There is one question that we all desperately want to know, what is the future of crypto-currency and will it survive? We all love them, their potential and their profit but is it enough to make them a viable form of payment? Cointelegraph decided to take a look into the future to see whether crypto-currencies are the future of money.
Models of success
Crypto-evangelists are fond of saying that crypto-currencies will do to banking what the internet did to information. Virtual currencies are indeed a natural extension of internet trends. Using this metaphor it is fair to ask what made the internet so successful and what do crypto-currencies share that with the internet? This can act as a guide to predict the success or failure of virtual money.
Another guide to the future of crypto-currencies are trends in technology take-up and acceptance? What rules govern whether a new technology is broadly accepted or ends up in the metaphorical trashcan of failed proto-types and good ideas that never came good?
A third guide to take with us into the future of crypto-currencies is brand research. What characteristics does a brand have in order to be successful?
The internet model
Plug in a few search strings into Google to see what research has been done on these three searches and the results are scary. If you can believe the results – no one has really researched why the internet has become so successful – one might say that it is self evident, the internet is so useful and convenient, why do we need to research it? Because the internet has become such a critical part of our lives it makes sense to understand and to break down what exactly makes the internet so useful so that we can use it as a model for new technologies that can potentially revolutionize our lives.
The internet is a forum for the exchange of information. It is not free – establishing communication networks costs substantial sums of money but its usefulness and accessibility means that everyone can use it (and it has now reached the point that everyone has to use it) and so the costs of these networks are spread over a large proportion of the population and this makes the costs acceptable given the value of information within the network.
So what are the key elements of the internet? One of the key elements of the internet is its speed: communication can now be almost instantaneous, and even in the old-days an email exchange could take minutes as opposed to weeks using traditional mail. This means information can be found quickly and conveniently – there is no need to spend a day visiting a library or specialist consultants to get information necessary to make decisions, you can sit at home and do the job a lot faster, giving you more time to do the things you want, or be more productive.
As a natural result of this speed of communication there is access to goods and services and furthermore it opens up an international marketplace. If I want to buy a new table I am no longer limited to what the local timber supplier imports, I can order direct from overseas. If I want a rare book, I can find it within a couple of minutes online and order it, whereas before the internet I may have had to travel overseas and spent months looking in old bookshops trying to find it. These are significant benefits and they are possible because a large number of people use the internet. It has acceptance and accessibility. The other important element of the internet is that it is decentralised and perceived to be relatively.
Comparing Crypto-currencies with the internet
Comparing crypto-currencies with the internet may be disingenuous, after all, we wouldn’t have them if it weren’t for the internet. However, with the growth of internet commerce, it should hardly be surprising if an internet currency appeared. Crypto-currencies provide for almost instantaneous transactions, they are anonymous and they are decentralised. These are three critical elements which they share with the internet. However, they do not have broad acceptance – at the moment it is much easier for the general public to pay for a product online with a credit card than to establish a Bitcoin wallet and pay with Bitcoin, after all, everyone accepts credit cards, even if there is a cost attached, the convenience overrides the cost. The general public will use what is most convenient, while business will use what guarantees greatest profit – while crypto-currencies remain unstable and not widely accepted, the majority of businesses will stick with more traditional payment methods, adopting a wait a see approach. The advantages of using crypto-currencies in the western world currently do not exceed the convenience and certainties provided by regular banking services.
In countries that have less stable economies and currencies that depend largely on remittances the advantages of crypto-currencies are significantly greater. While evangelists have talked about the advantages of crypto-currencies in places like Africa, it may be that countries located in South America, which already have developed infrastructure but are facing economic difficulties will be the first to really adopt crypto-currencies and by the popularity of the currency in Mexico, Argentina and Brazil, this looks like it is already beginning to happen.
