Are people not ready for bitcoin or bitcoin for mass adoption?
My teacher on the subject “History of Economic Theory” very often liked to repeat one phrase: “Do not evaluate the thoughts of historical personalities as a modern person, try yourself to become their contemporaries and then you will understand the motives behind the emergence of these ideas.” This was at least an obvious, but practical advice, because the present time and the reality of the conditional 16th century are very different from each other. People had a different perception of reality, they lived in a different economic system and they had other material values. Studying this subject, I strengthened my conviction that, regardless of the epoch, the behavior of most people is in line with the spirit of the times and modern economic theory for them. Only a few offer something improved or more progressive, which in time gains new momentum.
In March 1973, the Bretton Woods system virtually ceased to exist, but the official transition to the Jamaica system did not occur until 1978. The gold standard was abolished and we entered the era of fiat money, which, according to Wikipedia, “is supported by the belief of people that they can exchange them for something valuable”. Thus, the current monetary system (officially) exists only 40 years old, but people are already so used to it that for many it is the only true one.
Modern economists mostly adhere to the existing economic theory either because of the lack of incentives for the development of new ideas, or because of the intolerance of central banks to dissent . Political economists mostly offer minor “improvements” as problems arise, for example, the policy of quantitative easing after the crisis of 2008–2009, which has increased the debt load of countries.
An ordinary person is becoming more and more immersed in a consumer society, and the convenience of using money is more important for him than the fundamental basis. Cash, cards, Paypal and other services - all this is used depending on what is most convenient at a certain moment. Many people do not care what money is provided for, because they can exchange them for goods that are valuable for them at any time, as a result, an illusory confidence in the current monetary system is formed.
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As a result, people's perception was so distorted that it is difficult for them to accept the fact that the entire monetary system in fact rests on faith alone. From this it becomes fun to hear phrases that “bitcoin is not secured by anything”. At the subconscious level, we already perceive fiat money as a constant given and we ourselves assign the right to manage money to the central bank. This is very similar to how the people perceived the royal power and the right of the monarch to govern.
Few people monitor their daily spending, because we pay for something several times a day. We barely notice moderate inflation only when prices for the goods we need “suddenly” become high. We almost forgot about the Italian lira, German marks, Spanish peseta, although they existed 16 years ago. All of them replaced the euro, which is used in everyday life for only 20 years, although it already creates the feeling that he has always been.
Even crisis situations are already an echo of the past. The 1990s were a time of devaluation - the British pound, the Russian ruble, the Italian lira and many other currencies were going through hard times. Not so long ago, the Turkish lira fell 22 years in a row by either 40% or 80% per year. Over the past 30 years, Argentina has defaulted three times and is approaching the fourth. After the 2008 crisis, most Eastern European countries devalued their national currencies one and a half times.
From the conventionally recent enough to recall the story in India. In 2016, Indian Prime Minister Narenda Modi spontaneously declared that all large denominations of 500 and 1000 rupees, which accounted for about 86% of the total money turnover, became invalid . It was assumed that this would help in the short term to overcome corruption and get people to pay taxes, because only 2% of citizens pay income tax .
But instead of solving problems, India faced national outrage, massive queues and absolute chaos in the banks, as citizens rushed to exchange their suddenly invalid money. Street vendors could not normally sell their goods, because 98% of payments are made in cash. The rich still continued to evade taxes and began to buy diamonds and jewelry to save their money. This is how one decision in the current monetary system can affect the lives of millions of people.
Less than a year later, the experiment was considered unsuccessful and 99% of the prohibited currencies returned to circulation. The Prime Minister wanted to transfer the country to cashless payments and digital payments in a short time, but the Indians were against such a sharp transition and the distrust of the state apparatus increased even more.
Despite all these examples, many people are still ardent fans of fiat currency and stubbornly fail to notice the whole story of perpetual depreciation and unexpected political decisions. Even the current crisis in Venezuela will be quickly forgotten, just like the jokes about the one hundred trillion Zimbabwean dollar bill.
People practically endure no conclusions from crisis situations and continue to live by inertia, only slightly transforming their reality. Most likely, the first argument is the question: “And what are the alternatives?”. At least diversification. Not only currency diversification, but also for all assets. Probably, few people bought gold before and after the crisis of 2008–2009, because it is not as convenient as currency exchange. Did you or your family have a financial safety cushion at that moment that you could rely on? And now she is?
Assume no. Its creation may seem difficult to someone, out of place and, of course, inconvenient at the moment. And we don’t like the inconvenient, then we translate this question into the category of “Unimportant”. Is it justified?
