Mass adoption of cryptocurrencies is often tossed around as a nebulous description for a specific inflection point of crypto adoption.
Before the COVID-19 pandemic and global financial fallout, the vision of crypto mass adoption was furtive at best. Now, however, with markets paralyzed, the Fed pumping money into the economy, and a fiscal stimulus policy set to unleash trillions into the economy — that vision doesn’t look as distant as before.
The worst-case scenario from all the government monetary and fiscal moves is a potential for a hyperinflationary event as a USD supply shock. The Fed is expanding its balance sheet at an unprecedented pace to meet the needs of a surging global USD demand.
However, fiscal and monetary policy alone don’t take into account the lack of real goods production during economic shutdowns fueled by quarantine fears. That puts significant pressure on the USD as a reserve currency.
What’s an ideal alternative when the dollar system teeters on the verge of collapse? Bitcoin.
Stablecoins & A Robust Exchange Position
One of the interesting caveats of the whole COVID-19 fallout and dollar demand is the soaring popularity of stablecoins.
For example, Tether currently has over $5.4 billion in liabilities, including a surge of several hundred million USDT in recent days as the demand for dollar-pegged stablecoins rises.
In particular, stablecoins offer a unique alternative to USD. For example, Bank of America recently limited its cash withdrawals to $3,000 — a telltale sign of liquidity problems.
Additionally, the convoluted KYC measures of banking make larger withdrawals time-consuming and costly during a liquidity crunch.
Stablecoins offer both pseudo-anonymity within the network and censorship-resistance to bank withdrawal and transfer limits both within and outside the network.
What does this all mean?
Early indications point to a pivotal opportunity for exchanges, especially newcomers like CoinZoom that function as fiat-crypto gateways. Crypto exchanges occupy a distinct position in the ongoing financial dilemma. They grant access to stablecoins, which are in high demand, and bitcoin, which although plummeted along with the S&P 500 cliff dive, has shown resilience amid further stock slips in recent days.
Those are valuable avenues of liquidity for people who may feel more comfortable hedging their position with bitcoin or storing their cash in a stablecoin rather than a bank. As a third-party custodian, bank custody simply can’t be trusted during a liquidity crisis.
As far as exchanges like CoinZoom are concerned, their VISA card and ZoomMe features are a salve for anyone looking for asset flexibility and speedy transfers right now. For example, users can tap into VISA cards linked to their exchange accounts and spend them anywhere VISA is accepted.
For a user concerned about navigating the banking system right now, that’s a huge advantage. The user could store BTC or USDT in a hardware wallet, send a small portion to CoinZoom, and wield that account as a pseudo-bank account for buying groceries and other necessities. Additionally, ZoomMe is a P2P transfer feature where users can quickly send cash and crypto between each other.
The importance of ZoomMe is that during the “Black Thursday” of last week, where bitcoin dropped nearly 50 percent in a day, networks like Ethereum and Bitcoin were significantly congested. Users had a hard time liquidating a rapidly depreciating asset and any on-chain transfers were accompanied by delayed wait times and high fees.
ZoomMe bypasses that system. Again, serving as another reprieve for users staring down serious transfer and liquidity problems.
User-Friendly to Crisis-Friendly
User numbers for cryptocurrencies are not impressive. Bitcoin and Ethereum reign above the crowd below them, but even dapps on Ethereum have appallingly bad user numbers. The general perception was that better user-interfaces (UI) would help onboard more users, but COVID-19 is quickly throwing a wrench in that narrative.
Bitcoin projects like Strike offer promise in both regards, however. Both in terms of UI and the needs of COVID-19. Namely, liquidity and transferability.
Strike, from Lightning Network (LN) developer, Jack Mallers, taps Bitcoin’s LN as a sort of redundancy for merchants that struggle to attain banking services — such as cannabis firms in Colorado. The platform converts crypto payments via the LN to bank account balances so that users (e.g., the customers) never interface with bitcoin directly even though the transaction is being processed through the network. Their fiat bank account changes in accordance with the purchase, just like a debit card.
The redundancy and UI benefits of Strike are manifold, and it is a microcosm for what may unfold with crypto mass adoption. No longer will user-friendly applications be the bridge to mass adoption, but technologies that are crisis-friendly.
As people seek shelter from an onslaught of deleveraging events that have, for all intents and purposes, burst the corporate credit bubble, people will gravitate towards cryptocurrencies — specifically Bitcoin and stablecoins.
Strike, along with exchanges like CoinZoom, are both their gateways and redundancies if things go further South in legacy finance and the banking system. More user-friendly applications were formerly the accelerant for crypto mass adoption touted as the prevailing media narrative.
Now, that dynamic has changed entirely. Instead of sleek interfaces, a global pandemic that has induced a ripple of financial and economic consequences may have forced the public’s hand towards crypto.
Mass adoption or not — we’re witnessing a real-world scenario testing the hypothesis of crypto’s staying power.