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Why is Cardano Struggling With Adoption?

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There’s been a lot of negative press about Cardano, from the programming language to slow progress dependent on peer reviews to questionable projects and alliances.

Looking firstly at blockchain utility, the average person might not understand what a blockchain is or care about it. This is similar to the amount of thought one might give to how their credit card transaction is being processed. This isn’t necessarily good or bad, just different. People just want something that works.

What if Cardano is Right, But No One Cares?

Setting aside any doubts, let’s consider the possibility that Cardano has the best blockchain technology and that it will be widely accepted by the public.

Despite the fact that Cardano might be the most decentralized, technologically advanced option available, it is not guaranteed to become the world standard due to practicality. 

It’s not unusual for a worse technology to win over a better one for certain reasons. Think VHS over Betamax or how people still prefer the standard QWERTY over the more ergonomic DVORAK keyboard. In short, better doesn’t always win

Cardano May Be Better, But Does it Matter?

Cardano may have a superior product, but that won’t ensure its success in the mass adoption battle. A lack of marketing (other than Hoskinson on YouTube) and competition from Ethereum or new or existing projects could create problems for Cardano that it won’t be able to bounce back from-especially given its slow peer-reviewed approach. 

Cardano isn’t very nimble in a market that prizes speed along with innovation.

Ultimately, a light bulb is a technology that remains true no matter who uses it. It doesn’t matter if it’s Westinghouse, General Electric, or someone else who profits from the technology, as long as it is adopted. The same rings true for blockchains. People will use what is cheap, fast, and works for them without giving a thought to which blockchain they’re on.

The Scientific Method

Cardano emphasizes the importance of the scientific method, yet its investors may not reap rewards from the project’s contributions to the scientific community. Indeed, Cardano could be surpassed by another crypto project that takes advantage of Cardano’s insights and does a better job at promotion and finding the right industry partners.

A Flawed Fixation on Africa?

While the Cardano crowd (cult?) won’t agree, Africa is an unlikely location for the project to succeed. 

Of course, there are reasons why choosing Africa makes sense and Cardano should be applauded for their vision from a humanitarian perspective. The continent is filled with a vast amount of young people and open to radical, new ideas for progress and blockchain is cool.

As the average consumer does not usually have firm brand loyalties, it is possible for new business to seize an early advantage and build a competitive edge based on ever-growing popularity.

Nearly 57% of the African population is not serviced by traditional banking, and they are eager to find alternative solutions. But without massive adoption and payment infrastructure in place, what can a pocketful of ADA actually be used for?

Plenty of Potential and Problems

In a nutshell, the African continent is an untapped market with plenty of potential. Most individuals don’t have a bank account, so the choices they make now will heavily influence their future in terms of how they use technology to improve their lives.

Africa collectively is facing many difficulties, one of which is the low internet access rate of only 24%. These greater issues need to be resolved before introducing blockchain technology, no matter if they are interested or not. It’s like spending money on a big trailer for your sailboat when you don’t have the money to buy the boat.

Infrastructure matters

World Mobile, is a startup bent on setting up telecommunication networks in Africa where traditional telecom companies had little success. Although World Mobile could be successful, it would take quite some time to do so.

According to their marketing, it will take them nearly 10 years to reach their goal of creating “the world’s largest mobile network” with affordable and high-quality connections across Africa and beyond by 2030.

Taking into consideration potential unforeseen (and probable) legal and technical delays, a large-scale program such as this may be stalled numerous times. Add in the complexities of physical infrastructure and it is not likely to be completed until 2030 or later.

Additionally, the reality is that many Africans lack the financial means to acquire a basic smartphone with internet capabilities. GSMA, a mobile network industry group, found that these devices cost 120% of what the lowest 20% earn each month in Sub-Saharan Africa. Unless Cardano plans on building an affordable web phone this is going to be a problem.

Government First, Then the People

What is Cardano’s plan for the next 10 to 15 years while most of its target customers are unable to use its services? Is it just going to wait? The Cardano community has been nothing if not patient but one may assume they’ll start getting anxious. Cardano is currently trading 82% below what it was just a year ago. “Just wait” has been the mantra but that only goes so far in a culture used to moving fast and breaking things.

While nearly 76% of African people are cut off from the internet and hence unable to join the crypto industry, Cardano already has associations with a number of governments, which do have access to the web.

Mass adoption is more likely to come from working with governments and corporations rather than from citizens gambling on DeFi or NFTs, as governments already have a large user base-their citizens. From this perspective, it makes sense for Cardano to work with governments first as central governments will be able to roll out blockchain services to citizens more easily.