What successful brands do
Scouring the internet for information on the factors that determine technological take-up and adoption, you could be forgiven for thinking that there is no research on what makes for a successful tech product. Although, there are a number of sociological models such as technology adoption lifecycle, normalization process theory and Diffusion of innovations, there seem to be no guidelines and no rules for what elements technology needs to have to ensure success. It seems that our tech-savvy society blunders from one accidental invention to another without any real guide as to what will work. Incredible though this seems, given some of the weird inventions that have been made and tested in the market place, this might actually be the case, so let’s move onto a more reliable predictor for success. Let’s see what successful technology companies do and what makes their products world leaders.
There seems little doubt about Apple’s place as a tech leader producing successful hi-tech consumer devices. So what is that Apple does, and how do crypto-currencies match the Apple model? Tim Bajarin (techland.time.com/author/tpbajarin/) from Time lists six things that make Apple a world leader.
- Designed by users: The people creating Apple devices are creating devices that they want themselves, this ensures functionality
- Ease of use: The user experience can’t get much easier than an iPad or an iPhone.
- KISS: when it comes to the end user, Apple has kept its consumer products superbly simple. Any Apple product is simple and elegant, using them is a breeze and this means that anyone can use them – and their sleek design makes people want to use them.
- Positive experience: Apple offers great customer service and in-store experiences.
- Improvements only: Apple only makes products that it can improve and only produce a single model. This simplifies buyer choice, does not dilute the brand and means that customer service knows everything to know about the model on sale.
- Focused on the future: Apple stays two years ahead of the field.
Crypto-currencies compared with Apple
- Designed by users: Crypto-currencies really are designed and maintained by the users who see a need and are prepared to put their time, resources and the wallets where their mouths are. This means crypto-currencies are relevant to real world problems and those problems can be resolved by the users and ensures functionality. So far crypto-currencies are going well.
- Ease of use: Once you are initiated, crypto-currencies are a breeze and make transfers much easier, however, the hurdle of making the step into the unknown, deciding to use the currency and downloading software creates a number of psychological barriers which means that only people who are sold on it, are going to accept. This is where metaphor is important so that crypto-currencies are seen as a natural extension of something we already have as opposed to a revolutionary system of exchange that will overthrow the world as we know it.
- KISS: enthusiasts love their crypto-currencies but again, the system does not look that simple to new users.
- Positive experience: The crypto-community offers some great events and supports some great causes, but is it enough? The anonymity of the currency has led to several PR disasters recently and this is bound to make some more reluctant to take up virtual currencies while others who have been burnt, may have decided playing with crypto-currency is a little too close to playing with fire. This issues are liable to remain at the forefront until greater transparency is achieved and a larger number of good news stories break into the mainstream media.
- Improvements only and a single choice: There are dozens of crypto-currencies, just as there are dozens if not hundreds of smartphones you can choose from, but if you turn to Apple, there is only ever one. At the moment, Bitcoin is Apple, it has the best name recognition, it has the best value and there are more articles written about it than any other currency. As long as one virtual currency towers above the rest, it makes it easy for adopters to make a choice.
- Focused on the future: While Apple is at least two years ahead of the competition, crypto-currencies are half a generation ahead of their time, placing them probably where their ought to be to catch the next generation, and putting them in the same playing field that Amazon.com has been working in over the past 20 years.
Looking into the crystal ball
If you compare crypto-currencies to Amazon, Amazon also has its eyes clearly focused on the future. This means that the future of crypto-currency goes beyond the short lifespans of rip-off and run companies looking for a quick buck. It is important to note that PayPal when first established underwent similar regulatory problems and was even banned in several territories of the United States. But when it comes to comparing the rise of crypto-currencies with the adoption of the internet and Apple’s success it is important to note that the technology adoption curve is similar. Apple, which was a superior system to Microsoft’s DOS and Windows never achieved overwhelming success until their changed their business model and started following the principles stated above. The internet, did not take off while it consisted largely of typing prompt commands to get responses – it wasn’t until internet speeds increased and internet browsers were created that the internet gained popularity.
A similar pattern will doubtless emerge with crypto-currencies. When the advantages outweigh using the current bank transfer system and when it becomes easy to adopt the currency, people will start doing so. In the meantime as long as crypto-currencies can survive and evolve there can be little doubt that their long term prospects are looking promising.