Bitcoin Survey: Price Volatility and Complexity are Holding Back User Adoption
The results from our recent poll on bitcoin usage in the United Kingdom are now available. There are many different interesting points to take away from the results of the poll, and additionally we now have a bit of data related to what holds back the average person from using or holding bitcoin.
The two biggest reasons that many individuals in the UK still avoid bitcoin have to do with price volatility and the complex nature of using this new technology. Nearly sixty percent of non-bitcoin users who participated in the poll pointed to one of these two problems as the main reason they don’t use the digital currency. The good news is that there are many developers working on solutions related to these common issues.
Bitcoin price volatility has been declining over time
Although price volatility hasn’t gone away completely, the reality is that the bitcoin price has become much more stable over time. Although it’s unclear if bitcoin will ever become as stable as the US dollar, it’s possible that the digital commodity could eventually compete favorably with gold, silver, and smaller-market fiat currencies over time.
On the other hand, price stability may not be an attribute that bitcoin needs to become a widely-used medium of exchange. There are plenty of projects, such as Veritaseum and Hedgy, that are working on allowing businesses, large institutions, and consumers hedge price volatility against other, more stable assets. These solutions could make bitcoin more value as a mechanism for value transfer, as long as bitcoin is able to avoid 30-50% price swings in a single day.
There are also certain wallet providers, such as Circle and Coinapult, that allow their users to instantly convert their bitcoin balance into fiat currency. It should be noted that these sorts of solutions don’t involve hedging bitcoins, and overall liquidity remains somewhat flat when bitcoin is only used as a payment system. On the other hand, increased use as a payment mechanism also provides a bit of fundamental value to the bitcoin token.
Bitcoin applications are becoming much easier to use
Bitcoin is also becoming much easier for the average person to use. Long, convoluted addresses will soon be replaced by human-readable names, and wallet providers, such as Circle, are realizing that it makes sense to show account balances denominated in US dollars. When apps like Fold and Purse.io are able to offer large discounts to their users, it makes the average person much more interested in using bitcoin for the first time. Having said that, most people will want to be able to gain access to those discounts without having to worry about converting between bitcoins and fiat or trying to copy and paste a confusing bitcoin address.
Some apps are going after both issues
Of course, the most popular bitcoin apps are going to be the ones that take care of both of these issues for the user. The best example of this sort of application right now may be Abra. Created as an alternative to Western Union and other money transfer systems, Abra allows users to send digital cash (denominated in US dollars) by using the bitcoin blockchain. The bitcoins used in the application are hedged against the US dollar via smart contracts, so the interface can be as friendly as Venmo or any other popular app for transferring money. Over the next five to ten years, it’s possible that the most successful bitcoin applications will be the ones that remove both price volatility and complexity from the equation.