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Three Signs of a Mature Bitcoin Market

Imagine if the US dollar split in two. It would be chaos. 

Yet that's exactly what happened with Bitcoin, as Bitcoin Cash spun off to a form a totally new currency. 

Cryptocurrency has been around for a decade, yet it hasn't achieved stability. 

Look for three signs of a mature market. 

1. Strong Use Case

Cryptocurrency's core competency is sending money from one party to another for cheap. Currently this is done through a wide variety of legacy systems like SWIFT. A mature market will use blockchain technology to send money overseas, pay bills, and keep score in new ways. Prediction markets like Angur and social networks like Steamit are blazing the trail, but there needs to be undeniable use cases other than buying drugs.

2. PR Management

My girlfriend calls the Bitcoin community "the tin hat crowd." Anarchocapitalist and Preppers are great first movers, but if blockchain technology is going to thrive, it needs a makeover. I've seen countless stories about the deep web, but nothing about an immigrant using the technology to send his grandmother money overseas. We need a warm and fuzzy blockchain.

3. Regulatory Framework

If you buy a cup of coffee with Bitcoin, it's a taxable event. To the IRS, cryptocurrency is stock. You would never run a business where you exchanged shares of stock for every transaction. And it's currently impossible to have a fully integrated accounting system based on blockchain technology.

Blockchain technology makes micropayments possible, but it requires that IRS set a minimum threshold for reporting cryptocurrency transactions. For example, a  policy where no transaction under $200 needs to be reported. 

The first ten years of blockchain technology were fascinating, but for growth to continue, we need to hit these benchmarks of maturation. 


Derek SutcliffeComment