How do I become great in cryptocurrency?

Here are the 5 directions Bitcoin- or any virtual currency would need to move in to succeed, especially in emerging markets:

1) It needs to become less volatile.

Too much volatility kills demand; anecdotally, it remains the biggest barrier to adoption (aside from a lack of understanding) that I’ve seen locally.

Of course, volatility will diminish once consumers are actually using Bitcoin more as a currency than a commodity.

“One of the biggest killer apps [to build would be] removing the volatility and currency risk,” Jered Kenna of Tradehill, a B2B Bitcoin exchange for institutional investors, pointed out at Bitcoin London. BitPay is one such app that helps to reduce volatility by increasing adoption, he said, as it helps consumers connect to a variety of merchants who accept the currency.

To exchange Bitcoin, visit: bitcoin to paypal

2) It needs more exchange platforms.

To buffer Bitcoin from the failures of a given exchange platform, it needs to quickly develop more trusted networks, said Erik Vorhees, founder of Coinapult, a secure Bitcoin wallet and merchant service that works to provide Bitcoin liquidity to businesses.

“The most important thing is for the market to become deeper,” he says. “For that to happen, people need to get away from Mt. Gox. Mt. Gox has been the deepest exchange, but every time they come under pressure, they fail. People are scared to leave their money at Mt. Gox, for both operational reasons and because of regulators around the world.”

Mt. Gox has had its share of hacking scandals. Others are building other exchanges that are more trusted, Vorhees explained.

3) It needs more liquidity.

Less volatility and more trusted exchanges will lead to more liquidity, something Bitcoin urgently needs if it is to ever be used as an alternative currency for small states, argued economist Sveinn Valfells.

It goes without saying that virtual currencies could an appealing option for citizens of states beleaguered by sanctions or inflation.

But in countries that cannot effectively manage their own currencies, like Cyprus, Panama, The Bahamas, or Iceland, his nation of origin, Valfells argued that Bitcoin could serve as a viable official currency.

Bitcoin’s market cap- which is now over the US $1 billion- makes the currency a contender in Iceland, where the monetary base is 0.6 billion dollars, he points out.

However, to facilitate Iceland’s imports, Bitcoin would have to have more liquidity, and, again, less volatility and decentralization- not just in its exchanges, but among its miners, those individuals who generate more of the currency by having their computers crunch a complex algorithm. “Anyone who commands a lot of computing capacity can theoretically take over the Bitcoin network,” he said, recommending that each national network have at least two independent miners for 5 years before officially adopting a cryptocurrency.

4) It needs to be able to be traded for cash.

Anyone dealing in e-commerce in the Arab world knows the market: most customers simply don’t trust using credit cards online. Credit penetration rates and banking rates are abjectly low, and cash-on-delivery requests can reach up to 70-80% of online orders.

Most of its appeal in emerging markets, explained Pelle Braendgaard, the founder of Kipochi, is that it allows users to transfer money almost instantaneously, without fees. That alone is why most of his adopters in Kenya have signed on to Kipochi, a Bitcoin mobile wallet that has now integrated with Kenyan mobile network M-PESA.

Kipochi’s experiment with M-PESA might be one of the most exciting yet for Bitcoin enthusiasts when it comes to imagining worldwide networks of mobile payment in virtual currency; after all, one ambitious student lived on M-PESA for 60 days.

Coinapult, which allows users to transfer Bitcoin over SMS, could also help with accessibility.

5) It needs startups.

Finally, what Bitcoin, or any virtual currency, needs most of all are startups. Without an ecosystem of startups developing products to help foster its adoption and use, a virtual currency will not flourish.

Bitcoin London introduced several, including Bitprice, the first fully compliant virtual Bitcoin exchange in the U.K., and Bits of Proof, which is working to enhance mobile use, security, and auditing features for merchants; interested readers can listen to the rest of the pitches- including two other companies that tested Bitcoin products in an emerging market- on Bitcoin London’s StartForumTalks channel.

In Europe, where Bitcoin is not yet considered money, virtual currency may have a chance to accelerate in a manner that it won’t in the U.S, where a landmark ruling recently termed it a recognizable currency.