Is Onboarding Difficult? Crypto’s Path to Adoption Still Rocky

Advancements have been achieved in simplifying the Web3 onboarding process; however, the anticipated influx of mainstream crypto users has yet to materialize

For many years, Web3 has been the subject of conjecture; predictions regarding the factors that will accelerate mass adoption are frequent, as are potential impediments to the enrollment procedure. 

As hypothesized by Web3 gaming executives and others, several eagerly awaited blockchain games may be the key to the widespread adoption of cryptocurrencies.

Web3Auth, a critical management network, compiled 3,378 responses from Web3 users, developers, and decision-makers around the globe in a survey published on February 22. The findings of the study indicate that there are still several challenges that must be resolved before widespread adoption.

The chief of content at blockchain analytics platform DappRadar, Robert Hoogendoorn, said that he believes two obstacles must be surmounted in particular: a “simplified interface and user experience” and an increase in general consumer awareness regarding cybersecurity.

“In the past few years, significant progress has been made on one of these, whereas the other still requires improvement.” It is noteworthy that sixty percent of American consumers employ identical passwords for multiple accounts. He stated as much.

However, according to Hoogendoorn, “technological advancement” frequently accompanies enrollment difficulties. However, he believes that the Web3 industry has “substantiated progress” in this regard.

“Web3 onboarding presents a challenge.” “Insiders laud the technology, but for the end-user, the experience is everything,” he stated. 

“Only now have Web3-enabled video games and financial services reached a level of sophistication that has the potential to attract millions of users,” Hoogendoorn continued.

As per the findings of the Web3Auth survey, apprehensions regarding security and the potential for harm to individuals’ assets are the primary impediments to Web3 adoption.

Hoogendoorn asserts that the broader cryptocurrency sector has been characterized as a “wild west” for the past ten years, a characterization that has failed to impress the average citizen. According to him, this perception of inadequate cybersecurity is a barrier preventing users from adopting Web3.

This perception has not been significantly altered by events such as the mainstream media’s coverage of the FTX collapse or the subsequent trial of Sam Bankman-Fried, in which he was found guilty of fraud and sentenced to 25 years in prison.

Additional prominent crypto company failures, including Three Arrows Capital, a $10 billion cryptocurrency hedge fund based in Singapore, in 2022, have further exacerbated the negative sentiment that could impede the adoption of Web3 by mainstream users.

Additionally, rug draws, and hacks are a source of contention for Web3. In 32 separate incidents so far in 2024, breaches and rug pulls have reportedly ruined cryptocurrencies worth more than $200 million, according to a research report published on February 29 by blockchain security firm Immunefi.

Education and positive PR may be the solution

According to Hoogendoorn, who believes that “lots of positive PR” from within the industry will likely be necessary to alter the negative perception of Web3 and encourage widespread adoption of the technology.

Additionally, the general public must be reformed through improved education regarding optimal security protocols.

“People are notoriously poor at managing their account names and passwords in general,” Hoogendoorn said. “The majority of them do not use two-factor authentication, and a significant number of them use the same password repeatedly.”

The BNB Chain Core Development Team said that “multiple obstacles could serve as impediments” to Web3 enrollment. Lack of education and accessibility to unfamiliar user experiences, as well as the absence of incentive mechanisms, are the most prominent.

They stated, “Education, secure and dependable infrastructure, and user-friendliness are among the critical factors that will likely facilitate widespread adoption of Web3.”

Web3 can be difficult to traverse for newcomers, so “offering fun and engaging ways” to participate, such as meme campaigns that provide rewards and incentives, is crucial, according to the team.

In general, for onboarding more Web3 users, robust infrastructure, user experience, and efficacy are crucial, according to the BNB Chain Core Development Team.

They stated, “Mass adoption of Web3 is likely to occur gradually and through a variety of means, including education, user-friendly interfaces, and innovative technology.”

Preserving the efficacy of current technologies should be the primary focus, rather than exclusively depending on technological advancements to facilitate the shift from Web2 to Web3.

Complex technologies and ambiguous regulations impede Web3 adoption.

According to Pavel Salas, chief growth officer of the Gear Foundation, the organization that developed the Gear Protocol, Web3 enrollment is difficult for non-technical users to comprehend.

According to his statement, the need for user-friendliness in Web3 applications is a significant obstacle to adoption and may deter potential users.

“Playing a game on-chain serves as an illustration. “In the beginning, users must acquire the required tokens and download a wallet,” he explained. “These tokens may be game-specific or general protocol tokens such as Ethereum or Solana.”

Sami Start, CEO and co-founder of developer integration toolkit Transak, stated that there is a critical impediment in the onboarding process from fiat to cryptocurrencies.

“As a result of substantial entry barriers, less than 10% of global internet users own cryptocurrencies,” he asserts.

As per a market assessment report published by Crypto.com, an exchange that tracks cryptocurrencies, the number of crypto users worldwide increased by 34% in 2023, from 432 million to 580 million individuals. According to the online data platform Statista, the global number of internet consumers stood at 5.44 billion as of April 2024.

Additionally, regulatory complexities and the diverse integration with pre-existing financial systems, according to Start, render the transition to Web3 intimidating for new users. 

The European Council approved the initial all-encompassing legal framework for the cryptocurrency sector in May 2023.

Other nations and jurisdictions, on the other hand, have been slower in establishing a framework for cryptocurrencies, with some explicitly prohibiting their use.

Start further posits that the proliferation of blockchains and protocols within the Web3 domain may lead to user confusion and constrain the potential network effects that propel widespread adoption.

“Streamlining these processes is crucial for the industry as a whole,” he said. “Converting fiat to cryptocurrency should be as straightforward as any other online transaction.”

Ken Timsit, managing director at Web3 startup accelerator Cronos Labs, said that the majority of crypto users are initially onboarded on a custodial crypto exchange platform.

“This step works exceptionally well today because the leading exchanges are regulated and implement KYC [Know Your Customer] controls,” he explains.

KYC is a series of procedures executed by cryptocurrency exchanges as part of the registration process, which aims to authenticate customers’ identities and conduct necessary investigations to comprehend their financial activities and associated risks.

Timsit states, “We would all like to onboard more mainstream users.” However, he believes that the way in which the technology is being developed—specifically, how it should be designed for mainstream users as opposed to crypto experts—is an issue that must be resolved.

“Numerous recent successes, including those of modular scaling protocols, liquid restocking, and meme coins, have been propelled by an experienced user base,” he explained.