Liquidity
as a driver
of adoption

The issue of adoption - or the absence of such - is often talked about in conversations involving crypto. Back in 2017, much of the hype was caused by the promises and in some cases - premises of worldwide mainstream adoption of digital assets. Yet, 95% of them, fell short of the promises. Even prominent coins with large teams and tremendous resources are finding it difficult to achieve significant traction, steadily grow the user-base and increase their utility. After all, it’s the utility most developers set their goals on, and a step from the internet community-based project to a widely-adopted medium is the mark of success. Digital money and digital assets in the wider sense show great promise, but still too little practical usability.

Many hopes in achieving “adoption” were elevated by such promising concepts as Decentralized Apps (DApps), Decentralized Autonomous Corporations (DAC), the utility of smart contracts and their application in the legal area, enhancement of cybersecurity and safety of information stored on a Blockchain. However, there isn't a single project to prove that any of these concepts are capable of getting into the mainstream.

So, if there are this many promising things in the Digital Assets space , how come none of them have succeeded yet? Maybe, there’s more to achieving adoption than just having a nice idea and a proof-of-concept? Well, in our opinion - many projects forget about one simple but crucial factor: Liquidity.

Before we dive into why we think liquidity is vital, let’s first see what it is. According to Investopedia, the concept of liquidity has many facets to it. One way of defining liquidity is the ability of an asset to be converted into cash readily on demand. Another way of looking at it is when any asset can be bought or sold at its fair price. Liquidity thus means that there aren’t discounts or premiums attached to it during buy or sell and it’s easy to enter and exit the asset. The universal understanding of liquidity is that it’s a measure of how quickly, easily and efficiently an asset can be turned into fiat cash.

Now, how’s that important to the adoption of Digital Assets? The answer is quite plain and simple. A new asset class, which Digital Assets are, can not go from no traction to world-wide adoption rapidly and all by itself. It needs to have the infrastructure and processes in place, on top of a critical mass of supportive people, to be able to do that. This is a gradual, step-by-step process during which new potential adopters will go back-and-forth from using digital assets in their everyday life to going back to using predominantly fiat.

The only problem is, they can’t. People are not only unable to go back-and-forth to feel all the benefits of using crypto and compare this experience with using fiat money, but they also can hardly use their crypto in real life. How many cryptocurrencies are accepted in stores? A minuscule amount. The “merchant side” of the counter is usually more conservative, but still, there are some willing to try and already doing business with crypto. However, the peer-to-peer model of payment is hard to connect to everyday bookkeeping and business models. It’s ok when it goes between buddies, but it becomes increasingly harder to manage things when you need to sell to tens of consumers a day, week after week.This points to an obvious conclusion - Digital Assets will not reach wide adoption without usability.

What could we do about this?

The only obstacle to providing usability to crypto coins is in making it easy for vendors, merchants and service providers to accept them as a form of payment without risk and with minimal friction. Cyclebit - one of the very few players on the market - seems to have made a product that convincingly solves this problem. Its infrastructure allows any business - be that a restaurant, a luxury items shop or a provider of legal services - to accept any Digital Asset from its network in a form of payment, and within seconds convert it into the local currency.

Liquidity is the KEY to adoption

The more merchants accept crypto - the more often people will use it, which will trigger a chain reaction and by word of mouth attract new adopters into this space. Sounds very simple, and this is already the case in the countries of Europe, Canada, Vietnam and a number of others where Cyclebit has expanded its operations.

Projects participating in the network are already enjoying the benefits of substantially increasing the liquidity of their digital assets. It makes more people aware of the project, makes it more convenient for the current adopters to find utility in it and ultimately increases its chances to succeed. Having said that, still, not many projects are allocating enough effort to the problem of liquidity. Those that do - think ahead and have a clear strategy in mind.

Projects which have a Digital Asset at the core of their product will have a strategy that differs substantially from a conventional business if they want to succeed. Different approaches must be taken and steps should be made with long-term objectives in mind. Thus, if you have a Digital Asset you wish will succeed, you can improve its chances drastically by ensuring it is connected to networks such as Cyclebit, which ensure the token’s utility and liquidity in the long-term.