Bitcoin’s biggest challenge isn’t tech adoption

It’s adoption of a new mindset towards money says Adam O’Brien, founder and chief executive officer of Bitcoin Well

Once a niche interest of tech enthusiasts and libertarians, Bitcoin has made significant strides into the mainstream since its first introduction. Layer 2 protocols such as the Lightning Network accelerated Bitcoin’s scalability and transaction speed, making everyday transactions faster for consumers and more affordable for businesses taking payments in Bitcoin.

With the required tech infrastructure readily available, why can’t we buy milk and eggs with Bitcoin from our local grocery stores yet?

Despite the technical advancements in Bitcoin over the years, a major hurdle remains: changing the public’s perception to recognise the true value of Bitcoin. As much as Bitcoin is an adoption of new technologies, it’s also a major disruption to people’s mindset towards money, which has historically been in the form of cash and gold for centuries.

Like its infrastructure, Bitcoin education is peer to peer

So, how can Bitcoin ever become part of our daily lives? Like most disruptive concepts, education and adoption won’t come from the top-down like academic institutions to students. It will root from the same concept Bitcoin is built on–peer to peer.

The Lightning Network represents a pivotal advancement in Bitcoin’s accessibility, particularly for small businesses and local communities. With its ability to facilitate fast and low-cost transactions, this technology is poised to revolutionise payment systems, starting with grassroots communities like farmers markets and coffee shops.

Hyperlocal venues are driven by a shared understanding of peer-to-peer interactions, and their desire for competitive edge are likely to direct them to lead the adoption of Bitcoin transactions.

I can understand how sticking to the status quo is efficient and could appear as the safest option. When it comes to our bottom line however, especially in trying economic times, I encourage businesses to explore alternative financial strategies that prioritise transparency, security, and financial autonomy.

Transitioning to peer-to-peer payments requires a mindset shift among business owners, and it will involve demonstrating Bitcoin’s practical advantages while addressing concerns mostly driven by speculation.

Bitcoin is more secure than cash

Bitcoin has been wrongly lumped together with other, more volatile digital currencies like NFTs, earning a negative reputation by association. The downfall of several crypto exchanges in recent years has also added another layer of distrust, even if Bitcoin is just one component to their portfolio of other different kinds of digital currencies.

In reality, Bitcoin’s security is one of its most compelling features. Bitcoin’s decentralised structure makes it incredibly difficult to alter or counterfeit transactions. Unlike cash, bitcoin is stored in digital wallets secured by cryptographic keys. For context, the U.S. Federal Reserve was hacked more than 50 times between 2011 and 2015; meanwhile, Bitcoin’s blockchain and network have never been breached.

Bitcoin is cheaper in transaction fees than cash/credit

Bitcoin also offers significant cost advantages over traditional payment methods like cash or credit cards, particularly in terms of transaction fees. Unlike credit card transactions, which often incur merchant fees ranging from 1.5% to 3% of the transaction amount, Bitcoin transactions via Lightning typically involve much lower fees, often 1000x cheaper than legacy payment processors like Mastercard or Visa.

Moreover, Bitcoin transactions bypass the intermediaries typical in credit card payments, reducing additional processing fees. In comparison to cash transactions, where handling and security costs can add up, Bitcoin’s digital nature eliminates the need for physical storage and transportation, further lowering transaction costs. For businesses looking to reduce operational expenses and streamline financial transactions, Bitcoin is becoming an attractive option as a cost-effective alternative, or at least expand its methods of receiving payment.

The catapult to merchant adoption is middleware

How can we ensure the continued adoption of Bitcoin? As much as merchants are making bitcoin payments accessible to consumers, merchants need support to access Bitcoin infrastructure.

Middleware is the key, acting as a bridge between existing point-of-sale (POS) systems and Layer 2 protocols like Lightning Network. Currently, the POS market is dominated by a few major players, and once these companies begin integrating middleware that supports Bitcoin transactions, adoption is poised to accelerate significantly.

While the exact protocol may vary—potentially including Lightning Network or other Layer 2 solutions—the common goal is scalability.

As these middleware solutions become more prevalent and integrated within mainstream point-of-sale infrastructures, barriers to Bitcoin adoption diminish. Businesses will benefit from lower transaction costs, enhanced security, and expanded customer payment options.

Moreover, the scalability afforded by Layer 2 protocols not only addresses Bitcoin’s current transactional limitations but also positions it as a viable competitor to traditional payment systems.

The collective effort to incorporate and adopt Bitcoin-friendly middleware marks a crucial step towards its wider adoption, empowering merchants to capitalise on the efficiency and innovation offered by decentralised digital currencies in the evolving landscape of global commerce.

Moving forward

Bitcoin has transitioned from a curiosity that was out of reach for many to a significant player in global finance, driven by innovations such as the Lightning Network.

However, achieving widespread adoption hinges on shifting public perception to appreciate Bitcoin’s true potential. Education and peer-to-peer adoption will be critical in this endeavor, empowering small, independent businesses and communities to embrace Bitcoin’s advantages of enhanced security, lower transaction fees, and financial autonomy.

Lightning marks the dawn of being able to use Bitcoin in everyday life, and as more solutions integrate the technology into payment systems, the path to widespread adoption becomes clearer, shaping Bitcoin to play a central role in modern commerce and financial transactions beyond just a niche interest.

Therefore, if you have any desire to see the world move past the current, bloated financial system, I encourage you to learn more about Bitcoin and consider adopting it inside your small business.

Related: is Bitcoin halving monetary policy?

Image: Bitcoin Well

Guest Editorial This article was produced specially for Fintech Intel by an expert guest contributor.