Much is theorized on what it will take to reach mass adoption with cryptocurrency. This is a discussion that could go many directions. There is little doubt we have a lot left to do in terms of development, especially when it comes to making things easier for the average user, before this happens.
However, there is one area that is severely lacking when it comes to cryptocurrency. Sadly, it is something that was asked years ago and we still do not have a true answer.
What can I do once I get some cryptocurrency?
This is something that harkens back a number of years. Many of us asked the same question when we joined and the answer received was not much better than what we can provide today.
Since there are not many viable options, the solution for most of HODL. This leads to the casino mentality that is so prevalent within the crypto world. That is okay since most are drawn in due to the financial nature of this and the prospect of Lambos and mansions.
What can I buy with my cryptocurrency?
For the most part, in 95% of the cases, the answer is buy cryptocurrency. We major in swapping of coins and tokens. However, there is really little else outside of that. This is something that really needs to change before we can see a major economic impact due to crypto.
Marketplaces: Crossing the Rubicon
The solution is not really difficult. To be successful, and close the gap on the mainstream, crypto needs marketplaces where people can acquire many of the goods and services they need. This will be a major step forward in the evolution of the industry.
When that happens, on a large scale, suddenly people will have options they did not have before. Real world utility becomes part of the use case for cryptocurrency. It is not something that is just relegated to a few areas of our digital lives. Instead, we can acquire those things that impact our families on a regular basis.
A lot is made of the two pizzas that were bought using Bitcoin a number of years ago. The problem is how much have things changed since then? Consider the ability to pay for pizzas using Bitcoin today. How easy is it? Certainly there are some cryptocurrency cards that one could use. However, that is basically another layer over the existing system.
Can we buy food at the local supermarket? How about clothing? Are we able to get the works of our favorite author?
For the most part, the answer is no. And this is a major hindrance to the formation of the crypto-economy.
Velocity of Money
In economics, one of the major indicators on the health of an economy is the velocity of money. This is a gauge which tells us how often a unit of the currency is able to move through the system in a given period of time. Obviously, the greater the velocity of money, the healthier the economy. When money is moving from person-to-person, it means that economic activity is taking place.
This is not evident in cryptocurrency. In fact, we see a velocity of money that is stalled. HODLing is not the path to a healthy, growing economy. It is the exact opposite. When the VOM is low, the economy is thought to be stagnating.
It is easy to understand how this is happening in the crypto-economy.
The lack of commerce in the traditional sense is what holds things back. Money cannot flow through the system, enhancing the economic impact upon more people. Instead, as mentioned, it leads to the speculative nature of things, resulting in the casino mindset. On this end, cryptocurrency is treated more like stock than it is currency.
We often discuss use cases, or utility, in the crypto-sphere. This is vital to the evolution of what we are developing. Unless use cases, in general, are radically expanded, we will see an economic system that is rather niche. The growth rate will be slowed as compared to what it should be.
This would be rather disappointing because we are sitting upon possible the greatest explosion we have seen in economic history. Operating in the digital realm offers the potential for a massive network effect that will spread to many layers. With automation becoming a likely part of each human's future, we can see how the tokenization process, coupled with trillions of node, results in massive economic potential.
Of course, if there are no use cases other than to buy and hold, that will quickly fizzle out.
Obviously, the speculative, financial aspect of cryptocurrency is important. We are not saying that it should not exist. Market conditions which include price discovery are vital. The financial arena is enormous for a reason: it carries great importance for the economic plight of the planet.
However, not everything revolves around the equities or bond markets. Speculation is not the only game that is available. In fact, most businesses shy away from this. In those industries where there is the potential for massive price moves, like with oil/gas, many of them hedge to remove the risk. The idea is counter to what they are trying to accomplish.
Presently, cryptocurrency does not really hedge. We simply dive into the deep end looking for everything to moon. Naturally, when something is new, if successful, the value should explode over time. Again, this is all part of a healthy process.
Nevertheless, and maybe it is because this is still young, we are left with little else. It is the all or none situation. Projects are developed with the prospect of mooning or they end up worthless. Tokenization offers little middle ground.
All of this is an evolution. At the moment, we are in the phase where people are trying to amass whatever they can. Hopefully, as this happens, more opportunities start to arise whereby people are able to utilize cryptocurrency in a way that stimulates economic activity. We are starting to see a bit of that with gaming. However, to truly be a force, we have to move well beyond that.
We will know cryptocurrency is ready for mainstream when average people can get rewarded in a currency and easily use it to buy some goods or services they require in their daily lives.
Until we get to that point, we will remain a fringe industry that is interesting, speculative, and stalling as an economy.
If you found this article informative, please give an upvote and rehive.
gif by @doze
logo by @st8z
Posted Using LeoFinance Beta