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Coffee. It’s a beverage of mythical reputation in parts of the cryptocurrency community. It has the power, when purchased with cryptocurrency, suddenly renders that currency a commonly-accepted medium of exchange for all purposes, leading to the collapse of the central banking system and possibly the state itself.
Or not. I buy my coffee with Dash. Quite a few have bought theirs with another form of cryptocurrency. Yet, this has not significantly moved the needle forward towards adopting it as a new payment system. It’s a great step, but new people just aren’t lining up to get cryptocurrency so they can spend it on their favorite caffeinated beverage. Something’s clearly missing in how mass adoption is being approached.
Cryptocurrency adoption has taken a backwards approach
Strangely enough, most cryptocurrency adoption efforts have gone in the opposite direction of the proper model. Many adoption advocates have focused on retail adoption, in getting mom-and-pop mainstream shops to accept it, as well as larger retailers. This was probably targeted for symbolic or sentimental value, where being able to buy the proverbial crypto coffee signifies that this has become a regular part of economic life, but has always struggled with the same problem: not enough user demand. No one is lining up to spend it in everyday life except for the few hardcore fans, giving businesses little incentive to continue to accept it, and no reason to expect numbers of customers paying with this method to increase.
Now, using cryptocurrencies such as payments, and particularly Dash, does improve the payment experience from higher security to lower fees, and eventually the superior money and payment system will prove more attractive than legacy options. However, in the interim the difference between the two experiences is simply not great enough to provide a compelling reason to switch, and in many cases can provide disincentives due to the additional effort and costs associated with acquiring and offloading cryptocurrency.
Identifying powerful use cases, and building easy start-to-finish funnels, is necessary
What is needed for cryptocurrencies to build real adoption and regular economic use is to identify strong deficiencies in the current economic system and target them aggressively. These can be any of the situations where the paying experience is poor, from high-chargeback and expensive fee industries such as online gaming and remittances to areas with currency problems such as hyperinflation-plagued nations in South America, Africa and elsewhere. In these areas, there exists a significant enough gap between the experience of paying with fiat currency and legacy systems and using cryptocurrency to warrant a change.
However, a compelling use case alone isn’t enough. An industrious entrepreneur must find a way to turn an opportunity to use this particular tool into an all-in-one product that’s easily accessible to the targeted customer. For example, taking the use case of remittances, a potential user must be able to acquire and send funds via cryptocurrency cheaply and easily, with a one-stop shop approach where they can visit a single vendor and be walked through the entire process without complications. Distilling the rather complicated process of buying, sending, receiving, and selling digital funds all into a neat, easy to understand, and cost-effective user flow is a tricky business, and in particular may require the creation of specific liquidity providers and other tools to facilitate this process. But make no mistake, it’s necessary to make this whole adoption thing work.
Mass adoption comes piggybacking off of stronger use cases
In a mass adoption scenario, people will buy their coffee with crypto. In fact, if they can’t use it for that and other similar day-to-day regular purchases, adoption will fall flat on its face. They’ll simply go for it as a secondary effect of already having gotten on board for a much more specific purpose. Get your decentralized digital cash to send remittances, use what you have left for regular purchases. Eventually stop acquiring fiat because you don’t need it for much anymore. That’s how the model works. The large network of participating merchants must be there ahead of time to catch and amplify new users, but won’t generate those users on their own.
Solve someone’s critical problem with digital cash. After it’s all said and done, maybe they’ll use some of that to buy a hot cup of joe.