Bitcoin and Ethereum have accomplished their goal of creating a democratic and secure means of achieving peer-to-peer interactions. Undeniably, Bitcoin is ideal for transferring funds. Ethereum adds a unique spin onto this transfer system: smart contracts enforce specific parameters or criteria coded into them to enable peer-to-peer transactions. These idealistic properties and ideas have brought peer-to-peer transactions to the masses in their pure form. However, this type of system in its actual form has a few barriers to mass adoption.
Currently, associated fees are the first roadblock. Let us consider an average North American who can afford to live comfortably. A $10, $20, or $100 transaction fee is inconsequential when occasionally incurred. The problem begins with consumers below the poverty line, even in North America, let alone the rest of the underdeveloped world. To those, such fees are enormously high and may prevent them from eating or paying for their phone to perform the expensive transaction. The speed at which a transaction completes is also critical. Accustomed to almost immediate means of communications and transactions, a 10-minute delay or more for a simple transaction is impractical. Taking a taxi driver (Uber or other) rushed to drive to his next fare, for example, will unlikely accept waiting for a blockchain transaction to complete when cash or a credit card is immediate.
Compounded to the previous costs and efficiency barriers is the usability factor. Although some have adopted the Blockchain technology, most people have not mastered its use, not to mention the safety requirements of a private key (12 to 24 words in newer wallets).
Even the fear of losing access to the wallet can play a significant part. Imagine forgetting a private key or password, inhibiting access to digital funds without availed help to recuperate it! How can such a system be entirely trusted when, in case of a credit/debit card loss, all it takes is going to the nearest bank branch and showing an I.D. to receive a new card and have access to the funds therein?
Last but certainly not least is its value. Definitely, the volatility of its value contributes to these uncomfortable unknowns. What if the value of the asset held in a wallet suddenly crashes? Although the value may fluctuate up or down, the downside is devastating to most users who may not be speculators nor afford its fall. Unfortunately, this volatility is rampant in the crypto world, unexpectedly rising for enormous gains or decreasing as suddenly for significant losses. It simply renders it impractical for grocery shopping, for example, because of its unknown value from one moment to the next. The apparent price fluctuation of the cryptocurrency world is due to price discovery, likely combined with an attempt by some active players to reach their specified price goals or “pump and dump” manipulations by dubious actors. Certainly, these manipulations are easier to accomplish because of the reduced number of players in the digital asset space. Given the aforementioned, any average user must apply caution about the type of asset purchased and why the asset was purchased. These overall unknown factors impede most people and businesses from accepting current forms of digital assets.
In addition to the above, in smaller transactions, such as a taxi fare, the cost vs. payment ratio is simply unrealistic, especially when the fees are higher than the payment. These higher fees revolve around other technical concerns, namely, scaling. In a few words, it means that an insufficient number of transactions can be rendered in a one-second time frame, whilst banks, credit cards, and others can execute hundreds of thousands of transactions per second. Because Blockchain enables only a few transactions per second, people increase the bid of those transactions so that their transactions can complete more rapidly. Unfortunately, spending more money than others to ensure a quicker transaction approval excludes those without enough funds to do so, thus creating an unwelcome higher risk for businesses. Adding to this process, the rather cumbersome, user-unfriendly methods required to interact with a blockchain result in insurmountable entry barriers and mass adoption for everyday transactions. In conclusion, even if the crypto world is a vanguard innovation, it is unreasonable to expect average consumers, including businesses, to adopt it unless these barriers are addressed.