What to Expect in a Mainstream Crypto Economy

Back in 2009, an anonymous person released the genesis block of Blockchain and launched Bitcoin- a pioneer decentralized currency. From its value next to zero in 2009, Bitcoin’s worth has surged to a staggering $73,500 while the total valuation of the crypto economy stands at $1.3 trillion. 

Initially considered as a niche, digital currency limited to computer geeks, today cryptocurrencies and decentralized finance (DeFi) have emerged as a strong alternative to traditional finance systems across the globe. 

Today, governments are actively investing in cryptocurrencies and blockchain technology. Multi-billion valued companies have emerged for trading and there are millions of investors and crypto enthusiasts fixated on the phenomenon that seems to be growing in popularity every day. 

Crypto’s journey from an obscure peer-to-peer transfer system to mainstream acceptance has been fuelled by the evolution of blockchain technology and the modification of security measures to ensure safe transactions. 

In this article, we will discuss whether crypto will become mainstream and penetrate households affecting all age groups and what are the reasons behind its exponential growth and adoption.

How Cryptocurrencies Got Mainstream Acceptance?

Each day, cryptocurrencies are gaining more widespread acceptance. Its relevance is no longer limited to crypto-related platforms as we have seen recently tech and finance giants like Microsoft and PayPal using cryptocurrencies in their services. This penetration by the crypto industry gave them access to a much larger base of customers to trade and invest in crypto. 

The online gambling industry is also one of the pioneers in adopting cryptocurrency, with the first casinos accepting Bitcoin back in 2012. The adoption of cryptocurrencies has since enabled the growth of the billion-dollar crypto gambling industry, including sports betting and instant withdrawal bitcoin casinos.

Several countries including the US, the UK, and European Union countries have regulated the use of cryptocurrencies. Countries like El Salvador have made Bitcoin a legal tender, while the Bahamas, India, and Japan have launched their own central bank digital currencies (CBDCs). Moreover,130 countries are exploring developing and launching their CBDCs to compete with cryptocurrencies. 

Additionally, the use of blockchain technology is expanding beyond decentralized finance (DeFi) services, providing solutions in medical, farming, logistics, management, and other sectors. Despite concerns over market volatility and regulatory concerns, cryptocurrencies are becoming increasingly mainstream as countries are now actively making new laws to regulate the sector.

What Are The Factors That Contributed To Crypto Becoming Mainstream?

Large Scale Investment

In the venture capital sector, crypto has turned out to be one of the fastest-growing markets In March and April 2024, the crypto venture capital funding reached $1.09 Billion and $1.02 Billion respectively. 

Just in 2024, the crypto market witnessed several groundbreaking investments including $1.7 billion to blockchain infrastructure firms, followed closely by decentralized finance protocols at $626 million, another $225 million funding to ‘Monad’, and a $47 million investment in ‘Securitize’.

Institutional Interest

Several large financial institutions like banks and publicly traded companies are investing and offering crypto products, lending credibility to the asset class. The institutional enthusiasm has attracted more investors and legitimized cryptocurrencies.

Growing Use Cases

Cryptocurrencies are being used for various purposes beyond just peer-to-peer transactions. Their use cases have expanded into areas like online shopping, online gambling, cross-border payments, decentralized finance, and as a safeguard against inflation. This diversification has contributed to their increased adoption.

Technological Advancements

The progress in technology such as advancements in scalability and user-friendly interfaces has enhanced the accessibility and efficiency of cryptocurrencies. This has played a role in boosting their acceptance among the public. 

For example, platforms like Skrill have significantly contributed to the advancement of cryptocurrencies. Skrill has been offering crypto trading and wallet services with popular e-commerce platforms and crypto’s widespread use in crypto casinos has helped bridge the gap between traditional finance and cryptocurrencies.

Help to Underbanked

Cryptocurrencies have the potential to provide financial services to individuals worldwide who do not have access to traditional banks. For instance, crypto wallets and mobile payment solutions in areas with limited access to banking infrastructure have contributed to their adoption, as they provide greater financial inclusion.

Market Adoption and Integration

The growing acceptance of cryptocurrencies by both businesses and consumers, along with their integration into financial systems, can drive demand and reduce market volatility, ultimately fostering broader adoption. 

As per a report by Security.org, consumer adoption of cryptocurrencies rose from 30% in 2023 to 40% in 2024. This surge in adoption and integration improves liquidity levels, further driving the mainstream acceptance of cryptocurrencies.