We are so closed in our world that we are surprised at the contrast between human values. After watching the film “The Man” by Jan Arthus-Bertrand, you begin to understand how different the perception of reality can be in people. Someone does not have arms or legs; someone is blind, serving a life sentence; one cannot fearlessly move along the street, believe in whom he pleases, choose with whom to communicate; someone lives in a cycle of violence, and someone in an economy where money turns into a meaningless piece of paper. All these people have different values, goals, desires and you are lucky if you are not faced with such. Therefore, how can a person with a completely different perception of reality tell another that he “truly” needs?
Daniel Jeffries, in his article on the main features of cryptocurrency, described why the attitude to centralized structures and fiat money depends on perception:
Power holding and many wealthy people live in a “normal” centralized world, where most of the things work properly, and one of the main problems is the percentage of the loan. Many do not see the need to support technology that can be useful in such a situation, as they are sure that it will never happen to them. They basically see what is close to their perception and system: money laundering, tax evasion, financing of terrorism and so on. Therefore, the issue of cryptocurrency regulation for them is not a question of protecting the system from a possible collapse, but a question of protecting the system from habitual problems.
In order for an ordinary person from the “normal” centralized world to pay attention to cryptocurrencies, they should give him either financial gain or even greater convenience. Having found neither in this, this technology becomes practically meaningless for him.
Therefore, it is not surprising that cryptocurrency was supported by the population in such countries as:
The inhabitants of these countries had objective reasons to lose faith in the current monetary system and go further beyond the wall, in the direction of cryptocurrency. Understandably, such a minority of people, the rest simply put up with the consequences, but this already suggests that cryptocurrency is viewed as an alternative.
Curiously, the first mention of the use of fiat money in Europe was also a crisis situation. During the Spanish siege of the Dutch city of Leiden in 1574, the residents of the besieged city had neither metal coins nor leather, which was sometimes used to replace metal money. Therefore, the townspeople decided to use the paper, from which they made a temporary replacement of metallic money.
After Leiden, unsecured money was tried to be introduced into Sweden and the USA, but they quickly depreciated to the value of the paper on which they were created. There was no faith that is now . Paper money, which was secured by certain assets, began to be introduced, but not all of them were successful. For example, after issuing the first paper money in Norway, people did not understand what it was and why they should use paper instead of precious metal.
For people who have long lived in an era of gold and silver, paper money will be an inexplicable wonder. How can plain paper be equivalent to a silver coin? Why is this “piece of paper” conditionally worth $ 10, and the other $ 2? Because it is written that way? For human perception was important some fundamental basis of money, and not the practicality of their use. The addiction and confidence in the new payment method was formed gradually until it turned into unconditional acceptance. Electronic money has passed the same way, and now cryptocurrencies can also pass.
Most of the changes in the monetary system were consolidated through the ruling stratum of the population, and the people adjusted to innovations. Fiat money, the use of gold and silver coins - all this appeared in an evolutionary way and became ubiquitous by the will of the authorities, not the people. The monetary system is constantly evolving into one that can offer a more convenient form of calculation and that can satisfy a growing economy.
The idea of cryptocurrency has not yet been consolidated and is on the contrary revolutionary, because the transformation began in the people, and the government adapts itself to the innovation. Therefore, it is not surprising that the revolutionary spirit and rhetoric are inherent in the cryptocurrency community. Some crypto enthusiasts are against state regulation, the introduction of rules and regulations for users, and this looks partly justified, since the system has failed several times.
All this leads to the fact that the current cryptocurrency has only two ways to mass adoption - evolutionary or revolutionary. Or, the authorities will recognize cryptocurrency as a new form of money, will develop this idea and contribute to the creation of a monetary system that is based on blockchain technology. Or there should be some economic collapse, which will finally disbelieve people in the reliability of the current system, and then the power will change. The only question that remains is: are the cryptocurrencies themselves ready for such changes?
Imagine what happened to what many revolutionary-minded representatives of the cryptocurrency community want - the fiat monetary system failed. The world saw a new economic crisis that is more devastating than the Great Depression of the 1930s, the oil crisis of 1973 and the crisis of 2008–2009. Many lose their jobs, banks and companies are closing, panic is everywhere, and there are queues in shops. People are trying to understand how it happened, who is to blame and what will happen next, they become very politicized, superstitious and fearful. The guarantor in the form of the state monetary system lost its credibility and for many people their faith in national paper money was completely lost. In order to somehow save your money, you, like millions of others, start buying gold, cryptocurrency, or trying to find some other alternatives. Yes, this is no longer comments on the forum and not prophetic articles, all in reality. Well, fun cleansing with a flame?
