Most innovations in the recent past follow the ‘gradually, then suddenly’ trend. This is where the adoption of innovation—for instance, the internet—happens gradually until it’s about 8-10%. Once it reaches the 10% mark, the adoption rate skyrockets.
The innovation of the internet followed this rule between 1990 to 2000. In the 1990s, only a few key institutions like universities, government agencies, and a few large businesses had adopted the internet. However, by the year 2000, the use of the internet had grown to such an extent that most organizations already had a website.
Following this phenomenon, cryptocurrency’s use is expected to skyrocket once it reaches its 10% mark. However, it’s worth noting that the acceptance of cryptocurrency is quite impressive even now. Cryptocurrency has been growing at a groundbreaking speed. According to CBNC, the value of crypto hit an all-time high of USD$2 trillion for the first time in April 2021. This value has since shot up to USD$3 trillion in less than a year in March 2022. Investors decided to buy XRP with paybis, ADA, BNB and ETH in droves during the last bull run.
So, what is causing this surge in cryptocurrency adoption? Peter Janssen, a certified hedge fund manager, has comprehensively discussed some of the reasons behind this acceleration. By the end of the article, you’ll also learn why you should join the trend and invest in crypto technologies with companies like FirstBlock Capital, to mention but a few.
3 Reasons Behind The Accelerated Cryptocurrency Adoption
Here are some of the reasons cryptocurrency has been widely accepted in the market and is projected to perform even better:
Cryptocurrency Operates In A Decentralized System
Cryptocurrencies operate on two systems: a decentralized peer-to-peer system for currencies like Bitcoin and a centralized system like the one used by Ripple.
Of the two, the decentralized operation of cryptocurrency has contributed more significantly to its widespread adoption. A decentralized system is where cryptocurrency operates based on the trust of a network of users. By shifting the power to make decisions and control the system to the users, this system removes the middle person who traditionally acts as the security measure for transitions.
How can you be guaranteed security? Well, in a decentralized system, all the users have the same copy of transactions published in a public ledger. As such, if one of the users is engaged in questionable activities in any way, the other users can easily tell. And if the majority reject the questionable user, they are forced out. This is an efficient way to avoid fraud and corruption since you can’t buy your stay after being found out.
Secondly, Peter Janssen emphasizes that it’s usually very easy to hack into a client’s personal account. Such accounts are usually run under a centralized system. However, for you to hack a decentralized system, you’ll need to take ownership of about 50% of the coins. This is very difficult, making cryptocurrency investments more secure than other investments that operate based on a centralized system. This security feature has led to more and more people adopting cryptocurrency in the market.
Another thing that makes the decentralized system attractive is that it reduces reliance on specific players, hence eliminating possible weak points. When a system is centralized, it depends on a central power to deliver certain services. Therefore, when this central power doesn’t deliver the promised services, it may compromise the entire system. However, decentralized cryptocurrency’s efficiency and functionality don’t depend on a single person.
Cryptocurrency Offers Faster Transfers
One of the downsides of the banking system is that it often takes longer to transfer money, especially for international wire transfers. If you have tried to send money using the banking system, you may have noticed that how fast your recipient gets the money depends on two factors:
- The amount of money being transferred;
- The type of transfer.
If the amount of money being sent is huge, then the process of wiring the money is longer and more tedious. This is because the bank has to ensure all security protocols are followed. Similarly, if you’re wiring money internationally, it’ll always take more time to wire the funds due to the additional security protocols. Additionally, depending on your service provider, it may take days for the money to reflect in your recipient’s account.
Cryptocurrency has capitalized on this drawback, offering a faster way to make money transfers. It takes between 10 minutes to one hour for a successful bitcoin transfer. That’s regardless of the type of transfer—local or international—and the amount. However, note that the speed of a crypto transfer depends on how busy the network is. If many people are trying to access the cryptosystem all at once, the transfer may take longer than the mentioned time frame.
The Prospect Of Cryptocurrency As A Hedge
Although crypto was first designed to be a currency that facilitates these transactions, this digital currency is gradually leaning more toward being used as an investment than a trade tool. There has been a heated debate on the viability of crypto, especially using bitcoins as a hedge.
People who believe crypto is a hedge or will soon be a hedge are basing their argument on many facts. To start, the value of cryptocurrency has been on an upward trajectory. As of 2021, bitcoin hit an all-time high of USD$69,000. Additionally, bitcoin is scarce, and it’s bound to be limited in availability since there will only be 21 million bitcoins in the world. This will help push the market rule that is used to make assets such as good gold hedges.
On the other side of the coin, you have to learn about why cryptocurrency won’t make a good hedge. One is due to its high volatility, which makes its ability to maintain its value over time questionable. Second, the value of crypto isn’t only pegged on its scarcity. There are other factors to consider, such as the availability of whale accounts whose decision to buy or sell in bulk may inform the value of crypto.
Those who see potential in crypto being a hedge are buying into this technology, which has significantly contributed to the acceleration of cryptocurrency adoption.
The journey to the adoption of cryptocurrency has been gradual, just like any other technological innovation. However, this digital currency is putting up a show as one of the best performing inventions in history with a current value of USD $3trillion.
According to Peter Janssen, although there are several reasons cryptocurrency has been adopted faster, the three discussed above are the main contributing factors. This article can also serve as a resource for anyone looking to decide if they should invest in crypto or not. The article lets you in on what you may not know about digital currency and some benefits of investing in it.