Adoption is the only metric that matters in the battle for payment supremacy

Without mass adoption the network will remain largely unused and will fail to realize its grand destiny

By Daniel Lipshitz, CEO, GAP600

*This article was first published on CoinGeek on 11 March 2019.

As you may have read in a previous blog post, we passionately support cryptocurrency, with Bitcoin at the forefront. Above all else, crypto’s network effect offers the world a path to greater economic freedom and, as such, the opportunity to advance global prosperity. It is truly a wonderful, paradigm-shifting development.

Unfortunately, without mass adoption, the network will remain largely unused and will, therefore, fail to realize its grand destiny. It’s similar to holding a winning lottery ticket but never cashing it in, or operating a cargo ship that always runs at just 2% capacity. Without usage and adoption, the potential to extract the full economic value falls short. We’ve been distracted from this reality amid the hash war and hard fork melee and the prevailing bear market.

Picking a winner

While industry debate rages on, with everyone waiting for a clear market leader to emerge, it’s worth mentioning that the technical attributes and characteristics of the various cryptocurrencies merely enables them to be considered as potential denationalized, non-inflationary money systems.

Technical advantages can be helpful but are not the defining characteristics that lead to a network effect of widespread usage and, as such, adoption.

As we’ve seen many times before, the best technology doesn’t always win out. According to research by Rahul Kapoor and Ron Adner from Wharton Business School, when we talk about new technologies replacing existing ones, the more relevant factor is the ecosystem of the emergent and incumbent technologies.

Their research focuses on emergent technology risks and the capacity to innovate with the incumbent technology. The researchers define these factors as the ultimate determinants of mass adoption.

Path to victory

The major question, of course, is how do we achieve this?

How can crypto win, hands down, against the entrenched value proposition of fiat currencies to finally deliver its powerful promise of economic freedom and the resultant prosperity for all?

How can we develop the ecosystem required to drive mainstream crypto adoption?

Many of the critical technical characteristics and capabilities that create the opportunity to succeed already exist within certain cryptocurrency ecosystems, particularly the technological capital that currently supports the mining infrastructure. These attributes include:

• Massive scalability to drive global use
• Superior UX
• Professional, stable development
• A thoroughly tested technology base that creates trust, security and a stable environment for new services to grow and flourish

With these capabilities in place, driving mass adoption becomes a factor of highlighting instances where crypto already wins hand down when compared to the incumbent fiat. By building on these superior use cases, the opportunity exists to incentivize the market and align the forces needed to build out the necessary ecosystem that brings about mass adoption.

Crypto showcase

In this regard, non-custodial, public blockchain database services, and applications built on top of the blockchain would be the ideal places to start. You can read more about the value of non-custodial services here, but the essential added value they offer is the simplicity of managing money on the internet.

Non-custodial services cut through burdensome regulatory requirements like KYC AML. This can have a profound impact on the financial services sector, with trickle-down benefits realized by customers as well. More specifically, financial intermediaries would spend less time on administration and compliance, focusing instead on value-adding activities and engagements that improve the customer experience. A reduced compliance burden would also lower pass-through costs to the consumer.

Within the non-custodial cryptocurrency payment processing space, services such as Money Button from Yours.org already solve the flow rigidity issues inherent in peer-to-peer (P2P) payments and are revolutionizing the payment paradigm.

The simple ease of use, the capacity to scale and trade unhindered by current custodial regulations is part of the value proposition of a P2P system – a value proposition increasingly resonating with merchants around the world. And by making these payment options available at more points of purchase globally, adoption will continue to accelerate.

As cryptocurrency is adopted as an exchange medium, we will advance towards its true potential

Why be passionate about Bitcoin? (…whichever flavour you choose)

It’s very simple; it offers a path to greater economic freedom, which leads to prosperity

By Daniel Lipshitz, CEO, GAP600

Money is a means of exchange, all other characteristics flow from this primary attribute. It is a critical and ubiquitous part of our world, providing the means to access goods and services in our daily existence and enabling trade, which underpins our economic lives. The emergence of free, high quality money is a foundational move towards economic freedom.

No more government monopoly on the production of money

The  concept of private money is not new and is well founded in economic research. It has been long  professed by great economists including proponents of Austrian Economics, such as 1974 Memorial Prize for economic science laureate Friedrich Hayek.

Hayek’s ideas about the benefits and advantages of denationalised money are based on sound, rich economic theory and research, which suggests that broader adoption would be advantageous to the world, as it can contribute to economic freedom.

Essentially, Hayek believed that no government is politically and intellectually capable of evaluating the amount of money needed for economic development. Thus, if a society concentrates economic power in the state, it risks losing its political and intellectual freedoms.  Hayek was fully aware that governments, like all monopolies, would not relinquish control easily. A quote often attributed to him testifies: “I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can’t stop.”

The issue with centralisation

The issue with government management of money is that it is predicated on the belief that one person, or a small group of people can know enough to make centralised decisions. Economies are extremely complex, and the collection of aggregated data in order to assign resources by centralised authority leads to sub optimum results. By having an absolute monopoly on money production through interest rates and deficits, governments and central banks control a means of central planning that greatly reduces economic freedom.

Hayek proposed that the market is wiser than us all. Free market pricing is therefore based on the principle that individuals, acting in their own interest, is an optimum way to manage resources, as opposed to central planning where no one entity is capable of absorbing enough knowledge to do so efficiently.

Economic Freedom

Economic freedom can be summarised as to how freely an economy is left to individual decentralised activity  as opposed to centralised control of allocation of resources. The research on the benefits of economic freedom is vast – free market economies are more prosperous, more progressive, and grow faster and more sustainably. Quality of life in free market economies is also greater, with average incomes 7.1 times higher than in the least free quartile. Extreme poverty is also non-existent in the freest countries, which equates to better life expectancies and overall health.