Credit: Shutterstock photoBy Bradley Zastrow, Global Head of Business Development, Dash Core
One of the most commonly cited use cases for cryptocurrency today is as an alternative form of payment — payments that are faster, cheaper and more secure than what the legacy banking system provides. The act of paying is the product of a currency and a payment method, and the reason for the cryptocurrency industry’s interest in developing economies is because their payments are broken on some fundamental level, due to factors such as hyperinflation.
If your currency is broken, then payments are broken as well; you can’t safely store or transact with a currency that nobody wants because it consistently loses enormous amounts of value. When that happens, the economic impacts are immediately felt, as we’re seeing today in Venezuela, Argentina, and Turkey. People need a better way to pay and get paid because the status quo is no longer working. In Venezuela, people need to carry a backpack full of cash to pay for a coffee and merchants can’t afford the FX impact of waiting for credit card purchases to settle. This creates the need for a solution that cryptocurrencies can provide.
Even though there is a clear need, it’s not enough to just build it and assume they will come; simply air dropping coins doesn’t do enough to jump start an economy. Innovation has to be adopted by individuals and businesses, through regular social communication channels, over a period of time. This occurs across five stages:
- Knowledge of the technology
- Persuasion to investigate
- Making the decision to adopt
- Trying out the technology
- Confirming the continual use
The key factor is the speed in which these stages occur, and the support required to satisfy the user, as different levels of adopters have different requirements for adopting that technology. Additionally, the information that’s required in making that decision will need to be communicated differently and efficiently, as it moves from a more homogenous group with shared goals and ideologies, to more heterogeneous groups with more mainstream participants who may not speak the same language. The way to do this is to make adoption as easy as possible — start with the things people already know, and introduce new concepts in a safe manner.
To begin looking at cryptocurrency adoption, we need to examine the foundation, and at the most basic level, internet access is a fundamental requirement before using any cryptocurrency. The way most people access the internet today is with their mobile phone, particularly in developing countries. In addition to having the foundation of internet access, there are three final core components that makes a currency useful as an ecosystem:
- Being able to get an account (store)
- Being able to get the currency
- Being able to use that currency
This creates the conditions for a positive feedback loop where people can earn (or purchase) cryptocurrency and can securely store it until such a time that they need to spend it. If each of these components are addressed successfully, the usefulness of that currency increases.
As just one example of how these observations are useful in expanding the adoption of cryptocurrency in the developing world, Dash recently announced plans to provide cryptocurrency-integrated smartphones to countries across Latin America. In partnership with Kriptomobile, several Android smartphone models are being distributed, with a primary test case in Venezuela. Mobile phones were selected as an integration channel because they are again, becoming the primary means in which people access the internet, which is the fundamental prerequisite for using cryptocurrency. Importantly, mobile phones are also a device in which people are already comfortable in using and managing their finances. The goal is to make it easy for the user to investigate, try out, and hopefully confirm the continual use of Dash by providing the necessary components and experience to attract and keep new users. This is achieved by providing the three core components to make a currency useful as a complete ecosystem:
- A way to get an account - through the preinstallation of the Dash wallet
- A way to get Dash - through the preinstallation of Uphold, but additionally with some Dash in the form of a paper wallet included with the phone. This also provides the benefit of introducing the user to the experience of scanning a QR code.
- A way to transact in Dash - Not only can the user receive payment through their Dash wallet and Uphold accounts, but preinstallation of Bitrefill also allows for additional ecommerce options, such as prepaid mobile phone recharge options.
Its potential is there to realise, but there are several steps that must occur before wider mainstream adoption. By providing a new fully integrated cryptocurrency smartphone to Latin Americans, the hypothesis is that user adoption will increase by providing new users with the right experience on a device they already know and use. With Venezuela specifically, there are more than 1,000 vendors that currently accept Dash around the country, a live help and support desk for Dash users through Dash Help Me, as well as about $1 million invested in Venezuela by the Dash Network. It will be a costly and time-intensive process, but the creation of a fully-functioning crypto ecosystem is fast becoming a reality.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
