What Will It Take For Bitcoin To Replace The Dollar In Everyday Transactions

Of all the problems that keep Bitcoin and other cryptocurrencies from replacing the dollar in everyday transactions, one stands out: volatility—value fluctuation in relation to the dollar.

That’s according to a recent survey conducted by Survata, an independent research firm in San Francisco, which found that 60.3% of cryptocurrency holders see cryptocurrency volatility as the most important barrier of using cryptocurrencies in everyday transactions.

Survata interviewed 402 online respondents between January 18, 2018 and January 23, 2018. Respondents were reached across the Survata publisher network, where they took a survey to unlock premium content, like articles and ebooks. Respondents received no cash compensation for their participation.

402 respondents is a tiny sample, and therefore the survey findings should be interpreted with extreme caution.

7-Day Price Change For Major Cryptocurrencies
Coin/Investment Trust Change 7d*
Bitcoin (BTC) -0.71%
Ethereum (ETH) -10.63
Ripple (XRP) -13.47
*As of February 23, 2018, at 3.30 p.m.

Still, the survey results aren’t surprising to Craig Cole, CEO and Founder of CryptoMaps. “Whenever you transfer bitcoin using blockchain, it can take hours. Because of the high volatility of the currency, the value can change dramatically during that time. So for many virtual currency owners, they see this and think it doesn't make sense to use bitcoin to purchase anything.”

What could change the situation? Two things. One is speeding up the time it takes to execute cryptocurrency transactions, something cryptocurrency exchanges are working on. “The focus has been on changing this issue,” says Cole. “Projects such as OmiseGO, DASH, Stellar, BitcoinCash and Litecoin have radically improved transaction speeds. This has eliminated some of the angst that Bitcoin has given business owners and consumers. With new point of sale platforms emerging daily like CoinBase Commerce, cryptocurrency will be a viable payment option for businesses for the sustainable future.”

Then there’s Wall Street, which has come up with financial products that allow market participants to hedge their positions against volatility in one of the major cryptocurrencies, Bitcoin. Merchants, for instance, concerned about Bitcoin volatility, can purchase Bitcoin futures, as discussed in a previous piece here.

While technology and Wall Street will help cryptocurrencies overcome volatility, it cannot help them overcome the threat of big governments, big banks and hackers that can crush them at any time.

That’s why cryptocurrencies have a long way to go before they replace the dollar in every day transactions.