When you examine Cardano’s partnerships, they don’t seem particularly impressive. Most of the government partnerships it cites are inactive or still in progress and could easily vanish if something goes wrong with the project. The African continent is historically unstable and characterized by some governments that are less than trustworthy.

Current Cardano Projects in Africa

Ethiopia’s Ministry of Education, working with Cardano, is attempting to give 5 million students and 750,000 teachers decentralized identity records and blockchain-based achievement certifications. Unfortunately, due to a still-simmering civil war and state of emergency declared in the nation, this goal may be unlikely to be achieved any time soon.

World Mobile has partnered with Cardano to provide millions with “affordable internet”, the corporate alliances are mostly symbolic right now. It’s a demonstration of intent, not an indication of Cardano’s bigger aspirations. But to be fair, Rome wasn’t built in a day.

 

The China Problem

If Cardano did manage to build a financial and data infrastructure in Africa, they would be up against a strong opponent – China.

China has a heavy presence in Africa and is utilizing its economic power to gain influence over the different African nations. If Cardano wants to have a chance of succeeding, it will have to be cautious not to oppose China’s interests or suffer the consequences.

Africa is certainly a fascinating option, but it shouldn’t be a primary focus. To succeed in Africa, large amounts of resources and time would need to be allocated. This takes away from Cardano’s development and adoption in other areas.

Cardano’s fixation on Africa obscures what could be easier, more pragmatic wins, resulting in a wider adoption that may come too late or perhaps never, as another, faster, cheaper, and more useful blockchain takes the crown.

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US Treasury Sanctions Hit Russian Arms Dealer’s Crypto Wallets

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The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed full blocking sanctions on 22 individuals and entities across several countries, including Russia and Cyprus, as part of its sanctions evasion network that supports Russia’s military-industrial complex.

The sanctions were imposed under Executive Order 14024 and are part of the U.S.’s strategy to target sanctions evasion globally, close key channels, and limit Russia’s access to revenue for its war in Ukraine.

US Treasury Goes After Russian Arms Dealer’s Cryptos

The U.S. Treasury’s sanctions were imposed by the Russian Elites, Proxies, and Oligarchs (REPO) Task Force, a multilateral effort to identify, freeze, and seize assets of sanctioned Russians worldwide. This task force leverages information from international REPO partners and key data from Treasury’s Financial Crimes Enforcement Network (FinCEN) to share information, track Russian assets, and sever Russian proxies from the international financial system.

The REPO Task Force aims to maximize the impact of multilateral sanctions while preventing opportunities for Russia to evade or circumvent U.S. and partner sanctions.

The primary target of the sanctions is a Russian sanctions evasion network led by Russia and Cyprus-based arms dealer Igor Zimenkov and his son Jonatan Zimenkov. The Zimenkov network has been involved in projects related to Russia’s defense capabilities, including supplying a Russian company with high-tech devices after Russia’s full-scale invasion of Ukraine. They have also supported sanctioned state-owned Russian defense entities, Rosoboroneksport OAO and State Corporation Rostec, which are critical components of Russia’s military-industrial complex.

Igor and Jonatan Zimenkov have worked closely together to enable Russian defense sales to third-party governments and have engaged directly with Rosoboroneksport’s potential clients to facilitate sales of Russian defense material. Igor Zimenkov has also supported the Belarusian military-industrial complex by enabling the sales efforts of State Owned Foreign Trade Unitary Enterprise Belspetsvneshtechnika in Latin America.

Today, Igor Zimenkov was designated for operating in the defense and related materiel sector of the Russian Federation economy, while Jonatan Zimenkov was designated for having materially assisted, sponsored, or provided financial, material, or technological support for Igor Zimenkov, Rosoboroneksport, and other sanctioned entities.

The Zimenkov network used front companies to funnel money and maintain a lawful appearance. Singapore-based Zimenkov network shell company Asia Trading & Construction PTE Limited and its director, Serena Bee Lin Ng, have sold helicopters to clients in Africa on behalf of the Zimenkov network. Additionally, Cyprus-based Zimenkov network shell company Lobster Management Limited and its director, Mikhail Petrov, have facilitated sanctions evasion by providing support to sanctioned entities.

The Treasury’s OFAC continues to work with its international partners to coordinate information sharing and enforcement and to travel the world in pursuit of sanctions evasion. The sanctions imposed today are a clear signal to Russia and its military-industrial complex that the U.S. and its partners are committed to tightening sanctions enforcement and preventing the evasion of international sanctions.

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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.



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Digital Wallet Growth Will Enable More Closed-Loop Transactions

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Crypto and fintech investment firm Ark Invest has made bold predictions about digital wallets, estimating that more than half the world will soon be using at least one.

In its Jan. 31 ‘Big Ideas 2023’ research report, Ark Invest revealed that digital wallet global population penetration is currently 40%. This equates to around 3.2 billion users, the firm added.

