A bitcoin "exchange" application with international features could be what brings the incentive needed for adoption
One of the major hurtles bitcoin faces currently is the relative lack of liquidity within the bitcoin market. The various exchanges allow for a relatively liquid market for many traders and investors, but what about people using bitcoin for the purpose of sending money? Using bitcoin as a means of sending money hasn't come close to reaching it's full potential, and one of the main reasons behind the lack of adoption is the lack of liquidity, especially in remote or "underdeveloped" countries. When we look at the numerous advantages that bitcoin possesses over traditional money transfer services such as Western Union, Moneygram, ect, it becomes evident just how important an increase in liquidity is to bitcoins adoption.
I will propose the example of Mexican Migrant workers within the United States that wish to send money to back to Mexico periodically. The total amount of money that is sent from the US to Mexico through means of money transfer services exceeds 20 billion dollars per year. When you consider the fee of $8 for sending $1000 from the US to Mexico it initially sounds relatively reasonable with a fee of .8% or 80 basic points, but after further investigation i noticed that the exchange rate from Western Union actually is 2.6% lower than the current rate. This means that in addition to the $8 fee on a $1000 transaction, the recipient would actually loose an additional $26 in the difference between the exchange rate offered and the true exchange rate. This additional cost probably goes overlooked very often, and in many instances it would not be enough to deter people from using the service because of the relative ease of use and the liquidity it offers for the recipient. Bitcoins lower fees and advantages of having the potential to be completely digital don't offer enough incentive for its use as a means of transferring money, mainly in part to the lack of liquidity in many places and relative "complicated" process required to transfer to fiat in many regions and countries.
Many of these people and areas simply have no desire to change from the traditional methods because they have faith in the method from past experience and have no overwhelming incentive to change...yet. The lower fees and speed of transactions are definite advantages for bitcoin, but those advantages are relatively irrelevant to many people when they aren't also paired with a liquid system. The development of a more liquid market seen through bitcoin ATMs and in some cases bitcoin for fiat and vice versa from traditional currency exchange stands and booths in some areas. Both of these developments are the start of something great, but have yet to be implemented to the extent that they need to be to offer proper incentive. Its a classic bitcoin paradox in which there are no active users or a high demand for these developments because bitcoin hasn't been adopted in many of these areas, but in order for bitcoin to become adopted in these areas the liquidity from the services is vital. One cannot exist without the other long term, but there is no strong incentive for either party to implement bitcoin without the other existing prior.
The idea that the demand for bitcoin to fiat service must originate before supply of these services, but demand is nearly impossible to be present before the implementation of these services leaves us with a tricky dilemma. One potential solution that has the potential to offer the needed liquidity is the development of a mobile app similar to Circle, but had the potential to be used internationally and had a more efficient way of transferring bitcoin into fiat. The reason that a service such as this doesn't exist currently is because of the extensive regulation surrounding money service businesses, specifically internationally. Many governments would fear a service such as this because they would likely initially see the service as an enabler to tax evasion and money potentially leaving the originating country.
The mobile app Circle, announced December 7th that they are discontinuing the ability for users to buy and sell bitcoins through app, which was one of the most common uses of the app. Their decision to discontinue bitcoin transactions was likely caused by numerous factors, but the regulation the company faced over their bitcoin transaction ability definitely played a major role in the companies decision to discontinue the service. This is just another example of how the lack of clear regulation and excess of regulation surrounding bitcoin often deter potential investors and companies offering bitcoin services. In the long term bitcoin will be able to reach its full potential when clear, minimal, and fair regulations are developed. These regulations would incentive new bitcoin developments and give more faith to investors in bitcoin and the associated applications. The potential benefits an international bitcoin "exchange" application would likely be profound and is truly what could take bitcoin to a level that no one expected. The growth from an application like this would also likely have a domino effect that continued advancements in all aspects of bitcoin and cryptocurrency applications.
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