Among the blockchain industry’s challenges, one of the central struggles has been achieving mainstream adoption of the technology.
Unfortunately, the recent downturn in the cryptocurrency market isn’t doing blockchain any favors.
New investors who entered crypto trading during Bitcoin’s all-time-highs late last year probably have gotten a rude awakening this 2018. The first few weeks have not been kind to cryptocurrencies.
From a record high of nearly $20,000, Bitcoin’s price has dropped to below $8,000.
With the exception of a few coins such as NEO, most altcoins have also suffered similar drops in price. For those who weren’t able to trade out or sell, this could have caused their crypto portfolio values to drop by as much as 60%.
The same volatility that allowed investors to enjoy massive gains can also bite back hard. This has definitely had a negative effect on adoption. Panicked investors sold and exited. Even if a turnaround is likely in sight, it might be hard to win back those who got burned.
Fortunately, there still is a belief in the technology and so, large enterprises and financial institutions are forging ahead with their respective projects. While most blockchain ventures are focused on introducing sweeping disruption across industries, some are creating experiences that bridge the familiar with the new.
For example, crypto exchange Legolas leverages centralized and decentralized architectures to be able to offer features that not all current exchanges provide. SpectroCoin also provides means for consumers to pay for purchases through a crypto-backed debit card which can be used even in brick-and-mortar settings. Others, like Winding Tree aim to provide familiar experiences by abstracting blockchain behind recognizable interfaces.
These ventures might just have the right idea in trying to ease people into using the technology and bringing about its wider adoption.
Bridging the Familiar
Many of the blockchain projects have been quite aggressive in trying to bring about new experiences. However, not everyone is comfortable with this aggressive approach. Take the case of payments. Finance is still heavily regulated so any effort which seeks to enable adoption by average users has to abide by rules and regulations. If the service has any chance of operating legally in most territories, there will be a need for some level of centralization in order to comply with governments and integrate with banks.
Introducing drastically different and difficult experiences rarely works. Bitcoin somehow failed to become the digital currency it was envisioned to become. Hardly any day-to-day purchases are made using Bitcoin. Even in its early days when it wasn’t hampered by high transaction fees or slow confirmation times, using it required a level of technical knowledge. It was only with the introduction of more user-friendly services such as online wallets and merchant services that it enjoyed increased adoption.
SpectroCoin’s introduction of a debit card brings more familiarity with the experience. Cards continue to be the popular means for people to transact both online and offline allowing cryptocurrency users to seamlessly function within the existing payments ecosystem.
User experiences must also be made simple and intuitive. Other services seek to achieve this by using blockchain to power their back ends but continue to offer familiar front ends. For example, travel distribution platform Winding Tree aims to provide a client-side interface that’s similar to existing systems and performs what users already expect. But by using blockchain, it ultimately brings benefits such as lower transactions costs for end users.
Dispelling Fear and Doubt
Many new crypto traders, especially those who were familiar with stock and forex trading, bemoaned the experience many exchanges provide. Due to the lack of regulations, most offer little to no protection for investors. Breaches and theft of coins are likely to result in investors losing their money. Only a handful of exchanges provided fiat currency conversions and there are still limitations for large transactions. There had also been allegations of dubious practices by some exchanges including price manipulation.
Legolas attempts to solve these issues by combining centralized and decentralized architectures in its exchange. It is bank-backed so investors have recourse through secured deposits in case something adverse happens. Its bank partnership also allows for large fiat transactions which could even enable more institutional participation. By leveraging blockchain’s decentralization, the exchange also provides transparency and auditability to prevent dishonest acts from happening on the exchange.
By creating an experience that brings over the key strengths of trusted established practices and improving them with innovation, such efforts help inspire more confidence in crypto activities. These help allay the fears and doubts of the average user and even give institutional users the confidence in adopting the technology. If something is trusted by large institutions, individuals are also likely to follow.
Encouraging Belief in the Technology
It is critical for stakeholders in the blockchain industry to encourage more belief in the technology. The average user must be able to appreciate blockchain beyond its cryptocurrency use case and more for the advantages it brings to a variety of activities. Easing users into crypto activities through familiar and intuitive experiences would help users settle in. The sooner users will experience how blockchain can improve upon transactions and experiences, the more they can become encouraged to shift their activities to blockchain services. Perhaps these could even help win back those that have dismissed the technology due to bad first experiences.
Jim Hoffer is founder and managing director at Hoffer Financial Consulting. Follow him on Twitter.
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