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Bitcoin Adoption: The Double Edged Sword

I just want to get something out the way first before we get into the nitty gritty. I am all for Bitcoin and cryptocurrency adoption. I have been part of the community since 2012 and have been operating a Bitcoin business for almost 3 years.

Bitcoin adoption, great…Not.

On a regular basis people walk into our location to purchase or sell Bitcoin. We get clients from all walks of life. From very experienced cryptocurrency users to newcomers who have just heard about Bitcoin. A common theme from everyone when it comes to adoption is that it will be a good thing. On the contrary I don’t believe everyone has thought this completely through. Especially the cryptocurrency enthusiasts who I have spoken about adoption in length on hundreds of occasions.

Yea Bitcoin adoption is definitely a good thing in my opinion. However I am neither a Bitcoin or cryptocurrency maximalist. If anything I’m a maximalist in new technologies for the betterment of humanity, and evolution. Whether its space travel, quantum computing, AI, or technological advancements in medicine, I am a maximalist for technologies that can possibly advance the human race. Bitcoin or another cryptocurrency could be one, but the kicker is the way adoption will come about will hinder this completely.

The regular Joe Blow is not going to be the turning point for Bitcoin adoption.

I am a Bitcoin advocate but I can clearly state that although I may play a minor role in the adoption of Bitcoin. As a whole my role can be summed up to a tiny piece of the crust of a 100 mile pie. Adoption in the !st world will happen through the intervention of governments and financial institutions.

What does this mean?

This means that regulations will play a key role in the adoption of Bitcoin in the !st world. Countries such as the one I live in Canada, and our neighbors the U.S., will rely on government intervention for adoption. This is due to regulations and laws. Many people may think this is good myself included. However for the die hard crypto fanatics, it goes against the principles of Bitcoin.

Bitcoin is supposed to be permissionless.

Once regulations are clear which they are pretty close to being so, the permissionless factor is out the window.
When financial institutions become involved along with the government, does everyone really believe that we will have a permissionless virtual currency. If you read up on any countries AML(anti-money laundering laws), for the most part if you’re a 1st world country they are strict. Even in most 3rd world countries they are strict. Money laundering is a crime. The government wants to know what your spending your currency on and how much you have saved. They also want to track it. If financial institutions do integrate cryptocurrencies you will have to ask for permission, just like how it is now for Fiat currencies.

Anonymity is a dream

Another principle of Bitcoin is that at its core it’s suppose to be anonymous or close to it. This also goes against the AML of many countries. No country, government, or financial institution wants you to spend your savings anonymously and not necessariy because they want to look at your Netflix subscription. The regulators want to know if you are committing crimes with your funds and as I am not a Bitcoin maximalist I see this as normal. Adoption can happen in other forms but this is the route I see happening.

If you’re just in it for the money

Now if you bought Bitcoin to sit on years ago or recently and don’t care about anything else either than price movement, then adoption the way its going is more than likely a good thing. It will lead to Bitcoin being more accessible and more use cases will certainly arise. I have nothing against people like this. As an investor this is common sense. Buy low, sell high.
However as a Bitcoin enthusiast, Bitcoin will no longer be what its supposed to be.

Adoption doesn’t necessarily mean adoption

For the time being I forsee adoption going this route but if Bitcoin is no longer permissionless or anonymous what would be the point? Projects are launching all around the world. Entire nations are getting ready to launch their own cryptocurrency. If Bitcoin and other cryptocurrencies are adopted the way its going what is the difference between having a national virtual currency and Bitcoin?

The only thing I think of is the name Bitcoin is already well branded and was first to market. Also the fact many people are calling Bitcoin a store of value if it truly is then yes it would be different from a national virtual currency. Bitcoin has a finite supply and as of September 2020, over 3/4th of the entire supply has already been mined. Will it keep being a store of value if it loses some of its core principles? It quite possibly can but without some of the core Bitcoin features. Of course there are other features Bitcoin has that Fiat currencies don’t, however in actuality the use cases for these features are far from complete. Adoption may very well end Bitcoin in the long run. Yeah I said it. Don’t be angry, my entire business will also crumble if this happens.

The Rise of Privacy Coins

Privacy coins are on the rise. Crypto enthusiasts forsee this happening. In fact many people forsee Bitcoin losing its anonymity. These privacy oriented enthusiasts and also criminals will more than likely turn to a cryptocurrency that follows its core principles like Monero. Virtually untraceable. I am all for privacy. I don’t want people to know where I am, what i’m doing, and certainly what I’m purchasing whether its a cup of coffee or a new car. However I believe these currencies will be illegal in many countries and the possible repercussions for using such cryptocurrencies could be fines or jail time.

The Next Few Years

The next few years to come will play a vital role in how adoption takes place. There are talks of several countries that are almost ready to launch their virtual currencies. Banks may start issuing their own virtual currency in fact JP Morgan has already released the JPM coin built for quick global payments while reducing the costs assossiated. As I stated earlier regulations will make the permissionless factor disappear. For instance in Canada in June 2021 the new regulations come into play.

This includes what is called an “Exchange transaction ticket”. Firstly a license is necessary for conducting transactions involving the purchase and sale of virtual currencies. When over $1000 CAD worth of cryptocurrency is bought or sold the client will have to fill out a form. This form requires their I.D. their current employment, the cryptocucrrency address, the time, the date, and some more details. This regulation has already been passed but not yet enforced.

Regulations are great except it goes against the principles cryptocurrencies were built upon. I believe this is how adoption will take place with strict rules and regulations which are very much needed in the industry. Yet they will come with the caveat, taking away some of the features which has led to the massive cryptocurrency community growth up to this point.

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