Lack of regulation, poor public image, and uncommon use cases have continued to serve as barriers to crypto mass adoption, according to experts.
A recent cryptocurrency adoption report from Finder, a comparison site, found that around 31.6 million American consumers currently own cryptocurrencies, making up roughly 10 percent of the country’s population. Globally, this rate is around 15 percent as of September 2022.
However, the adoption rate is still far below other disruptive technologies such as the smartphone, with 83 percent adoption across the world’s population, or the internet, which is around 60 percent, according to The World Bank.
Ease of use
Holger Arians, chief executive officer of Banxa, a fiat-to-crypto on-and-off-ramp platform, says that user friction and lack of everyday use cases are behind the lagging adoption rates.
Only recently have crypto exchanges begun allowing users to purchase cryptocurrencies using their credit cards and spend cryptocurrency directly at retailers using exchange-wallet-linked debit cards.
However, for the most part, setting up wallets and dealing with transactions still generates a high amount of user friction, he said.
“It’s user experience. You don’t have to be a mechanic to drive a car.”
Arians argued that crypto and blockchain technology needs to get to a point where an average user won’t even know that the technology is involved.
Mistrust and misconceptions
Gary Hamilton-Walker, the global head of communications at crypto exchange ByBit believes the problem lies in misconceptions and a lack of wider education about cryptocurrencies.
“Most mainstream retail investors rely on trust and reassurance to make investments – most of it provided by friends, ‘expert’ websites, and mainstream media,” he explained.
“Currently, the mainstream storyline paints a picture of a dangerous, transient ‘fad’ that will soon disappear – they said the same thing about the internet, and last time I checked it was still here and a fundamental part of our daily lives.”
Arians made similar observations, noting that mainstream media tends to focus on negative aspects of the industry rather than the positives as it “sells better.”
Hamilton-Walker said to combat this, the industry needs: “Education, education, education at every level,” which could involve digital asset providers working with other stakeholders and policymakers to take advantage of the transparent and open nature of crypto to protect investors.
Relatable use cases
There has also been a lack of everyday use cases for crypto, said Arians, but admitted that NFTs, or non-fungible tokens that gained popularity last year, could be one of the first examples of a “relatable” use case for crypto.
“Web3 is still very techie, most people use it for investment and financial services… so we’re really very much deep in the specialist areas here, and that’s not mainstream. It’s not for everyone.”
“NFTs were great for that, as people for the first time were able to relate it to mainstream digital art.”
“That was for me, the first consumer use case, the mass market adoption use case,” said Arians, adding that later, with advancements in usability, users could eventually “buy an NFT from your bank account or your credit card, like buying something on Amazon or in the shop.”
Last year, global auction giant Sotheby’s hosted a number of high-profile NFT auctions, even launching its own “Metaverse” marketplace last October.
Solana Labs, which is affiliated with the Solana blockchain protocol, recently debuted a mobile phone that is set to integrate with web3 apps on Solana, with co-founder Anatoly Yakovenko saying he was hoping the product could eventually bring a billion new users into the crypto sphere.
Regulation, however, remains one of the key hurdles to adoption, both Arians and Hamilton-Walker note.
“This touches a little bit on the trust and image aspect, but it would be good to get more clarity from regulators and have regulators be quite innovative in their approach to this asset class.”
Arians said that in the US, there hasn’t been enough clarity to jump-start innovation and for people to jump into this space.
Meanwhile, Hamilton-Walker said the lack of tax guidance in most jurisdictions is also holding back investors.
“Investors need clearer guidance and certainty to fully embrace a new asset class,” he explained.
In the future, Arians believes that the tokenisation of real-world assets would bring the next wave of user adoption, such as the tokenisation of real estate.
“All that sort of stuff I think it’s going to help with adoption,” he said.
Up Next: AIBC Malta Week 2022
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