And now the question: what next? Will people learn to distribute money without a central authority? Accustomed to full control over your money? Will we jointly, through universal suffrage or competition, constantly form flexible rules in a dynamically developing system? And this is taking into account that each person has his own experience, knowledge and perception of justice? Will not this absolute democracy become a universal manifestation of the herd instinct in decision-making?
Yes, over time, you can get used to everything in the world and exclude such an outcome is not worth it, but it all looks too utopian. Although during times of change and crisis situations people tend to collectivism and self-organization, but can a centralized person quickly evolve into a decentralized person?
It is unlikely, because we always shift the responsibility for certain things to other people. This has already become an integral feature of human psychology, and the reason for this is our centralized worldview. For example, we solve many domestic problems through centralized structures. The state, individual institutions and personalities often act as a scapegoat and the culprit of all ecumenical problems. For many, the state or other manifestation of power is a necessary evil. Therefore, human power in one form or another will still remain, even in a world where social consensus is at the core.
So we got directly to the cryptocurrency. Considering the technical condition of Bitcoin and other coins, they are unlikely to become a full-fledged replacement for Fiat. The problem comes down to the “holy Trinity” (decentralization, security and scalability), in which you can most often focus on two points out of three. In the current economic system, priority is given to security and scalability, and decentralization, although present to a certain extent, is not a matter of top priority.
Bitcoin also underpins security and decentralization. It is Bitcoin, not cryptocurrency, because most of the Altcoins are not really decentralized. Yes, their network can carry out thousands of operations per second, developers can quickly introduce innovations and change the blockchain in case of problems, all this is cool, but at the cost of decentralization.
Altcoins are not much different from Fiat, because they have a single point of failure in the form of the founder, the main group of developers, or even a company like Ripple. I understand that if this statement may seem controversial to someone, but Bitcoin does not have a single point of failure and, paraphrasing Jimmy Song , if a whole group of developers falls under the bus, the system will continue to develop normally.
Due to the similarity of many altcoins with centralized structures, they can more easily adapt to the current system, but apart from privacy, they offer little to change the status quo. The same Ripple does not deny itself anything, works directly with banks and conductors of financial transactions. That is, it looks like an ordinary IT company, but with a cryptocurrency solution. Because of this, the XRP token is rather a digitized personal product that can be used as a means of payment. If the Fed digitizes the US dollar, isn't it the same as the XRP?
Bitcoin, on the contrary, due to its distinctive feature, suffers from a long period of updates and low scalability. According to Jonas Shnelli, one of the leading developers of Bitcoin Core, a Bitcoin client has no such thing as a roadmap . Each developer is free to decide in which direction to move. However, the more developers are working on one thing, the sooner the release of the innovation will take place. This situation is now with the implementation of Schnorr signatures, which are also designed to improve scalability.
For the most part, the most discussed proposals for improving Bitcoin are precisely those that increase the network scalability - batching, SegWit, Lightning Network, MimbleWimble, and others. Developers are trying to make the Bitcoin network have all three necessary qualities - decentralization, security and scalability. And as long as Bitcoin does not possess them sufficiently, then there can be no question of any mass acceptance .
Remember the series “Charmed” of the late 90s and the beginning of the zero, in which there were three witches and they needed the so-called Power of three to defeat a strong demon. So, something similar is needed and Bitcoin, if he wants to become a full-fledged alternative to the current monetary system.
If we compare the process of buying Bitcoin now and 5 years ago, then it has become much more convenient and simple. I can buy bitcoin using my bank card with a relatively low commission, paying with my national currency, and my bank will think that I am making a regular online purchase, and not doing some dubious business. The whole procedure takes a few minutes. The cryptocurrency purchased on the stock exchange is sent to my bitcoin wallet, access to which I can even have from my smartphone. In the future, I can conduct transactions at any time with the most convenient device for me. It would seem that there is no comfort problem, take it and use Bitcoin in everyday life, but not everything is so rosy.
The problem begins with the transaction. After specifying the recipient's address and commission for conducting the transaction (and it is good if the wallet prompted me the optimal commission size at the moment), we confirm the transaction with a digital signature and go into standby mode. Depending on network utilization and commission size, a transaction can take from several minutes to a couple of hours or even a day.
Considering that we live in a world where people whine that a webpage is loading for more than a second, the “modern person” would immediately start spitting or worry if the transaction takes more than a few minutes. The person in the subject understands that the nodes must check and propagate the transaction, then it enters the memory card, where it essentially competes with other transactions for the attention of the miner, after that it is included in the block and it is held. The average user is deeply ... no matter what happens there and how, he wants here and now and he is not particularly important reasons for the delay of the transaction. At the same time, the user always has the feeling that everyone should.
