tutorials and quizzes, to efficiently learn about the field. Additionally, these newer members can connect with those that are more experienced both to ask questions and receive moral support, which could help investor retention immensely since trading and investing can be an emotional and solitary occupation.
All of these features will be available in the Bitdollar Fund mobile app, and is designed to deliver value and convenience to all levels of investors. Not only will account information, prices, news, and videos all be within the app, but also the ability to discuss crypto with your fellow members as well as the ability to vote in elections. All of these features will conveniently be under one roof within our app, and there will no longer be a need to visit Coinmarketcap, Cointelegraph, Bitcointalk, Reddit, or YouTube for crypto research. Whether saving our members’ time by conveniently having several types of important information within one app, or helping them learn by watching debates or taking a quick tutorial, Bitdollar Fund aims to deliver value to its members.
Conclusion
Many retail cryptocurrency investors were scared off during last year’s bear market due to high (negative) volatility, a steep learning curve, and a lack of convenient learning resources. The cryptocurrency market as a whole has done a poor job at retaining the new investors it obtained during the bull run in late 2017, and it must improve and effectively address the concerns of newer investors if it ever wants to achieve mass adoption. Bitdollar Fund desires to take on the real issues hindering the mass-market adoption of cryptocurrencies by providing convenience and value to all of our members. In addition to reducing negative volatility with uncorrelated assets in its portfolio, Bitdollar Fund will be a place where more experienced members will get paid for their investment ideas by providing content, while less experienced members can learn and benefit within the relative safety of its community. If you would like to be an early supporter or contributor of our community and cause, please feel to reach out to us here or on one of our other social channels.
*Cryptocurrency investing involves a significant risk of loss and is not suitable for everyone. Please do your own research or consult your investment professional before investing. Citizens of the USA, Canada, Cayman Islands, Estonia, China, South Korea, Singapore, & New Zealand are not eligible to participate in Phase 1 of the Bitdollar ICO, however, we are working to accept citizens from these countries during future phases of our ICO in 2020 and beyond.
Nick Kitcharoen is Founder and CEO of Bitdollar Capital, which recently launched its private sale for Bitdollar Fund, an incentivized worldwide investment club for major cryptocurrencies. Both planned collectively managed funds from Bitdollar Capital aim to provide clarity to the cryptocurrency community by guiding fundamental analysis and facilitating research, while also providing a relatively safe place for those that are new to cryptocurrencies to get started. Nick has a background in corporate finance and trading in financial markets and was most recently Founder and CEO of Acumen Algorithms LLC, a formerly registered Commodity Trading Advisor, where his sole focus was the development of trading algorithms based entirely on technical analysis.
