In its short lifespan, bitcoin has mostly been plagued by an identity crisis of sorts.
When it was launched, the cryptocurrency led the charge in disrupting traditional finance systems and fiat currencies. Almost a decade later, its disruption pitch seems to have soured. Uptake for its use as a medium for daily transaction has been slow. Instead, the phenomenal upswing in its price last year drew speculators to the cryptocurrency ecosystem. Bitcoin, the original crypto, is increasingly being referred to as a store of value.
Now, a leading proponent for cryptocurrencies has declared that it might be a while before digital currencies find mass acceptance.
“It will be quite some time before you can cross the street and buy coffee at Starbucks with crypto,” said Brian Armstrong, chief executive officer at Coinbase, North America’s largest cryptocurrency exchange, during a conversation with Bloomberg. “The financial system in the U.S. works well for most consumers,” he said, adding that there’s a higher pain point in other areas. Armstrong’s statements are important since Coinbase is a leading player in cryptocurrencies. The company, which is based in San Francisco, has announced a slew of new products aimed at institutional investors and has ambitions to become the Google of the cryptocurrency ecosystem.
The Problems Of Cryptocurrencies As Medium For Daily Transaction
Over the years, several retailers have announced their support for bitcoin for purchases. But the adoption of cryptocurrencies as a medium for daily transaction has been hindered as much by the absence of regulation as by technical problems in their network. The surge in bitcoin prices skyrocketed transaction activity related to trading and clogged bitcoin’s network during the end of last year and earlier this year. The average confirmation time for a transaction increased. This does not bode well for use of cryptocurrencies as media for daily transaction since it means significant delays for transaction confirmations. On the other hand, fiat currencies have developed infrastructure and systems, such as credit card systems, that allow for instant confirmation of a sale or purchase. (See also: Will Rising Transaction Fees Bring Down Bitcoin Prices?)
Governments and notable bankers around the world have also added to the bear case for cryptocurrencies by consistently criticizing bitcoin. For example, JPMorgan Chase Inc. (JPM) CEO Jamie Dimon labeled bitcoin “a fraud.” (See also: JPM Calls Bitcoin "A Fraud", Its Investors "Stupid"). Legendary investor Warren Buffett has referred to bitcoin as “rat poison squared.” In his interview with Bloomberg, Armstrong said that Dimon and Buffett were wrong. “If you go back six years, nine out of 10 people were crypto skeptics,” he said. The development of use cases in mainstream economy has changed those statistics, however. “It’s becoming harder and harder to find bitcoin skeptics now.”
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