Crypto and blockchain should mainly look and function like the banks they plan to disrupt for a broader adoption rate as Forbes highlights three key functionalities any consumer looks for in a financial institution.
Blockchain technology was set out to disrupt and transform the established financial institutions that rely on a large number of intermediaries for carrying out a variety of processes. This left consumers with little to no control over their own financial assets.
Time-consuming payment settlements, expensive intermediaries fees, and an endless number of approvals are precisely the reasons why crypto and blockchain came into existence a decade ago. However, despite an original vision, the concept is still in its elementary stage and yet to see a substantial adoption rate.
Crypto and blockchain popularity rising but still inadequate
That said, developments are being made in this regard. Last week, the Acting Comptroller of the Office of the Comptroller of the Currency requested public feedback on how crypto and banks can work together to achieve a common goal – an enhanced consumer experience.
A recent survey also indicated that over 36 percent of institutional investors from Europe and the US own crypto in some form, and around 80 percent of them find it an extremely appealing form of investment. This suggests that the cryptocurrencies may have made rapid inroads into the investment scene when Bitcoin was in its prime in 2017. However, the vision behind designing Bitcoin goes far beyond.
Today, crypto and blockchain, albeit being revolutionary technologies, lack adoption because they missed a critical point – an easy user interface. And according to Forbes, one way to ensure that it happens is to replicate these very institutions, at the primary level, to bring about change. Trends such as Facebook Libra and Quorum indicate that the rearrangement is well underway.
First, resemble and then disrupt
Among the three critical points, the first one revolves around creating and nurturing a robust ecosystem of retailers, investors, merchants, and individuals who have confidence and trust in the system.
Without an assurance of some kind of insurance to protect the ones involved, it wouldn’t be possible to convince more people and institutions to get on board. So crypto and blockchain need to replicate the security and stability of the fiat currency system for broader adoption.
The second crucial point is to facilitate easy conversion of crypto to fiat and vice versa, and that’s a feature that will bring in more retailers and merchants on board. Even though a cryptocurrency owner has crypto assets as his or her most preferred mode of payment, there are still a large number of organizations that choose not to deal in crypto.
And to make them get on board with the idea, crypto and blockchain must offer the flexibility traditional banks do, which is an easy conversion from one currency to another.
Third and perhaps the most essential feature to replicate is the transfer of funds on a peer to peer basis. Today, leading payment services providers like PayPal or Venmo offer a real-time transmission of funds to individuals as well as institutions. Crypto and blockchain can achieve mainstream acceptance if they reproduce this functionality with enhancements.
In the end, it is essential to realize that crypto and blockchain envision an alternative financial system that addresses the weak spots effectively. They have tremendous potential; however, they lack the interoperability that makes it compatible with existing systems and drives people to use it.
For that to happen, it might need to have a specific look and feel of the banking system to bring about disruption. And that might not necessarily be a bad thing.