Another question is the average commission. Now it is less than $ 1, thanks to some of the above technologies, which are designed to improve scalability, as well as relatively low user activity. But if December 2017 reoccurs again, when people started to make transactions very actively, and the cost of Bitcoin flew to the Moon, the commission would be monstrously high. At the end of December, the average transaction fee reached $ 55. Now imagine what will happen if the above-mentioned economic collapse occurs and people massively run into the crypt?
Yes, the solution to the issue of scalability should save us from all these problems, but there is another important aspect. All the current convenience of the process of buying Bitcoin has a very big sacrifice. It is about the triangle “privacy, trust and security” in the context of bitcoin wallets and cryptocurrency exchanges.
My example of a convenient buying of Bitcoin is possible thanks to the usual centralized exchange and online wallet, which for the most part do not have anything from this triangle. Do you want privacy? Find a stock exchange or wallet on which you do not need to leave your data or install a complete node for yourself. Do you want to trust third parties? Validate your network, that is, install the full node. Do you want security? You can try using hardware wallets or somehow strengthen the protection of private keys. And, well, install the full node, just to not walk twice.
As you can see, this is not very convenient and an ordinary user is unlikely to download nearly 200 gigs of information to complete transactions. Only a person for whom privacy is more important than convenience will do it. Therefore, an ordinary user may not appreciate all the opportunities Bitcoin provides, simply because you need to do something else.
In general, people do not go en masse to bitcoin simply because the whole process of interaction with it is difficult for a modern or, what is to be cunning, lazy person. A bunch of new terms, a bunch of incomprehensible gestures to perform seemingly simple things.
And the truth is ... it's just great , because the relatively high entry threshold gives developers time to solve technical problems, for example, with the same scalability.
Some people, especially those for whom privacy and security are more important than convenience, call Bitcoin “good” technology. Almost a beacon that can lead us out of the gloomy tunnel of modern reality. Some crypto enthusiasts like to draw some utopian stories in which we will finally be free from the shackles of the existing system, and the monetary mechanism will be fair, as there will be no bias of individual participants in it. In short, everyone is equal, only unicorns are missing.
Yes, technically, technology is not bad, but this does not mean that the consequences of its use will also be good. This is a very one-sided view of things. Technology is a knife, and you cut a tomato for a salad, or you decide another person depends on you. Any utopia can turn into a dystopia if the one holding the knife has a different perception than you.
All this means that if the government begins to regulate cryptocurrencies, actively develop this idea, then the mass adoption of Bitcoin is also in question.We may find ourselves in the world of omnipresent centralized blockchains, where the authorities will have much more control and information about each person. A sort of scenario in the style of Orwell, which was partially presented by Weiss Ratings.
Bitcoin can have quite strong opponents in the form of national cryptocurrencies. This is not a team of developers who came to the ICO with a cool idea and broad functionality, but a whole state apparatus that has unconscious support of the people in the form of centralized thinking. In this case, Bitcoin still remains a niche product "for its", which is important privacy. But if it is more convenient, clearer, simpler and will not have problems with scalability, then high competition for the user is ensured.
Both. We are too accustomed to the convenience cult, which is being promoted now, and we are not ready to reorient ourselves to the new system, where it is necessary to act according to different rules. The concept of decentralization and the absence of a single point of failure, on which all the blame can be charged, is unusual for the average user.
Even with all the advantages, a modern person would prefer a more convenient, rather than a secure system, so until a decentralized network provides the same level of convenience as a centralized one, we cannot see mass adoption. Well, or it is necessary to change the consciousness of society, which will not be a very fast procedure, even in conditions of a strong crisis.
Of course, you can still talk about the massive adoption of Bitcoin under the guise of replacing gold as an intersubjective means of preserving value. Then the issue of scalability will no longer be so acute. Roughly speaking, Bitcoin lacks only faith and stability to replace gold. With respect to gold, the Lindy effect acts in people's minds (if something has been popular for several thousand years, then it is likely to be popular for several thousand more years), but this is not yet applicable to Bitcoin. Anyway, I think this is a question for a separate article.
It is important to understand one fact. We look at cryptocurrencies as contemporaries and do not know how successful the technology will be in the future. Electricity, cars, telephone, Internet - all these technologies were underestimated at the beginning of development. And perhaps now we are again condescending towards what can drastically change our life in one direction or another.
Money is dead, long live money!
In March 1973, the Bretton Woods system virtually ceased to exist, but the official transition to the Jamaica system did not occur until 1978. The gold standard was abolished and we entered the era of fiat money, which, according to Wikipedia, “is supported by the belief of people that they can exchange them for something valuable”. Thus, the current monetary system (officially) exists only 40 years old, but people are already so used to it that for many it is the only true one.