What are the Challenges Preventing Mainstream Adoption of Crypto?

Several key factors currently prevent the full mainstream adoption of cryptocurrencies:

Regulatory Uncertainty

The regulatory environment and legal framework of cryptocurrencies can significantly vary from country to country. While some jurisdictions have clear regulations in place, others are more cautious, even restrictive. This lack of uniform global regulation acts as a barrier to the mainstream adoption of cryptocurrencies worldwide. 

Price Volatility

The price volatility of cryptocurrencies can prevent their use as a medium of exchange or store value. Cryptocurrency prices fluctuate significantly over short periods, making them a speculative and high-risk investment.

Scalability Issues

Popular cryptocurrencies like Ethereum and Bitcoin face scalability issues, which lead to slower transaction speeds and higher fees during high periods of usage. Litecoin and Dogecoin transaction speeds are much faster. While scaling issues can prevent popular cryptocurrencies from mainstream adoption, there are scaling solutions like layer-2 solutions and proof-of-stake consensus mechanisms that could change scalability issues.

Limited Understanding and Education

For widespread adoption to be successful, cryptocurrencies need to become more user-friendly and more accessible to individuals who are not tech-savvy. The lack of education about the risks and benefits of cryptocurrencies by the general public impedes active engagement and adoption.

Resistance from Traditional Finance: Traditional financial institutions view cryptocurrencies as a disruptive threat to their established and traditional business models. For instance, in 2018, U.S. banks JPMorgan, CitiGroup, and Chase restricted or banned cryptocurrency purchases using their banking services or credit cards. This was considered an attempt to limit the exposure of traditional financial institutions to the risks associated with cryptocurrencies.

What is the Future of the Mainstream Crypto Market?

If cryptocurrencies were fully mainstream on a global scale, the future of finance, economics, and society would look significantly different. There are several radical changes one can expect if crypto becomes mainstream.

Financial Systems Transformation

Traditional fiat currencies could be replaced with cryptocurrencies issued by central banks (CBDCs) or private cryptocurrencies such as Bitcoin and Ethereum. The prominence and roles of traditional banking systems and financial institutions would potentially diminish as decentralized finance (DeFi) platforms created on blockchain technology allow peer-to-peer transactions, lending, and other financial services without intermediaries. 

Additionally, cross-border transactions and remittances could be instant, compared to traditional systems, more cost-effective, and exceptionally convenient, leading to improved financial inclusion for underbanked populations worldwide.

Technological Advancements

Current blockchain networks are experiencing challenges with scalability that can be resolved by implementing technological advancements such as sharding, new consensus mechanisms, or incorporating layer-2 solutions. 

Additionally, quantum computing could impact the security and sustainability of existing cryptocurrencies. Quantum computing uses complex calculations much faster than traditional computing models that could break cryptography. The reality of this threat requires cryptocurrencies to constantly adapt and evolve.

Societal Changes

Growing financial privacy and anonymity can empower individuals; however, it also raises concerns about illicit activities and the need for regulatory oversight and trust. The concept of trust could shift from centralized authorities to decentralized, transparent blockchain networks, potentially impacting governance models and social structures. 

The widespread adoption of cryptocurrencies might pose a threat to the authority and control of traditional financial institutions and governments over financial systems.

Economic Impact

As cryptocurrencies become more widely accepted and have greater liquidity, price fluctuations, and volatility could decrease, making them more stable stores of value and mediums of exchange. 

The integration of blockchain technology, smart contracts, and decentralized apps could lead to the development of newer economic models and business prospects, ultimately promoting growth and innovation. 

This would require governments to adapt tax policies and regulations to account for the decentralized nature of cryptocurrencies and their potential impact or influence on monetary policies.

Final Thoughts

While achieving mainstream adoption of cryptocurrencies is possible and it would bring significant benefits, but will also present challenges. As cryptocurrencies continue to evolve, their role in the financial system worldwide is likely to become increasingly prominent. 

This would also require regulatory authorities to provide clear and comprehensive guidelines on how cryptocurrencies should be classified and regulated. This would include clarifying whether cryptocurrencies are securities, commodities, currencies, or assets for tax purposes. 

Once the global regulatory and legal framework has been established, the mainstream adoption of cryptocurrencies could be a positive development globally.

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