Crypto Funding Surpasses $100bn – Does Mass Adoption Defeat Its Purpose?

At the end of 2022, the collapse of FTX appeared to be the biggest crisis facing cryptocurrency. The fact that the third largest and one of the most trusted crypto exchanges could fall apart amid the criminal behavior of one of the biggest names in the business had a strong rippling effect. 

That high-profile collapse, which was not the first in the cryptocurrency world, fed into the widespread idea that there was something fundamentally fraudulent or untrustworthy about cryptocurrency. 

Yet a few months later, cryptocurrency has bounced back yet again. This month, total crypto funding since 2014 passed the $100bn mark. In 2024, the biggest problem facing cryptocurrency is not instability but what the effect of mass adoption will be on this sector. 

The rise of cryptocurrency

Despite constant predictions of its collapse, cryptocurrency continues to grow. It has been adopted across many industries. Some retailers in certain sectors are accepting the better-known coins. Sweepstakescasino.net is a good example of an innovative online gaming review site that discusses the online sweepstake casinos that accept cryptocurrency deposits and withdrawals. 

In fact, to an extent, some of the problems associated with cryptocurrency over the last few years are linked more to rapid adoption by people who are focused on things that are not central to the cryptocurrency concept. This is a well-known phenomenon in market economies, in which the promise of the new leads to people buying in, driving up prices artificially until something gives. 

For instance, cryptocurrency as an investment is not central to the concept and takes much of the focus away from the fundamentals. It allows people who are not fully on board with the principles of cryptocurrency to get involved with crypto, but it tends to take up a lot of the attention and focus of both the public and the media and does not help to communicate the principles of crypto. 

Crypto compromises

There are some obvious potential problems that can occur when cryptocurrency is adopted en mass. Perhaps the most significant are the demands that new users may put on crypto, including the creation of easier-to-use on-ramps to crypto and the desire for crypto laws and regulations enacted and overseen by centralized authorities and regulators. 

Decentralization is at the heart of crypto, so bringing it under the control of central regulators, where it will be treated as just another financial instrument or currency, is a fundamental challenge to the principles that underpin its creation. 

Equally, a desire to make it easier for new crypto users to access and use crypto, while understandable, risks partially dismantling another of the main planks of crypto: the high level of security provided by digital bearer instruments that cannot easily be hacked. 

Perhaps the best example of this is the extent to which cryptocurrency speculators are prepared to store their crypto holdings in centralized exchanges. While this undoubtedly makes for easier transactions and administration for those new to crypto, it poses a fundamental challenge to the principle of decentralization and leaves people exposed to headline-making FTX-style events, which, strictly speaking, should not be possible with properly decentralized cryptocurrency. 

In favor of mass adoption

Despite these concerns, there are cryptocurrency experts who argue that mass adoption is not just inevitable but that it could potentially make crypto stronger and eventually ensure that the cryptocurrency principles of privacy and decentralization are enshrined globally. 

One of the biggest arguments for the desirability of mass adoption is that it is actually scale that will give decentralized elements more power. For example, the largest cryptocurrency, Bitcoin, is extremely difficult to attack or undermine, whether through government action or malicious activity, because Bitcoin miners are dispersed around the world. Smaller crypto networks, however, will prove much easier for governments or other agencies to dismantle, should they wish. 

Mass adoption will also force cryptocurrency advocates to be more effective at communicating the importance of the core principles of crypto. There has been a tendency among crypto enthusiasts to assume that the things they value: privacy, decentralization, and resistance to censorship, are viewed with equal enthusiasm by the wider population, which may not always be the case. 

As mass adoption becomes reality, crypto enthusiasts will be faced with the urgent need to persuade new crypto users of the importance of these principles, which might be easier when the mass of the global population is at least familiar with using some form of cryptocurrency in their daily lives. 

Conclusion

Technically, mass adoption does not automatically defeat the purpose of cryptocurrency, but unthinking mass adoption would be a problem. If the cryptocurrency concept is changed to fit what a mass audience would find easier to understand, then mass adoption would certainly defeat its purpose. However, if mass adoption occurs alongside a widening understanding and embracing of the principles that lie at the heart of cryptocurrency, then it could yet have the transformative effect on humanity that its most positive advocates still hope can be realized.