"We need to be having some harder conversations [about bitcoin​ and blockchain​]," said Abigail Johnson, chairwoman and CEO at Fidelity Investments. These "harder conversations" were at the crux of her address to attendees this morning at Coinbase, a bitcoin and blockchain conference held in New York City.

To a certain extent, Johnson's point about such conversations is true. Bitcoin burst into the public consciousness back in 2012. Five years later, it has yet to gain mainstream traction. Even as the digital currency reaches new highs, it is still relegated to the fringes of the existing financial services system. Blockchain, the underlying technology beneath bitcoin, is still in testing phase as far as banks are concerned. (See also: Yet Another Record High for Bitcoin.)

Johnson outlined four problems present in the digital currency ecosystem that are preventing widespread adoption of the technology.

First, unresolved problems related to the technology constitute the Technology problem. For example, bitcoin ledgers have been hacked, resulting in losses of wealth. According to Johnson, privacy could also become a serious stumbling block to widespread bitcoin adoption. (See also: North Korea May Be Responsible for Recent Spate of Bitcoin Attacks.) 

The second problem highlighted by Johnson in her address was the Policy problem. She pointed to the rapid pace of innovation in the blockchain ecosystem and said that it was "outpacing" regulators' ability to keep up with the technology. This might lead to a situation in which regulators end up without a "mental model" of how to understand or regulate the technology. "It will cause some growing pains," Johnson said. She counseled an "open dialog" with regulators to ensure that consumer interests are protected and blockchain reaches its true potential. (See also: What Bitcoin Regulations Look Like Around the World.)

The open nature of bitcoin and ethereum​ translates into a Control challenge, according to Johnson. "Companies that build products on these platforms don't have clarity about the future path they might take or how to influence developer communities," she explained. Even in private networks, which are popular in financial services institutions due to their emphasis on security, lack of clarity about control structures within a community can lead to problematic decision making and confusion. (See also: Is Ethereum More Important Than Bitcoin?)

The final problem outlined by Johnson was the Human problem. "We need to come up with use cases for this technology that drive clear benefits for individuals and institutions," she said. Earlier in her speech, she had referenced an experiment conducted by her team at Fidelity. They studied the local wallet (a secure online location where bitcoins are stored) experience for bitcoin users and provided them with a recovery phrase (used to recover a wallet's contents). Their subjects responded in three ways: applying existing mental models (such as using the phrase as a one-time activation code or treating it as a password recovery phrase), developing new models or exiting the system completely. Part of the reason for their response was the absence of enough use cases for digital currencies, Johnson explained. (See also: SEC Denies Winklevoss Bid to Launch Bitcoin ETFs in Surprise Upset.)

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