Bitcoin, the giant in the world of cryptocurrency, continues to defy all expectations of an early demise and rises higher and higher in value and use. Its adoption as everyday money, however, remains negligent among the common people, almost eight years after the digital currency first emerged.
While the title of “ the first cryptocurrency” is no further up for grabs, the title of “digital cash” still remains unclaimed, ready to be seized by another up-and-coming digital money. In order to become the common medium of exchange for large swaths of the world, a cryptocurrency first must fulfill several crucial requirements.
Easy and inexpensive transactions
Forget about cryptocurrency for a second. Right now, regular people use either cash or card for day-to-day transactions.
Cash does not have any transaction costs but requires one to be physically present and have adequate change, and card transactions are relatively instant, though final confirmations often happen the next day, although fees are relatively high it is sufficient to disincentivize very small transactions. Any cryptocurrency wanting to create inroads with the common people needs to beat this with faster and cheaper transactions.
Bitcoin already offers this advantage, though the margin by which it does is growing slimmer by the day, and even now it may not be enough to entice people to abandon traditional financial means. Any cash or card replacement needs to be better by way of a large enough margin to warrant a change.
The exact same goes for fees. Cash does not have any fees. Other money transfer tools, like cards and bank accounts, are able to charge a fee because they are able to function across great distances with greater efficiency. Cryptocurrency has those same advantages over cash, and as such can be expected to have an associated transaction fee. However, that fee must be significantly lower in order to entice your average consumer away from banking systems. Large companies can afford to make major payment changes in order to save a few cents per transaction because of scale, but regular people cannot.
Improvements to Bitcoin’s basic model
Bitcoin retains a massive lead in adoption in front of other cryptocurrencies. In comparison to traditional financial systems, Bitcoin provides enough benefits and improvements to warrant a switch. If a currency wants to beat Bitcoin as the new money, it has to be objectively better. Faster or more inexpensive transactions, more anonymity, a better governance structure, and other features are needed to set another coin apart to justify its use and adoption. If a cryptocurrency does similar things as Bitcoin in the exact same way, its odds of overpowering since the digital money for the future will be extremely slim.
A streamlined Bitcoin substitution mechanism
Right now, Bitcoin maintains a massive lead in adoption over every other cryptocurrency. That lead was earned on the promise and hype, not of Bitcoin alone, but of cryptocurrency and of the Blockchain technology itself.
Attempting to best the great front-runner of digital currency from scratch, and without a truly staggering level of difference between the two, simply won't happen. The only way to compete with Bitcoin, as previously mentioned, is to provide at least as much utility, and a large chunk of Bitcoin's utility is its adoption lead. What another cryptocurrency needs, then, is an easy and efficient way to be used in Bitcoin's place such as an automatic exchange built into the wallet.
An easy fiat currency conversion system
Like it or not, the world still currently runs on government-issued fiat currency. Living entirely off of cryptocurrency, without any method of conversion into fiat, it is extremely difficult at the present time, and not a viable option for most people. The average person will need an easy way to buy and offload a cryptocurrency for it to be a practical option for them. Most cryptocurrencies are only easily accessible through first acquiring Bitcoin. In order to become dominant and widely accessible, that crippling reliance on Bitcoin needs to end.
An aggressive adoption campaign targeted at the common people
Finally, in order to entice the world at large, the digital currency needs to presented in a way that resonates with most people. While some technical users will care about hash rates, cryptographic keys, smart contracts, and ring signatures, the common folk will not. They need to be reached with the language of cheaper fees, faster access to funds, more security, less paperwork, etc. The only way anyone will know why cryptocurrency makes sense for them is for someone to tell them why. In order to achieve that, a successful marketing campaign is needed.
The cryptocurrency world, while new, is wildly diverse. However, in terms of a tool for everyday use in financial transactions, Bitcoin has almost exclusive reign. In order to dethrone the king of digital cash, any competitor has to bring their A-game.