However, the research suggests that the number of online wallet users will increase at an annual rate of 8%. The firm predicted that this will result in a global population penetration of 65% by 2030:

“Having onboarded billions of consumers and millions of merchants, digital wallets could transform the economics associated with traditional payment transactions, saving them nearly $50 billion in costs.”

It also noted that digital wallets were gaining market share in online and offline transactions. Cash is definitely in decline, accelerated by government initiatives to go digital, as recently seen in Nigeria.


Payment method trends - Ark Invest
Payment method trends – Ark Invest

Digital Wallet Growth to Continue

Ark reported that digital wallets were scaling faster than accounts at traditional financial institutions. Furthermore, U.S. digital wallet adoption rebounded in 2022, surpassing previous highs following a COVID-induced dip.

The firm estimates that U.S. digital wallet users will increase by 7% annually during the next eight years. This will be a growth of around 160 million in 2022 to more than 260 million by the end of the decade.

Digital wallet user growth - Ark Invest
Digital wallet user growth – Ark Invest

Furthermore, online wallets are enabling “closed-loop” ecosystems. This is where consumers and merchants can transact directly, cutting out the middleman. 

“Digital wallets are onboarding millions of merchants to platforms that enable direct consumer-merchant transactions that disintermediate traditional financial institutions,” it noted.

In this closed-loop environment, wallet providers capture more value per transaction, enabling savings to be shared with merchants and consumers.

Open and Closed Lopp transactions - Ark Invest
Open and Closed Lopp transactions – Ark Invest

Additionally, Ark noted that closed-loop transactions could boost the margin structure of wallet providers.

It used Block Inc. (formerly Square) as an example, stating that it paid around 60% of customer transaction fees to third parties in 2022. The fees were paid for interchange, assessment, processing, and bank settlement fees. Block’s net take rate could more than double if customers transacted directly with merchants.

Block Inc. fee structure - Ark Invest
Block Inc. fee structure – Ark Invest

Closed Loop Transactions Could Top 50%

Finally, Ark predicted that these closed-loop transactions could account for over 50% of digital payments by 2030.

It used China as an example where wallets and merchants are largely internal or domestic only.

Closed loop cost savings - Ark Invest
Closed loop cost savings – Ark Invest

In conclusion, digital wallet growth is set to continue. Cutting out the intermediary which they facilitate is beneficial to both the consumer and merchant.

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Strike Launches Lightning Remittances in the Philippines

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Bitcoin fintech giant Strike rolled out its Lightning Network money transfer service Send Globally in the Philippines, a $35 billion remittance market.

Send Globally launched in the Southeast Asian country on Jan. 31, 2023, enabling businesses and tourists to receive international money transfers in the Philippine peso. The country receives $35 billion in remittances globally.

How Strike’s Send Globally Service Works

“Remittances are a broken system and Strike delivers an incredibly empowering experience for people to send money around the world in nearly an instant,” Strike CEO Jack Mallers said.

According to a press release, Strike’s remittance service converts a sender’s fiat into Bitcoin and sends the Bitcoin to a Strike partner in the destination country using the Lightning Network, which in the case of the Philippines, is Pouch.ph. Pouch.ph then converts the Bitcoin to the recipient’s fiat currency and credits their bank or mobile money account, with Strike shielding both parties from the tax implications of handling Bitcoin directly.

Bitcoin’s Lightning Network is a layer-two solution on the Bitcoin blockchain that allows micropayments between nodes over a payment channel. Unlike traditional payment networks, Lightning’s low fees enable almost zero-cost remittances.

Recently, Mallers announced a trial to bring Bitcoin Lightning Network payments to retailers through a partnership with Fiserv’s point-of-sale solution Clover Commerce. The trial allows any application with Lightning capability to pay Bitcoin for goods and services at Clover merchants.

Philippine Smartphone and Internet Adoption Auger Well for Strike

Send Globally rolled out to Strike users in Ghana, Nigeria, and Kenya on Dec. 6, 2022, where it has reportedly gained rapid traction.

However, mainstream adoption in the Philippines will depend heavily on network effects, driven by smartphone and internet penetration.

According to Statista, the number of smartphone users will increase from 85 million in 2022 to 87 million by 2023. Additionally, forecasts suggest smartphone users will increase to 91.5 million in 2025, representing roughly 83% of the island nation’s population.

Smartphone Adoption in the Philippines
Smartphone Adoption in the Philippines | Source: Statista

Additionally, Statista predicts that about three-quarters of the population will have internet access by the end of 2023. Growing internet access increases the chance of Strike’s success, since it helped drive adoption of crypto game Axie Infinity.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.

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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.



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