All of the writing seems to be on the wall.
Bitcoin now has PayPal integration and dedicated global banking to go along with its natty logo. Regulators are taking notice of it, and noted retailers are accepting it.
If you think bitcoin is mainstream, though, think again. According to an analysis earlier this year, there were only 1.2 million bitcoin addresses holding anything other than dust as of February.
Even its advocates admit that it has a long way to go. Curtis Fenimore’s attempt to promote bitcoin to the masses has stalled. Bitcoin Bigfoot, his grassroots effort to get posters and other materials promoting bitcoin out into the community, “hasn’t been all that active or relevant lately,” he admitted.
Fenimore raised all of the bitcoins for his public awareness effort when the price was over $700. Then, he spent the funds on Bitcoin Bigfoot after the price fell under $700. It was just the luck of the draw.
In the meantime, many people are still blissfully unaware of bitcoin. “We still have a very long way to go in absolute terms,” he suggested.
The perception problem may have more to do with depth than breadth. Bitcoin entrepreneur Erik Voorhees argued that around half the people he spoke to are aware of bitcoin, but only a small fraction understand it.
This is normal and expected, said Voorhees:
“Both the Internet and Paypal had a long period where people heard of it and sort of knew what it was, before they really tried it out.”
Conquering the learning curve
How will the understanding of bitcoin grow among the masses that have heard of it, but know little about it? We’re still in the speculation phase, where people hope to make a fast buck. This early, immature phase could work to the cryptocurrency’s advantage, said Voorhees.
Successive price bubbles create an effect called the ‘tide theory’. When prices spike, people wake up, smelling a potential money-making opportunity, and flock to bitcoin hoping for profit. That may be a short-term reaction, but it sparks a new wave of user adoption.
When the price slumps again, many of the people who arrived in that wave will slide away, but some will stay. Those remaining will have gained a deep understanding of bitcoin and its technology. With each successive bubble, the pool of adopters that continue to use the payment network increases.
Where’s the motivation?
What about those people who aren’t investors? Like, say, the significant proportion of Americans living paycheck to paycheck? The bitcoin community faces multiple challenges getting these people interested.
Disregarding those political and ideological arguments that are difficult to communicate to exhausted parents working three jobs, one challenge is the ‘why should I use it’ problem. Many people are still wedded to credit and debit cards, or simple cash, and don’t yet see the benefits of an alternative.
“There are lots of use cases for bitcoin, but nothing yet that has captured the imagination of the general public, there hasn’t really been the ‘killer app,'” admitted Voorhees.
Newly-appointed Bitcoin Foundation executive director Patrick Murck says that those applications are appearing.
Murck said:
“Blockchain-based products are starting to emerge that solve real problems for people, that will drive adoption and grow the pie for the whole bitcoin community.”
All of this assumes that the average Joe or Jane understands what the blockchain is, or how to use a wallet. That’s a work in progress, according to ‘bitcoin Jesus’ Roger Ver.
“Bitcoin wallets are tolerable for techies to use today, but easier and safer designs are needed to help drive mass adoption,” he said. “Companies like Blockchain, Mycelium, and Bread Wallet are hard at work on this.”
Bad press
Bitcoin’s road to mainstream adoption may also be hindered by some of the bad press it has received. Lots of people are still convinced that bitcoin went bankrupt back in February, mused Voorhees, arguing that the Mt Gox debacle was “a huge net negative” for bitcoin. The biggest problem was the reputational damage that it caused in the media, he said.
“Because of poor reporting by the media, many people conflate Mt Gox with bitcoin itself,” added Ver. “This is a huge problem that needs to be corrected.” Headlines like “Bitcoin goes bust” and “The end of bitcoin” are good examples of misguided and reputation-damaging press for the digital currency.
Others will focus on the scandal surrounding Silk Road, rather than on bitcoin’s benefits.
Silk Road may in the long run be good for bitcoin adoption, say commentators. Voorhees argued that it helped to bootstrap the bitcoin network’s commercial use in the early days. Fenimore is convinced that Ulbricht’s drug trafficking site helped to demonstrate bitcoin’s capabilities as a value transfer system – and that its subsequent takedown confirmed bitcoin’s legitimacy for many.
Public misconceptions of bitcoin won’t disappear overnight, even if mainstream media outlets correct them. Instead, Fenimore consigns the uninformed to the ‘late adopter’ category which will be led to bitcoin gradually, as the opportunities emerge. This group of people won’t adopt until they can be shown that doing so is significantly cheaper than being a non-adopter.
Promoting a decentralised concept
One of bitcoin’s biggest strengths is its grassroots support. This is also one of its weaknesses, though, because it lacks a coherent narrative, which makes it difficult to present a single, strong message in the same way that, say, PayPal’s founders did.
Voorhees concluded:
“Ultimately we just have to accept that bitcoin won’t get popular on the back of a slick corporate media campaign over five years. It will get popular person by person, in a messy, organic process.”
That doesn’t mean that the community can’t organise to help it on the way. What is the single, biggest thing that the bitcoin community can do to make the cryptocurrency mainstream? CoinDesk’s interviewees all had different ideas.
Murck argued that funding core development was crucial. Voorhees wanted more remittance providers with larger marketing budgets. Ver suggested integrating bitcoin more closely with the financial markets, while Fenimore said that “the biggest thing is the aggregate of all the small things”.
Is there one thing that you think will spur bitcoin to mainstream adoption? Let us know in the comments below.
Global network image via Shutterstock