Is onboarding too difficult? Cryptocurrency adoption still faces significant obstacles.

Web3 has been the subject of speculation for years, with frequent predictions about what will drive mass adoption and predictions that there may be obstacles that slow down the onboarding process.

Some, like Web3 gaming executives, have speculated on the hype in the cryptocurrency market, and that several highly anticipated blockchain games could be the key to mass onboarding.

Respondents believe there are still several issues that need to be addressed before mass adoption becomes a reality, according to a February 22 survey report from Web3Auth, a leading management network that received 3,378 responses from Web3 users, developers and decision-makers around the world. .

Robert Hoogendoorn, head of content at blockchain analytics platform DappRadar, told Cointelegraph that he believes two obstacles need to be overcome in particular: a “simplified interface and user experience” and increasing general consumer knowledge about cybersecurity. said.

“One of these has improved significantly over the last few years, but the other could use a bit of work. Did you know that 60% of U.S. consumers use the same password across multiple accounts?” he said

“This is the same audience you want to engage with Web3, and who would be surprised that MegaPepeBitcoinToken turned out to be a rug? “This is just one of the major challenges ahead of us.”

At the same time, Hoogendoorn says it’s not uncommon for “technological advancements” to come with onboarding issues. But he believes the Web3 industry has made “significant progress” in this area.

“Onboarding to Web3 is difficult. Insiders praise technology, but for end users, experience is everything,” he said.

“We are now at a point where Web3-based financial services or video games have reached a level of sophistication that can potentially accommodate millions of dollars,” Hoogendoorn added.

Respondents to the Web3Auth survey claim that the biggest obstacle preventing people from adopting Web3 is concerns about security and risks to people’s assets.

According to Hoogendoorn, the broader cryptocurrency industry “has been labeled the Wild West for 10 years, and that’s not sitting well with the general public.” He believes this perception of poor cybersecurity is an obstacle holding back Web3 users.

Related: Web3 can benefit from adopting Web2 optimizations: NBX Berlin

Mainstream coverage of the FTX collapse and cases such as the trial of Sam Bankman-Fried, who was sentenced to 25 years in prison for fraud, have done little to help this perception.

The collapse of other high-profile cryptocurrency companies, such as the $10 billion Singapore-based cryptocurrency hedge fund Three Arrows Capital in 2022, has also contributed to the negatives that may deter mainstream users from joining Web3.

Rug pulls and hacks are also a thorn in Web3’s side. According to a February 29 research report from blockchain security firm Immunefi, more than $200 million worth of cryptocurrency has been lost to hacks and theft in 32 separate incidents so far in 2024.

Education and positive publicity may be the answer

Hoogendoorn believes the negative perception of Web3 needs to change to encourage mass adoption of the technology, and that this will require “a lot of positive publicity” within the industry.

Change is also needed for the general public through better education on best security practices.

“People are generally not very good at managing their account names and passwords because most people don’t use 2FA and many people always use the same password,” Hoogendoorn said.

“People care about safety, but they don’t act responsibly. In Web2 this could cause problems, but in Web3 this could immediately result in your money being stolen. And when this happens, it once again has a negative impact on our industry.”

The BNB Chain Core development team told Cointelegraph that “several obstacles can stand in the way” when it comes to getting people to join Web3. Most notable is the lack of training and accessibility or incentive mechanisms for an unfamiliar user experience.

Related: Web3 domains are a powerful force in mass adoption of cryptocurrencies — Unstoppable Domains COO

“Mass adoption of Web3 will be driven by several key factors, including user-friendliness, secure and reliable infrastructure, and training,” they said.

According to the team, Web3 can be difficult to navigate for those new to the space, so it’s important to “offer fun and engaging ways” to participate, such as meme campaigns that offer incentives and rewards.

Overall, the BNB Chain Core development team says that strong infrastructure, user experience, and performance are all important to onboard more Web3 users.

“The path to mass adoption of Web3 will be gradual and multifaceted, involving innovative technology, user-friendly interfaces, and training,” they said.

“Rather than relying solely on innovation to support the transition from Web2 to Web3, we must prioritize improving the usability of existing technologies.”

Complex technology and uncertain regulations are slowing Web3 adoption.

Pavel Salas, chief growth officer of the Gear Foundation, the organization behind the Gear Protocol, said onboarding to Web3 is complex and difficult for non-technical users to understand.

He said Cointelegraph Web3 applications are not always user-friendly, which can pose significant barriers to adoption and keep new users away.

“Let’s take an on-chain game as an example. Initially, users need to download the wallet and acquire the required tokens. This could be game-specific or a general protocol token like Ethereum or Solana,” he said.

“Once set up, you will be faced with the requirement to pay gas fees on an ongoing basis with each transaction.”

Sami Start, co-founder and CEO of developer integration toolkit Transak, told Cointelegraph that fiat-to-crypto onboarding faces severe bottlenecks.

“Less than 10% of global internet users own cryptocurrency, reflecting serious barriers to entry,” he says.

According to a market size report from cryptocurrency exchange Crypto.com, the number of global cryptocurrency users will increase by 34% from 432 million to 580 million in 2023. Statista, an online data platform, estimates that there will be 5.44 billion internet users worldwide as of April 2024.

Start says the transition to Web3 is difficult even for new users due to regulatory complexity and various integrations with existing financial systems.

In May 2023, the European Council adopted the first comprehensive legal framework for the cryptocurrency industry.

However, other countries and jurisdictions have taken longer to create cryptocurrency frameworks, and some have banned the use of cryptocurrencies outright.

Start also believes that the Web3 space is fragmented with many blockchains and protocols, which could confuse users and limit the potential network effects that drive adoption.

“It is important for the industry to streamline these processes to ensure that converting fiat to cryptocurrency is as simple as making traditional online payments,” he said.

“By addressing these challenges, we can make the transformative potential of blockchain accessible to more people and significantly increase adoption.”

Ken Timsit, managing director of Cronos Labs, a Web3 startup accelerator, told Cointelegraph that for most cryptocurrency users, onboarding first occurs on a managed cryptocurrency exchange platform.

“This step is working very well these days because the best exchanges are regulated and implement KYC (Know Your Customer) controls,” he says.

Related: Australian corporate regulator establishes ‘results-based’ cryptocurrency policy

KYC is a series of steps cryptocurrency exchanges take during onboarding to verify customer identity and perform due diligence to understand financial activities and risks.

“We all want to recruit more mainstream users,” says Timsit, but he believes the problem that needs to be solved is how the technology is developed. In particular, it should be targeted at mainstream users rather than those with cryptocurrency experience.

“Many recent success stories, such as liquidity restaking, modular scaling protocols, and memecoins, have been driven by experienced user bases,” he said.

“As a result, projects are currently encouraged to be built primarily targeting OG, whales and degens. At the same time, some mainstream users remain reluctant due to lack of regulatory clarity.”