This is the third part of the thought leadership article series “Are National Currencies Headed to The Blockchain?” by Blockchain expert, Coinify Co-Founder and CEO Mark Højgaard.
In Part 2, I examined the roles of the main factors driving the adoption of blockchain based national currencies. I will now conclude with the key steps that need to be taken to achieve the widespread adoption of blockchain based national currencies.
The key steps towards blockchain based national currencies adoption
Despite the interest in blockchain based national currencies from banks and governments, the transition to go completely digital will not happen overnight. The entire financial ecosystem needs to be prepared for the digital currency uptake.
According to Moore a “chasm” exists between early adopters and the early majority, two distinct groups within a disruptive technology adoption lifecycle. These two groups have very different expectations towards the technology. For successful adoption, we need to focus on one group of users at a time, using each group as a springboard to the next group. The transition from early adopters to early majority, in this case adoption of blockchain based national currencies, remains one of the biggest challenges, (see the figure below).
This is where we are right now – having the most difficult step ahead of us. How do we urge adoption among the early majority?
The early majority needs to witness efforts from the key stakeholders in the financial ecosystem (such as legislators, governments, banks and alternative payment providers) to create conditions for the mainstream blockchain adoption. When the entire ecosystem works together towards achieving this goal, the chasm to early majority will be crossed.
Figure 2: Adoption cycle of the blockchain technology.
Source: Geoffrey A. Moore “Crossing the Chasm.”
Regulatory hurdles still need to be cleared
Before governments can make the leap forward with national currencies on blockchain, an extensive groundwork on finding a common approach to regulation and implementation (design, verification and enforcement) is required. This may take quite some time.
A parallel to the automotive industry can be drawn here. Today, almost every car manufacturer produces hybrid cars. This is a consequence of the new industry trend to build electric cars, forcing every producer to adapt their business model around it. In the future, we will most likely all drive in 100% electric cars (or cars with other alternative types of engines). The same occurred when credit cards and later internet were introduced, forcing existing actors to adapt.
I believe that the mainstreamed adoption of blockchain based currencies will be facilitated by developments in the payment regulatory space, changes in consumer behaviour and increasing interest in blockchain payments from banks and governments.
National currencies on blockchain will create new opportunities to improve existing transaction processing and personal identification systems and enable creation of programmable money platforms. Particularly in developing countries that use only cash and commodities for payments, this innovation has vast potential to improve the quality of life, as it facilitates high-tech infrastructure and can eradicate corruption.
Image credits: fdecomite (Flickr) and Geoffrey Moore
Forbes Finance Council conducted an interview with Mark Højgaard to profile him as a new member and share his advice. Read the interview here.