Modern economists mostly adhere to the existing economic theory either because of the lack of incentives for the development of new ideas, or because of the intolerance of central banks to dissent . Political economists mostly offer minor “improvements” as problems arise, for example, the policy of quantitative easing after the crisis of 2008–2009, which has increased the debt load of countries.
An ordinary person is becoming more and more immersed in a consumer society, and the convenience of using money is more important for him than the fundamental basis. Cash, cards, Paypal and other services - all this is used depending on what is most convenient at a certain moment. Many people do not care what money is provided for, because they can exchange them for goods that are valuable for them at any time, as a result, an illusory confidence in the current monetary system is formed.
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As a result, people's perception was so distorted that it is difficult for them to accept the fact that the entire monetary system in fact rests on faith alone. From this it becomes fun to hear phrases that “bitcoin is not secured by anything”. At the subconscious level, we already perceive fiat money as a constant given and we ourselves assign the right to manage money to the central bank. This is very similar to how the people perceived the royal power and the right of the monarch to govern.
When it comes to money, people have a very short memory.
Few people monitor their daily spending, because we pay for something several times a day. We barely notice moderate inflation only when prices for the goods we need “suddenly” become high. We almost forgot about the Italian lira, German marks, Spanish peseta, although they existed 16 years ago. All of them replaced the euro, which is used in everyday life for only 20 years, although it already creates the feeling that he has always been.
Even crisis situations are already an echo of the past. The 1990s were a time of devaluation - the British pound, the Russian ruble, the Italian lira and many other currencies were going through hard times. Not so long ago, the Turkish lira fell 22 years in a row by either 40% or 80% per year. Over the past 30 years, Argentina has defaulted three times and is approaching the fourth. After the 2008 crisis, most Eastern European countries devalued their national currencies one and a half times.
From the conventionally recent enough to recall the story in India. In 2016, Indian Prime Minister Narenda Modi spontaneously declared that all large denominations of 500 and 1000 rupees, which accounted for about 86% of the total money turnover, became invalid . It was assumed that this would help in the short term to overcome corruption and get people to pay taxes, because only 2% of citizens pay income tax .
But instead of solving problems, India faced national outrage, massive queues and absolute chaos in the banks, as citizens rushed to exchange their suddenly invalid money. Street vendors could not normally sell their goods, because 98% of payments are made in cash. The rich still continued to evade taxes and began to buy diamonds and jewelry to save their money. This is how one decision in the current monetary system can affect the lives of millions of people.
Less than a year later, the experiment was considered unsuccessful and 99% of the prohibited currencies returned to circulation. The Prime Minister wanted to transfer the country to cashless payments and digital payments in a short time, but the Indians were against such a sharp transition and the distrust of the state apparatus increased even more.
Despite all these examples, many people are still ardent fans of fiat currency and stubbornly fail to notice the whole story of perpetual depreciation and unexpected political decisions. Even the current crisis in Venezuela will be quickly forgotten, just like the jokes about the one hundred trillion Zimbabwean dollar bill.
People practically endure no conclusions from crisis situations and continue to live by inertia, only slightly transforming their reality. Most likely, the first argument is the question: “And what are the alternatives?”. At least diversification. Not only currency diversification, but also for all assets. Probably, few people bought gold before and after the crisis of 2008–2009, because it is not as convenient as currency exchange. Did you or your family have a financial safety cushion at that moment that you could rely on? And now she is?
Assume no. Its creation may seem difficult to someone, out of place and, of course, inconvenient at the moment. And we don’t like the inconvenient, then we translate this question into the category of “Unimportant”. Is it justified?
Oh marvelous centralized world
We are so closed in our world that we are surprised at the contrast between human values. After watching the film “The Man” by Jan Arthus-Bertrand, you begin to understand how different the perception of reality can be in people. Someone does not have arms or legs; someone is blind, serving a life sentence; one cannot fearlessly move along the street, believe in whom he pleases, choose with whom to communicate; someone lives in a cycle of violence, and someone in an economy where money turns into a meaningless piece of paper. All these people have different values, goals, desires and you are lucky if you are not faced with such. Therefore, how can a person with a completely different perception of reality tell another that he “truly” needs?
Daniel Jeffries, in his article on the main features of cryptocurrency, described why the attitude to centralized structures and fiat money depends on perception:
“Imagine that you live in Syria right now. Your centralized infrastructure is destroyed, no one can prove that you had money. You don't want war, but you can't do anything about it. Your home is no more, your friends and family are dead, your banks are being bombarded. You are an outcast, homeless, penniless and not in control of your life. Worse, nobody cares about you. The world has moved from open borders to building walls everywhere. You are not expected anywhere, you cannot remain where you are, and you are broken.
