In Mid August Brian Armstrong, CEO the world’s largest cryptocurrency exchange, Coinbase warned that mass adoption of cryptocurrencies is going to take much longer than expected. This is a possible harbinger of slowing growth in market capitalization in Bit
The Bitcoin price is currently over its psychological threshold of $6,000. This is a barrier which was crossed twice in 2018 after it’s massive rally in the winter of 2017. All told, the price has dropped 70 percent from its gains in December 2017, wiping out any remaining growth.
Buying Coffee with Crypto
Armstrong was interviewed at the Bloomberg Technology Summit in San Francisco where he stated that it would be “quite some time,” before one could purchase a cup of coffee at Starbucks with cryptocurrency. This comes after the coffee giants walked back reports of its partnership with Intercontinental Exchange and Microsoft on a program that would allow cryptocurrencies to be used at its locations.
It was assumed that the venture, Bakkt, would allow customers with crypto to grab a frappuccino with their digital currencies. However, a Starbucks spokesperson later clarified stated that the venture would not allow this. Clearly, this came as a blow to the dreams of early adopters who are hoping to capitalize on the currency of the future.
Waiting on Adoption and Use
Coinbase CEO Brian Armstrong decried the fact that only 10 percent of cryptocurrencies including the highly valuable Bitcoin is used in real life, games, or online purchases.
He went on to suggest that cryptocurrency adoption and utility is tantamount to the point that the internet was in 1994. This is a clear assertion that the industry could be in the middle of a dot-com bubble of its own unless 2018 was the rout.
Armstrong stated that because of the speed of technology, bubbles and corrections are creating a large disparity in people’s expectations. While real-world adoption is going up and there are still billions of people worldwide who could buy into Bitcoin, this process will take a long time. It also means that people who recently entered the market will likely not see the massive gains they are looking for.
A constant concern faced by Bitcoin enthusiasts is government regulations. While places like China, India, and the United States are attempting to create their legislative framework, some countries like Iran are banning it outright.
At the same time, some nations are seeing the cryptocurrency market as a hedge against geopolitical fluctuations. Most notably, Venezuela and Turkey have turned to crypto in order to maintain global value in the face of governmental malfeasance.
Armstrong praised this given that the proliferation of smartphone technology will increase in the world and economic uncertainty is a fact of life in a globalized business environment.
Coinbase has traded around $150 billion in cryptocurrencies in 2017. Investors, both new and old, see the company as a bellwether for the emerging space so it is no surprise that Armstrong is taking the measured approach to managing expectations of the crypto ecosystem in the coming year. According to Armstrong, new investors should be prepared for lean times ahead, but optimistic for a burgeoning market.