How crypto can reach the next one billion users

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Most crypto entrepreneurs love to brag. They say that their blockchain, protocol or application will bring in the next billion users and eventually make digital assets a mainstream and indispensable part of our daily spending.

But scratch beneath the surface and you’ll quickly realize that this is all just empty talk. Why? Because many of these projects suffer from the same problems that have prevented them from gaining widespread adoption for the past decade: a chronic lack of usability.

Approximately 0.4% of all crypto users have claimed domain names using Unstoppable Domains in the last few years. This is not due to lack of demand, but rather poor user experience and lack of security where anyone can easily investigate a user’s balance and transactions just by knowing their name. It seems that Unstoppable Domains, friend.tech, or Mastercard Crypto Credential have not entered the mainstream due to a fundamental lack of privacy.

Survey after survey explains why ordinary consumers are reluctant to try crypto. Bombarded with headlines about multimillion-dollar hacks and bad actors, they are clearly wondering if businesses in this space can do a job of protecting their cash. While many payments to merchants and loved ones in the traditional financial world are free for the public, the idea of ​​spending a few dollars to cover transaction fees is off-putting. Why would you switch to a new technology that’s actually going to cost you money?

This brings us to the endless jargon that curious potential customers are exposed to when they visit a crypto website. From zk-SNARKs to liquidity pools and degens to DAOs, the sheer number of platforms makes things way too complicated. It’s no surprise that beginners feel like everything is written in an impossible-to-understand second language.

All of this then translates into usability. Web2 users are used to getting what they want done in a few clicks, without needing a PhD in coding to know how things work. Even those who consider themselves tech-savvy find web3 platforms painfully complicated to use, meaning important first impressions are ruined as newcomers give up in frustration.

When you put all of this together, the challenges of cryptocurrency become crystal clear: the complexities of how blockchains are designed undermine the powerful benefits they offer in the form of decentralization, censorship resistance, and financial inclusion. A major hurdle to overcoming all of the hurdles we’ve mentioned is alphanumeric addresses.

Addressing the issue

Bitcoin addresses are 34 alphanumeric characters—a random set of letters and numbers that are impossible to memorize and prone to accidents. To explain what I mean, a 2014 study asked a group of 75 people to learn a series of alphanumeric strings ranging from just six to 14 characters in length. The researchers found that as a string grew longer, the number of errors detected when participants were asked to type it out unintentionally also increased. The most common errors included incorrectly capitalizing letters, missing characters entirely, and typing them in the wrong order.

Now ask yourself this: If errors can occur when trying to type just eight alphanumeric characters, what happens when the string is four times longer?

Missing a single character when making a crypto payment can have disastrous consequences. In any case, if the wallet accepts the wrong address, the funds are lost forever. Double-checking an address and scanning for errors is also not as easy as it sounds, a series of letters and numbers come together in a single understandable bundle. Therefore, savvy cryptos usually send their crypto addresses to the sender via an encrypted chat and then ask the sender to send a test transaction for a small amount in case the sender gets the address wrong. Once the test transaction is complete, the rest of the funds can probably flow to the same address. You should send an encrypted message with the correct recipient address in the most seamless example of a proper transaction. The sender sends a test, the recipient confirms it, and then the sender sends the main amount. The address also needs to be correct for the crypto being sent. Ethereum (ETH) addresses do not work for Bitcoin (BTC) payments (I repeat, if you do this wrong, you will lose completely).

The answer to all of this is simple, yet incredibly underused. Crypto users should be able to send money to a human-readable name, rather than a series of numbers and characters. This name should also not reveal to the world how much money the owner of the name has. The user should be able to send their name anywhere, like PayPal, Zelle, Venmo ID/QR code, and receive any cryptocurrency on any chain without hackers being able to guess how much money they have. Crypto will never reach the same level of adoption as TradFi until it implements the privacy consumers are used to, and ideally does everything TradFi does better. Human-readable addresses can be thought of as the new digital real estate of web3. Just as owning an address gives you an address, these names can provide real utility, unlike NFTs, and empower users with a unique identifier for seamless crypto transactions, digital asset ownership, and SSI.

On the security front, address poisoning scams, where malicious actors trick unsuspecting users, can become instantly easier to detect. Here, cybercriminals often create alphanumeric wallets that are nearly identical to addresses the victim has traded with in the past and trick them into sending funds to an unintended destination.

Since this solution will not need to rely on Personally Identifiable Data (PID) to operate and calculate addresses, it will be completely decentralized, thus minimizing security risks.

Human-readable addresses will also have a major impact on ease of use, allowing consumers to enjoy the benefits of digital assets without any hassle. The increased interest will create a network effect as more users start trading.

Good start, but what next?

The crypto industry may not want to admit it, but human-readable addresses will only be the first step on the long road to achieving mass adoption.

Account abstraction has been touted as a major breakthrough in simplifying blockchains, as it enables funds to be managed through smart contracts. While this can offer a degree of greater customization (and move some of the technical processes behind the scenes), it is complex to implement and prone to security vulnerabilities, with the potential for additional costs for end users.

That’s not the only headache to address. As of now, account abstraction only exists on Ethereum when many crypto enthusiasts use a constellation of other networks. The fragmentation between blockchains is getting worse, and since most wallets are built for specific ecosystems, they can’t communicate with each other. This leaves users with little choice but to rely on bridges that are even harder to use if they want to move their wealth.

Other vital steps to take in terms of security include implementing multi-party computation and hardware security modules. These vital security measures add an additional layer of protection for users’ stored funds while also making it much harder for hackers to attack.

The future for digital assets can and should be bright. However, for blockchains, web3, and crypto platforms to achieve greatness, developers must be brave, go back to the drawing board, and look at the user experience through the eyes of a beginner who has never owned a single token before. Then, and only then, can the claim of onboarding the next billion users be taken seriously.

Michal Pospieszalski

Michal “Mehow” Pospieszalski is an experienced technology leader with a track record of delivering pioneering innovative solutions in the crypto space. As CTO and co-founder of SwissFortress and CEO, co-founder and inventor of MatterFi, Michal combines visionary strategy with applied technology knowledge, leading both companies to define the future of digital asset management.