Though it is increasingly acknowledged by major business, investors and governments that bitcoin has the power to enable potentially world-changing financial innovations, fundamental issues are still holding back adoption.
One of the most prominent, around the world, is the lack of consumer understanding of the subject. For all its development, it remains difficult to explain to the average person just how bitcoin technology can impact their lives – today.
This begs the question: in its current form, is bitcoin, both the technology and the wider industry, evolved enough yet to solve real problems for the mass market?
The answer, according to experts in the industry, is not yet, though scores of entrepreneurs and startups are working toward this goal, use case by use. Vinny Lingham, CEO of mobile gift card provider Gyft, for example, enables bitcoin to be spent on gift cards – a mainstream use for the bitcoin currency.
Even so, Lingham believes many of the strongest use cases for bitcoin have yet to be developed:
“I think there are a multitude of use cases for bitcoin that are going to be very regionally specific. The beauty of this technology is that it’s not a one-size-fits-all technology.”
Bitcoin in the US
Bitcoin awareness in the US is growing, with the latest polls showing that more than 50% of consumers have heard about bitcoin. Still, the majority – 65% – said they are unlikely to buy the currency.
This statistic doesn’t bode well for US startups, most of which are focused on making buying and using bitcoin easier, not applying the technology to more specific use cases. This problem is further compounded by the competition the industry faces in the broader mobile payments space.
For example, Apple recently launched Apple Pay as part of its unveiling of the long-awaited iPhone 6. Though many industry observers are confident in bitcoin’s open community in the long run, in the short term, enabling mobile payments through more familiar credit card accounts could challenge bitcoin.
“I’m not sold on bitcoin as a currency per se in the US just yet, but it may become easier for consumers to use over time with some cost benefits.”
With Apple Pay, there’s some compelling benefits, as well. For instance, banks, and not merchants, are being charged fees for using the platform, though it remains to be seen whether this will reduce overall costs like bitcoin conceivably could.
Competitive mobile payment platforms are a good thing, and hopefully bitcoin stands to benefit from this in the US market. For one, it could mean the recently announced partnership between Coinbase and PayPal subsidiary Braintree will need to produce an even stronger end product that makes the case that consumers can use bitcoin everyday.
“I’m not seeing mass market adoption, but perhaps [things like the] PayPal integration will change that,” Lingham added.
Paul Puey, founder of bitcoin wallet Airbitz, was critical of Apple Pay because it, like many of Apple’s other products, is built on a closed platform.
In the long term, he argued, this could give bitcoin an edge, as its open platform could appeal to innovators who will build more compelling use cases for the technology.
Bitcoin around the world
People in more established financial hubs like the US or the UK see the long-term promise of bitcoin and have, to date, treated it more like an investment or a tool capable of cutting costs associated with payment.
Outside of these nations, however, many in the bitcoin and wider payments industry believe there is opportunity for the technology to empower financial independence with new products that tackle problems in ways the industry hasn’t yet conceived.
The two most often cited reasons that support this assertion are the power and ubiquity of mobile phone technology and the inflation problems of many countries worldwide.
Still, while bitcoin could ultimately solve real problems in this area, there are more immediate use cases for bitcoin in emerging markets.
Brian Gamido, whose company Palarin is focused squarely on the Philippines-based bitcoin market, believes that payments and remittance could be bitcoin’s most compelling use cases.
“One of the major global use cases for bitcoin is the ability to send low-cost, near real-time cross-border remittances. According to the World Bank, it costs 5–8% to send money from the US to the Philippines.”
In the end
If there’s steadfast belief in the community that the problems bitcoin can solve will be refined by the industry itself, it isn’t for a lack of bravado.
This has been fueled by tens of millions of dollars of investment in many different sectors of the bitcoin economy – many of which are working to figure out this issue of converting traditional money into a spendable digital format.
But, today, bitcoin arguably has few compelling arguments for consumers who aren’t early adopters.
Andy Beal, an attorney with Crowley Strategy and advisor for several bitcoin startups, said the burgeoning bitcoin industry should focus on slowly evolving its platform toward expanding this audience:
“First, it can continue to innovate and evolve at a rapid pace, particularly the consumer facing layers; keep pushing the ball down the hill. Second, it can continue to refine the narrative – mainstream adoption is as much about marketing as it is about functionality.”
The takeaway for entrepreneurs is that having that mindset, and focusing on a particular problem that bitcoin can solve, may be the best way to get a bitcoin company off the ground.
Still, Lingham, like many in the industry, believe these use cases are forthcoming.
“Some people will make it a currency, others will create the financial internet and even more will use it in yet to be thought of ways.”
Puzzle image via Shutterstock