Bitcoin has many advantages over traditional currencies: it is decentralised, limited, free from the will of governments, secure and involves little bureaucracy.
Many people believe that bitcoin will be disruptive for money, like email was disruptive for the post, or digital music and streaming were for CD stores. A complete revolution of finances.
But… If bitcoin has so many advantages, why is it not being used by more people? How could bitcoin fail?
On the one hand, there are thousands of cryptocurrencies in circulation, with a trillion-dollar market value [ source: https://arata.se/cmc ]. So the statistics of cryptocurrency usage really are impressive. Gradually, more and more people are putting a portion of their assets into bitcoin as a form of value storage.
However, the truth is that bitcoin has not yet become popular. Try paying at the corner shop with bitcoin. Ask to pay your rent in bitcoin. Ask if your dentist accepts bitcoin as payment. The answer will probably be no.
So the question is: is it worth betting on the future of bitcoin? Or is it destined to fail? To make smart decisions, we need to understand some reasons why bitcoin might fail.
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For now, bitcoin is still complicated, unpredictable and difficult to use.
Anyone who likes technology or economics will know the many advantages of bitcoin. A digital currency with a limited supply, without a central governing body, with clear rules. These are characteristics of sound money.
But if you are not a fan of technology, or you do not understand much about economics, bitcoin is still difficult to use, hard to understand and unpredictable in the long term. This is also true of the other crypto assets, which are all the other cryptocurrencies.
The fact that bitcoin can depreciate thirty percent in just one day puts many people off. Its volatility is high. But there are more elements preventing bitcoin from becoming popular as a means of exchange.
At the moment, who are the people who choose to face the technical difficulties of learning to use bitcoin? Many users are teenagers who like tech and highly motivated adults with free time.
But for most people, bitcoin is still a difficult technology to understand and use. This is not unique to bitcoin. Every technology is hard to use at first, until people get used to it and the developers improve it.
The first cars were very difficult to use. Many people did not see the advantage of trading a horse for a complicated machine. When the telephone was first created, it was quite difficult to call someone. You had to go through an operator who connected the lines and the audio quality was bad. Even the process of going online used to be much more complicated than it is today.
As long as it is easier to use a traditional bank and a state-owned currency, bitcoin will struggle to achieve mass popularisation. Banks and governments are not going to stand by and wait for bitcoin to become easier to use: they are creating new services, facilitating transactions and even creating state-owned digital currencies.
So, the first reason why bitcoin has not yet become popular in daily use, is because the technology is not yet easy enough for the average person.
And even those who can understand bitcoin also have a second reason for not using it: increased liability.
Bitcoin empowers people. This is both an advantage and a liability that scares a lot of people.
Bitcoin’s biggest advantage, decentralisation, is also a factor that puts many people off using cryptocurrencies.
The biggest advantage of bitcoin in comparison to traditional currencies is the fact that there is no central governing body. There is no government issuing currency and no bank asking you to fill out forms to move your money.
Bitcoin is a peer to peer network. This gives you the freedom to use your money as you please and it guarantees that the rules of the game will not change in any circumstances.
But choosing to use bitcoin also comes with huge responsibility. Since there is no bank, you are responsible for the security of your own money. You are your own bank.
If you write your password on a piece of paper or type it on an unprotected digital document that anyone can access, or if you lose the password, it is your responsibility.
It is impossible to call a help desk, there is no central point of contact for bitcoin support. You cannot sue bitcoin to recover lost money.
This type of responsibility scares many people and is another reason why bitcoin still has not become popular as a currency.
On top of all this, governments will crack down on the use of this technology.
The current owners of centralised power are not interested in the popularisation of bitcoin.
Money was an instrument created by people, for people. Over time, the state took possession of money. Issuing money is the government’s greatest power to control its population.
When bitcoin was invented, right after the 2008 financial crisis, the main idea was to give control over money back to the people. This is why cryptocurrencies are closely linked to the ideals of economic liberalism, which supports less state involvement in the economy.
Obviously, governments are not going to stand by and watch an alternative currency grow without taking any action. That is why many countries adopt laws and measures that make it harder to use cryptocurrencies.
Some countries even ban holding or trading bitcoin. Other countries prohibit the operation of exchanges, making it difficult to buy and sell crypto assets. Some banks prohibit their clients from sending payments to brokerages and even from investing in shares of companies that hold crypto assets.
All of this makes bitcoin expensive and difficult to use. Fear and uncertainty create incentives for people to continue using the currency they are used to. Governments will not be able to stop the network from working in their country, but the limitations are strong enough to drive many people away from bitcoin.
Governments are now creating their own official digital currencies as a way to continue exercising their monopoly of power over money.
The reasons why bitcoin fails today are not likely to last long. So those who adopt the technology early can reap great rewards.
This is the real reason why bitcoin has not become massively popular yet. The technology is still difficult to use, many people are scared of the responsibility of keeping their own money, and the government wants them to continue using the official currency.
It is likely that bitcoin technology will become easier to use over time, and people will get used to the idea of having more responsibility over their own money.
If bitcoin is adopted on a large scale, governments might have no choice but to accept cryptocurrencies as part of the financial system alongside traditional currencies.
When it comes to that, those who adopted bitcoin in the early days will have a big advantage. We are still in the early days.
There is still time to study, understand this new currency and be able to make conscious and well-informed decisions.
Bitcoin has impressive usage statistics, but it is still quite controversial. Ordinary people are not using bitcoin yet. The technology is still hard to use, liability is scary, and the government is not cooperative.
But soon, all this may change. Technology should become easier, the idea of being responsible for your own money should become more acceptable and governments should eventually accept that private and state currencies will have to coexist.
Will it really happen? Only by studying will you be able to make a well-informed choice about the possible risks and rewards. This is why I would like to invite you to watch a special lesson from the Diamond Hands training at this link