But what if your money was still there, written on the blockchain, waiting for you to install your deterministic wallet, enter the correct code phrase to restore it? How much easier would it be to start a new life? ”
Power holding and many wealthy people live in a “normal” centralized world, where most of the things work properly, and one of the main problems is the percentage of the loan. Many do not see the need to support technology that can be useful in such a situation, as they are sure that it will never happen to them. They basically see what is close to their perception and system: money laundering, tax evasion, financing of terrorism and so on. Therefore, the issue of cryptocurrency regulation for them is not a question of protecting the system from a possible collapse, but a question of protecting the system from habitual problems.
In order for an ordinary person from the “normal” centralized world to pay attention to cryptocurrencies, they should give him either financial gain or even greater convenience. Having found neither in this, this technology becomes practically meaningless for him.
A crisis situation makes a person change his perception
Therefore, it is not surprising that cryptocurrency was supported by the population in such countries as:
- Venezuela with its hyperinflation;
- Turkey and South Africa, which are faced with a new wave of devaluation;
- China, where there is a strong control over the movement of capital;
- India, due to distrust of the government after the story in 2016.
The inhabitants of these countries had objective reasons to lose faith in the current monetary system and go further beyond the wall, in the direction of cryptocurrency. Understandably, such a minority of people, the rest simply put up with the consequences, but this already suggests that cryptocurrency is viewed as an alternative.
Curiously, the first mention of the use of fiat money in Europe was also a crisis situation. During the Spanish siege of the Dutch city of Leiden in 1574, the residents of the besieged city had neither metal coins nor leather, which was sometimes used to replace metal money. Therefore, the townspeople decided to use the paper, from which they made a temporary replacement of metallic money.
After Leiden, unsecured money was tried to be introduced into Sweden and the USA, but they quickly depreciated to the value of the paper on which they were created. There was no faith that is now . Paper money, which was secured by certain assets, began to be introduced, but not all of them were successful. For example, after issuing the first paper money in Norway, people did not understand what it was and why they should use paper instead of precious metal.
For people who have long lived in an era of gold and silver, paper money will be an inexplicable wonder. How can plain paper be equivalent to a silver coin? Why is this “piece of paper” conditionally worth $ 10, and the other $ 2? Because it is written that way? For human perception was important some fundamental basis of money, and not the practicality of their use. The addiction and confidence in the new payment method was formed gradually until it turned into unconditional acceptance. Electronic money has passed the same way, and now cryptocurrencies can also pass.
Universal belief in revolution is already the beginning of a revolution.
Most of the changes in the monetary system were consolidated through the ruling stratum of the population, and the people adjusted to innovations. Fiat money, the use of gold and silver coins - all this appeared in an evolutionary way and became ubiquitous by the will of the authorities, not the people. The monetary system is constantly evolving into one that can offer a more convenient form of calculation and that can satisfy a growing economy.
The idea of cryptocurrency has not yet been consolidated and is on the contrary revolutionary, because the transformation began in the people, and the government adapts itself to the innovation. Therefore, it is not surprising that the revolutionary spirit and rhetoric are inherent in the cryptocurrency community. Some crypto enthusiasts are against state regulation, the introduction of rules and regulations for users, and this looks partly justified, since the system has failed several times.
All this leads to the fact that the current cryptocurrency has only two ways to mass adoption - evolutionary or revolutionary. Or, the authorities will recognize cryptocurrency as a new form of money, will develop this idea and contribute to the creation of a monetary system that is based on blockchain technology. Or there should be some economic collapse, which will finally disbelieve people in the reliability of the current system, and then the power will change. The only question that remains is: are the cryptocurrencies themselves ready for such changes?
Imagine what happened to what many revolutionary-minded representatives of the cryptocurrency community want - the fiat monetary system failed. The world saw a new economic crisis that is more devastating than the Great Depression of the 1930s, the oil crisis of 1973 and the crisis of 2008–2009. Many lose their jobs, banks and companies are closing, panic is everywhere, and there are queues in shops. People are trying to understand how it happened, who is to blame and what will happen next, they become very politicized, superstitious and fearful. The guarantor in the form of the state monetary system lost its credibility and for many people their faith in national paper money was completely lost. In order to somehow save your money, you, like millions of others, start buying gold, cryptocurrency, or trying to find some other alternatives. Yes, this is no longer comments on the forum and not prophetic articles, all in reality. Well, fun cleansing with a flame?
