Fundamental challenges for crypto adoption
By: Mindaugas Kelpša
Tags: Fintech, Crypto, Adoption, Cryptocurrency, Bitcoin

Over the past year, cryptocurrencies have undoubtedly been one of the most talked about technological developments, both in the mainstream and specialized media. Expectations have been flying high, with enormous price projections and emotional discussions about towards which direction should technology move to. Even the traditional financial sector — once exceptionally sceptical if not outright hostile — is feeling the rising pressure from their clients and peers, and is slowly but surely beginning to enter the cryptocurrency market.

Media hype, continued technological advances and influxes of institutional money seem to be clear indicators of accelerating crypto adoption rates. Yet in the real world — to the disappointment of many techno-utopian evangelists — things don’t seem to move as fast as desired.

Cryptocurrencies are disruptive technologies and therefore require substantial change. This change needs to appear in several areas in order for us to witness the start of real mass adoption. Let’s have a look through some of the main challenges holding back cryptocurrencies.

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1. Uncertain regulations

Like it or not — regulations are coming into the crypto space. And currently things look quite problematic. Many vested interests are at play and many one-sided decisions are made. Often times regulators still lack the necessary knowledge to fully understand cryptocurrencies and the sometimes contentious stance of the crypto community doesn’t help to alleviate that. Lack of internationally coordinated effort to strive for uniform decisions is also apparent, with regulators around the world demonstrating divergent approaches.

Major enterprises that want to integrate cryptocurrencies into their businesses require clear rules and guidelines in order to be sure they are fully legally compliant. Regulations would also help to increase consumer trust and pave the way for mass adoption. And, last but not least, healthy regulations would be beneficial to the crypto industry itself by increasing responsibility and wither out some of the malicious market players.

Regulations are challenging and might be a hard pill to swallow for some, but it is one of the things that needs to be done in order for crypto to have a chance at realizing it’s potential on the grand economic stage.

2. Risks and scams

Mt. Gox — the company whose name and shady practices have become akin to a curse word in the crypto community. Unfortunately, hacks, scams and frauds are still happening almost every day, despite the enormous effort made over the years by tech experts, crypto activists and governmental institutions.

The crypto space remains a very dangerous one. Malicious parties are constantly improving their operations and even the tech-savvy are not risk-free from shady ICOs or unreliable wallets. But the situation is most dire for mainstream newcomers who fall victim and whose negative experiences shed a dark light on the entire industry.

Fighting criminals in the uncharted crypto space is a constant uphill battle — one that will eventually be won, but also one that will require significant effort.

3. Lack of information reliability

Cryptocurrencies are a new and emerging industry sector, and therefore suffers from a lack of reliable information. Mainstream media still has limited coverage and lacks understanding of the crypto space, although the situation seems to be improving somewhat. But even the specialized crypto media is riddled with fake news, unfounded claims, self-proclaimed blockchain experts and questionable ICO advisors.

Furthermore, intentional misinformation and manipulation is a constant threat. Artificial media hype can create overexaggerated expectations for inexperienced investors. On the other hand, targeted FUD campaigns can have lasting negative effects on innovative and well-meaning projects.

The challenges of verifying information and reputation are not unique to the crypto space yet are ones that will need to be addressed in order to become more welcoming to inexperienced investors and mainstream consumers.

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4. High market volatility

On the intersection of the three mentioned challenges lies a fourth one — high volatility of the cryptocurrency market. With an emotionally-driven market, little to no oversite and high incoming capital, the cryptocurrency market has become famous (or infamous if times are tough) for daily double-digit price fluctuations.

A constantly volatile market presents unmatched speculative opportunities for those interested in short-term gains. However, investors in various cryptocurrencies and tokens — especially those with smaller market caps — are susceptible to market manipulations and elaborate “Pump & Dump” schemes. This also deters many cautiously-minded investors, particularly institutional ones coming from the traditional financial sector.

The challenge here is a delicate one — how to ensure adequate market reliability while retaining the lucrative growth potentials? Many solutions are already in the works, although only time can tell which ones will rise up on top.

5. Difficult crypto management

For the many outstanding advantages that cryptocurrencies have, none of them can sufficiently outweigh one of the major shortcomings — the difficulty of crypto portfolio management. For a tech-savvy individual this might seem trivial, but for an amateurish newcomer the learning curve is very steep.

The situation is reminiscent of internet browsing before the appearance of search engines — a user had to have a certain level of technical awareness, browse different indexes full of webpage links, look through all of them and later try to remember addresses of the important ones. The list of requirements is somewhat similar today for cryptocurrency users — some understanding of cryptography and token standards, using many different wallets and exchanges, researching and being on constant lookout for the best deals and opportunities, remembering different login data and using two-factor authentication, etc. And all of this in order to perform one rather simple, yet very important task — to safely and efficiently manage your cryptocurrency portfolio. Clearly not a task for an ordinary consumer.

But just as internet browsing became more human-friendly, so will management of your crypto portfolio. And once it does, then crypto mass adoption will be set for lift-off. Only one ingredient will be missing — utility.

6. Limited crypto utility

Cryptocurrencies have still to live up to their name — to be currencies. Let’s be fair — currently the uses of crypto are quite limited. A user can try to send them to someone using a non-user-friendly application, speculate on a risky market or look for an oftentimes dodgy retailer who accepts cryptocurrencies. And nothing much beyond that.

Of course, many innovative projects are still in development and many enterprises are waiting on the sidelines for the best opportunity to jump into the crypto space. The constantly growing cryptocurrency user base is also providing immense help by increasing investment and spurring demand for various services and new use cases.

If cryptocurrencies are destined to succeed at achieving the revolutionary change that many speak of, increases in direct crypto utility as currencies is a must. Many of the necessary technologies are already here — it’s time to begin using them.

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A way of moving forward

Not all of the above-mentioned challenges can be solved easily or even addressed directly. Many of them require cooperation, considerable effort and complex change. But change isn’t a zero-sum game — it’s cumulative. With all the talent, creativity and investment coming into the crypto space, it’s only a matter of time when all of these challenges will be overcome — one at a time.

Here at ORCA Alliance we are seeking just that — to overcome challenges. We are bringing our contribution to the pursuit of mass cryptocurrency adoption in the form of the ORCA Platform.

While there are many cryptocurrency portfolio management tools around, ORCA is unique — it’s the first one that allows users to manage their crypto and fiat funds, both on the same platform. ORCA integrates various crypto wallets and uses Open Banking to connect with user bank accounts. With ORCA both professional users and newcomers to the crypto space will be able to bypass the frustration involved in using several different applications or service providers while having many additional tools and features to ease the process.

By making it easier and more convenient to access, manage and use cryptocurrencies — right next to the ordinary bank accounts — ORCA will help to bring traditional consumers closer to the crypto space. And once you’re so close it takes only one leap to fully jump into crypto.