A new research paper released by Imperial College London and eToro predicts that cryptocurrency could become a mainstream payment solution within the next decade, but the paper also outlines the necessary problems that have to be solved first.
The report covers a brief background of cryptocurrencies, Distributed Ledger Technologies (DLT), smart contracts, and also differentiates between cryptocurrencies, cryptocommodities, and cryptotokens. Throughout the report, they list various issues that cryptocurrencies have to overcome, but still have the “conviction that cryptocurrencies will gain global mainstream adoption within the next decade”. The report theorizes how cryptocurrencies can achieve the traditional three tenets of currency: medium of exchange, unit of account, and store of value. They also discussed an over-aching theme that will be important in widespread adoption.
“Finally, DLT businesses, cryptocurrencies and cryptoassets need to invest in design thinking as user-friendly design is at the core of any successfully adopted technology. Only then could we expect a continuation of the exponential growth of adoption seen in the technology’s early phases.”
The report gave context by discussing the evolution of money from commodity money to present day fiat and centralized electronic currencies. The report considered a quote from Morris Perlman, Macroeconomics (3rd edition), 1999 about fiat currencies to draw attention to the fear that most people currently exude about cryptocurrencies – not being backed by anything – actually exists within the fiat currencies they use everyday.
“Money is like a myth that requires only imagination for its creation, but faith for its effectiveness”
The report then went on to discuss the challenges that cryptocurrencies face to achieve mainstream payments adoption including regulation, reputation, privacy, trust, volatility, scalability, incentives, and usability.
Obstacles to overcome to achieve mainstream payments adoption
One of the major issues that was focused on throughout the paper was volatility since they argue that this affects all three aspects of money that cryptocurrencies are trying to achieve; medium of exchange, unit of account, and store of value. The paper talks about various attempts at solving cryptocurrencies’ volatility such as USDT, Etherium’s Dai, and Circle’s CENTRE project, but also acknowledges the unknowns surrounding each of those projects. Dash, however, is on the path to lowering its volatility, even below that of Bitcoin, by offering a combination of usability in everyday transactions at merchants around the world and favorable investments through its Masternodes.
The paper also discussed the scalability of cryptocurrencies and how many cryptocurrencies “feature restrictions on block size or transaction complexity, and deliberately regulate the rate at which blocks are published”. The paper mentioned how this led to bottlenecks in the Bitcoin and Ethereum networks half a year ago and cause transaction fees and confirmation times to increase dramatically. The authors went on to discuss the various on-chain, off-chain, and atomic swap solutions that are being developed as possible solutions. However, another recent study in partnership with ASU, indicates that Dash can scale, on-chain, up to 10 MB blocks at 2.5 minute intervals, which would support around 120 transactions per second or just over half or what PayPal handles. This adds to Dash’s current history of consistently maintaining low transaction fees, fast confirmation times, and security.
Interestingly, the study also draws attention to the public nature of cryptocurrencies as a drawback to major business adoption. The study argues that since public ledgers stores all transactions in the open for public availability, it lends the opportunity for industrial sabotage between corporations spying on their competitors’ spending habits. Dash is able to offer a compromise by providing, within one cryptocurrency ecosystem, the option to still store all information on a public blockchain, but also offers additional and optional privacy with PrivateSend.
The paper discussed more barriers that cryptocurrencies have to overcome to achieve mainstream payments adoption, but the depth is too extensive for this article. Overall, the paper believes that cryptocurrencies can achieve mainstream payments adoption, if done correctly.
Dash is solving the barriers to mainstream payments adoption
As mentioned above, Dash is making strides in technological developments to solve many of the barriers to mainstream adoption. Dash is becoming relatively less volatile, scaling to handle more transactions, and offering optional privacy to work in business settings. These features will help Dash become a medium of exchange, unit of account, and store of value. Merchants and consumers are already recognizing the benefits of Dash as seen through their adoption rates. Recently, Rewards.com announced integration with Dash, which currently allows consumers to earn rewards in Dash and will soon allow them to make purchases at over 7,000 businesses in Dash. There are over 1400 merchants listed on DiscoverDash.com and the number of Dash transactions are reaching record levels, which indicates that Dash is being increasingly used for daily and everyday transactions.