And now the question: what next? Will people learn to distribute money without a central authority? Accustomed to full control over your money? Will we jointly, through universal suffrage or competition, constantly form flexible rules in a dynamically developing system? And this is taking into account that each person has his own experience, knowledge and perception of justice? Will not this absolute democracy become a universal manifestation of the herd instinct in decision-making?
Yes, over time, you can get used to everything in the world and exclude such an outcome is not worth it, but it all looks too utopian. Although during times of change and crisis situations people tend to collectivism and self-organization, but can a centralized person quickly evolve into a decentralized person?
It is unlikely, because we always shift the responsibility for certain things to other people. This has already become an integral feature of human psychology, and the reason for this is our centralized worldview. For example, we solve many domestic problems through centralized structures. The state, individual institutions and personalities often act as a scapegoat and the culprit of all ecumenical problems. For many, the state or other manifestation of power is a necessary evil. Therefore, human power in one form or another will still remain, even in a world where social consensus is at the core.
The power of three
So we got directly to the cryptocurrency. Considering the technical condition of Bitcoin and other coins, they are unlikely to become a full-fledged replacement for Fiat. The problem comes down to the “holy Trinity” (decentralization, security and scalability), in which you can most often focus on two points out of three. In the current economic system, priority is given to security and scalability, and decentralization, although present to a certain extent, is not a matter of top priority.
Bitcoin also underpins security and decentralization. It is Bitcoin, not cryptocurrency, because most of the Altcoins are not really decentralized. Yes, their network can carry out thousands of operations per second, developers can quickly introduce innovations and change the blockchain in case of problems, all this is cool, but at the cost of decentralization.
Altcoins are not much different from Fiat, because they have a single point of failure in the form of the founder, the main group of developers, or even a company like Ripple. I understand that if this statement may seem controversial to someone, but Bitcoin does not have a single point of failure and, paraphrasing Jimmy Song , if a whole group of developers falls under the bus, the system will continue to develop normally.
Due to the similarity of many altcoins with centralized structures, they can more easily adapt to the current system, but apart from privacy, they offer little to change the status quo. The same Ripple does not deny itself anything, works directly with banks and conductors of financial transactions. That is, it looks like an ordinary IT company, but with a cryptocurrency solution. Because of this, the XRP token is rather a digitized personal product that can be used as a means of payment. If the Fed digitizes the US dollar, isn't it the same as the XRP?
Bitcoin, on the contrary, due to its distinctive feature, suffers from a long period of updates and low scalability. According to Jonas Shnelli, one of the leading developers of Bitcoin Core, a Bitcoin client has no such thing as a roadmap . Each developer is free to decide in which direction to move. However, the more developers are working on one thing, the sooner the release of the innovation will take place. This situation is now with the implementation of Schnorr signatures, which are also designed to improve scalability.
For the most part, the most discussed proposals for improving Bitcoin are precisely those that increase the network scalability - batching, SegWit, Lightning Network, MimbleWimble, and others. Developers are trying to make the Bitcoin network have all three necessary qualities - decentralization, security and scalability. And as long as Bitcoin does not possess them sufficiently, then there can be no question of any mass acceptance .
Remember the series “Charmed” of the late 90s and the beginning of the zero, in which there were three witches and they needed the so-called Power of three to defeat a strong demon. So, something similar is needed and Bitcoin, if he wants to become a full-fledged alternative to the current monetary system.
Convenience? No, I have not heard
If we compare the process of buying Bitcoin now and 5 years ago, then it has become much more convenient and simple. I can buy bitcoin using my bank card with a relatively low commission, paying with my national currency, and my bank will think that I am making a regular online purchase, and not doing some dubious business. The whole procedure takes a few minutes. The cryptocurrency purchased on the stock exchange is sent to my bitcoin wallet, access to which I can even have from my smartphone. In the future, I can conduct transactions at any time with the most convenient device for me. It would seem that there is no comfort problem, take it and use Bitcoin in everyday life, but not everything is so rosy.
The problem begins with the transaction. After specifying the recipient's address and commission for conducting the transaction (and it is good if the wallet prompted me the optimal commission size at the moment), we confirm the transaction with a digital signature and go into standby mode. Depending on network utilization and commission size, a transaction can take from several minutes to a couple of hours or even a day.
Considering that we live in a world where people whine that a webpage is loading for more than a second, the “modern person” would immediately start spitting or worry if the transaction takes more than a few minutes. The person in the subject understands that the nodes must check and propagate the transaction, then it enters the memory card, where it essentially competes with other transactions for the attention of the miner, after that it is included in the block and it is held. The average user is deeply ... no matter what happens there and how, he wants here and now and he is not particularly important reasons for the delay of the transaction. At the same time, the user always has the feeling that everyone should.
