Cryptocurrencies are becoming increasingly popular, but what does that mean in terms of mainstream acceptance?
Put in pretty basic terms, blockchain and cryptocurrencies are digital networks. And like any network, in order to be truly successful, they need to scale.
Not only do they need to scale to achieve their full potential in terms of impact and overall value, but they need to scale to become sustainable and less vulnerable to security issues (things like 51% attacks and other network weak spots).
So really, in order to achieve the full vision of decentralized, digitally-native, and efficient means of conducting business and moving data, cryptocurrencies need to move past the novelty phase and achieve some level of mainstream acceptance.
Sure, I bet most people would agree with that. The issue arises when you start to talk about mainstream. What is that exactly? How is it quantified? And how will you know when cryptocurrencies have moved from the fringe and more towards the middle?
Indicators that blockchain and cryptocurrencies are going mainstream
For me, there is no hard cutoff, easily defined data point, or market cap that aligns with general public acceptance. Instead, I think mainstream crypto is one of those things that “you know it when you see it.”
Nevertheless, I think there are a few indicators that point to wider acceptance of cryptocurrencies. A couple of months ago, there was a piece about how the retail financial service, Fidelity Investments, would allow account holders to integrate their Coinbase information into their accounts.
What that means practically is that Bitcoin, Ethereum, and Litecoin could sit along traditional retirement accounts. What it might be taken to mean more symbolically is that digital assets are a legitimate way to financially prepare for the future.
Even though holding digital assets on an exchange cuts against the acknowledged best practice, the point is that the partnership can be viewed as a major threshold for crypto enthusiasts. And likely the beginning of a larger acceptance of crypto by the retail financial sector.
Another benchmark is the increased inertia of groups such as the Ethereum Enterprise Alliance (EEA) — a consortium of established businesses that are teaming up to support and study how the ethereum blockchain can be used and integrated into existing businesses to make them more efficient and effective.
The EEA is not composed solely of fringe tech, or emerging crypto companies. Instead, there are some long-established businesses and corporations (like JP Morgan, Microsoft, MasterCard, etc.) looking to blockchain to solve a wide array of problems, from logistics and data management to IP and payment systems.
The list could go on because now it seems like these partnerships between established organizations and new crypto projects are being announced almost weekly (WhopperCoin anyone?)
But the point is, digital assets are going through a maturation process and people and groups from all sectors of the economy are starting to take notice.
Regulation and the future of fintech
Regulations will also be a huge slice of the mainstream acceptance puzzle. I have a feeling that future state-defined economies will largely become divided by how heavy-handed they are with digital asset regulation.
So far, some governments are actively looking for fintech innovation and experimenting with how blockchain and cryptocurrencies can be integrated into existing state-run operations. In other places, like the U.S. fintech regulation, especially around cryptocurrencies has been slower, with officials frequently citing policy and security concerns.
I’ll leave things with this great quote from a Bloomberg piece a couple of days. The piece was about how central banks around the world are starting to pay attention to cryptocurrencies.
“Central banks cannot afford to treat cyber currencies as toys to play with in a sand box,” said Andrew Sheng, chief adviser to the China Banking Regulatory Commission and Distinguished Fellow of the Asia Global Institute, University of Hong Kong. “It is time to realize that they are the real barbarians at the gate.”