Another question is the average commission. Now it is less than $ 1, thanks to some of the above technologies, which are designed to improve scalability, as well as relatively low user activity. But if December 2017 reoccurs again, when people started to make transactions very actively, and the cost of Bitcoin flew to the Moon, the commission would be monstrously high. At the end of December, the average transaction fee reached $ 55. Now imagine what will happen if the above-mentioned economic collapse occurs and people massively run into the crypt?
Yes, the solution to the issue of scalability should save us from all these problems, but there is another important aspect. All the current convenience of the process of buying Bitcoin has a very big sacrifice. It is about the triangle “privacy, trust and security” in the context of bitcoin wallets and cryptocurrency exchanges.
My example of a convenient buying of Bitcoin is possible thanks to the usual centralized exchange and online wallet, which for the most part do not have anything from this triangle. Do you want privacy? Find a stock exchange or wallet on which you do not need to leave your data or install a complete node for yourself. Do you want to trust third parties? Validate your network, that is, install the full node. Do you want security? You can try using hardware wallets or somehow strengthen the protection of private keys. And, well, install the full node, just to not walk twice.
As you can see, this is not very convenient and an ordinary user is unlikely to download nearly 200 gigs of information to complete transactions. Only a person for whom privacy is more important than convenience will do it. Therefore, an ordinary user may not appreciate all the opportunities Bitcoin provides, simply because you need to do something else.
In general, people do not go en masse to bitcoin simply because the whole process of interaction with it is difficult for a modern or, what is to be cunning, lazy person. A bunch of new terms, a bunch of incomprehensible gestures to perform seemingly simple things.
And the truth is ... it's just great , because the relatively high entry threshold gives developers time to solve technical problems, for example, with the same scalability.
In the footsteps of Orwell
Some people, especially those for whom privacy and security are more important than convenience, call Bitcoin “good” technology. Almost a beacon that can lead us out of the gloomy tunnel of modern reality. Some crypto enthusiasts like to draw some utopian stories in which we will finally be free from the shackles of the existing system, and the monetary mechanism will be fair, as there will be no bias of individual participants in it. In short, everyone is equal, only unicorns are missing.
Yes, technically, technology is not bad, but this does not mean that the consequences of its use will also be good. This is a very one-sided view of things. Technology is a knife, and you cut a tomato for a salad, or you decide another person depends on you. Any utopia can turn into a dystopia if the one holding the knife has a different perception than you.
All this means that if the government begins to regulate cryptocurrencies, actively develop this idea, then the mass adoption of Bitcoin is also in question.We may find ourselves in the world of omnipresent centralized blockchains, where the authorities will have much more control and information about each person. A sort of scenario in the style of Orwell, which was partially presented by Weiss Ratings.
Bitcoin can have quite strong opponents in the form of national cryptocurrencies. This is not a team of developers who came to the ICO with a cool idea and broad functionality, but a whole state apparatus that has unconscious support of the people in the form of centralized thinking. In this case, Bitcoin still remains a niche product "for its", which is important privacy. But if it is more convenient, clearer, simpler and will not have problems with scalability, then high competition for the user is ensured.
So bitcoin is not ready for mass adoption or people?
Both. We are too accustomed to the convenience cult, which is being promoted now, and we are not ready to reorient ourselves to the new system, where it is necessary to act according to different rules. The concept of decentralization and the absence of a single point of failure, on which all the blame can be charged, is unusual for the average user.
Even with all the advantages, a modern person would prefer a more convenient, rather than a secure system, so until a decentralized network provides the same level of convenience as a centralized one, we cannot see mass adoption. Well, or it is necessary to change the consciousness of society, which will not be a very fast procedure, even in conditions of a strong crisis.
Of course, you can still talk about the massive adoption of Bitcoin under the guise of replacing gold as an intersubjective means of preserving value. Then the issue of scalability will no longer be so acute. Roughly speaking, Bitcoin lacks only faith and stability to replace gold. With respect to gold, the Lindy effect acts in people's minds (if something has been popular for several thousand years, then it is likely to be popular for several thousand more years), but this is not yet applicable to Bitcoin. Anyway, I think this is a question for a separate article.
It is important to understand one fact. We look at cryptocurrencies as contemporaries and do not know how successful the technology will be in the future. Electricity, cars, telephone, Internet - all these technologies were underestimated at the beginning of development. And perhaps now we are again condescending towards what can drastically change our life in one direction or another.
Source: https://habr.com/ru/post/444250/
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