This is the year that cryptocurrency finally makes its way into the mainstream. From Elon Musk and Tesla investing in and accepting Bitcoin (BTC) to the recent non-fungible token craze, the days of blockchain technology, which is the domain of cypherpunks and coders, are behind us.
However, the technology is not yet advanced enough for the average person to be comfortable with. And the longer it takes for the usability of the cryptocurrency to reach the level at which it is associated with non-technical users, the greater the risk that centralized companies will instead take on the task of improving accessibility, which increases the censorship resistance of this relatively new one Technology, when it finally rises, affects mainstream awareness.
Let’s look at the state of the crypto usability landscape today.
Bitcoin’s “lightning-or-bust” approach is facing hurdles
When Bitcoin decided to reject on-chain scaling over large blocks, it essentially put all hopes and dreams of being usable as an everyday currency on second-level scaling solutions, most notably the Lightning network. Although the Lightning Network is functional today, it nonetheless introduces a whole host of new complexities, including balancing liquidity, opening and closing channels, forwarding payment paths, maintaining connectivity at all times to get money, and so on. New users may find it hardest to move funds off-chain to the Lightning Network. This requires an on-chain transaction (as well as various other Lightning network features) which trigger those terrible, long confirmation times and high transaction fees. All in all, this is a frustrating experience, even for a savvy cryptocurrency user, and an absolute non-starter for complete newbies.
Fortunately, tireless developers have come up with a new generation of Lightning Network wallets that greatly improve the user experience, so a non-technical user might find it easy to use. The second generation Lightning Network wallets like Phoenix achieve this by outsourcing some of the functions of a regular Lightning Network node – including opening channels, managing liquidity, automatic backups, and more – to the wallet provider.
In essence, they are similar to wallets in almost every way except that they are not custody. That is, the user remains in control of their own money and the service provider cannot run away with their money (or deny access to it). Basically, two main goals have been prioritized: ease of use and user control over means, and all the tradeoffs necessary have been made to achieve this. And the results are pretty good: if you’re using a second-generation Lightning Network wallet, you can send and receive with ease without the intricacies of the intricacies of the network, and you are in full control of your money at all times. You just have to trust the Lightning Service Provider (LSP) a lot more than if you were just using Bitcoin in the chain.
The challenge lies in the precedent and the direction this sets for the ecosystem. This approach makes an increasing number of users dependent on a shrinking number of large LSPs to move their Bitcoin with ease. This is similar to the old financial system, where transaction processing grows together around a small number of large payment companies.
Sure, many users could still control their own funds and be protected from inflation and currency manipulation, but aside from a few technophiles running their own nodes, most people will rely on centralized units for transactions.
Even “fast” competitors don’t seem to be like that from the user’s point of view
To be fair, not every cryptocurrency suffers from the complications of an overloaded main chain and a nascent second-layer solution. Many chains, especially the big Bitcoin forks and projects like Litecoin (LTC), have low chain fees and regular confirmation times. However, even this experience is not enough for an end user.
Regardless of what Bitcoin Cash (BCH) fans say, transactions aren’t instant. If you pay through many popular payment processors or deposit on exchanges, you still have to wait for multiple confirmations, which can take many minutes to sometimes hours. The average user does not understand why they have to wait, or why the waiting time is variable, or that the service should be able to trust transactions without confirmation but chose not to. They will just understand that they had to wait and will be frustrated as a result.
Of course, some coins, such as. B. those that are based on the evidence of use are considered safe after a single conformation, which significantly shortens waiting times. Depending on the chain, this may or may not be enough to ensure a seamless user experience. Dash (DASH) transactions become permanent after a single confirmation (approximately 2.5 minutes) and can be considered highly secure in less than two seconds. This creates an experience that rivals or exceeds that of proof-of-stake coins, despite being a proof-of-work network.
However, not all exchanges and services fully understand the underlying technology, so this experience can be a hit or miss. However, other networks like Nano (NANO) achieve the final transaction within seconds. However, this can lead to significant tradeoffs in network reliability. Nobody cares that a payment is completed immediately if the entire network becomes unreliable for days or even weeks due to spam attacks.
Usernames are centralized, rudimentary, jumbled, or on a test net
Even when the problem of faster, more reliable transactions is resolved, there remains an important usability key that is required for mass adoption: usernames. While scanning QR codes can be easy enough, copying and pasting long cryptographic hashes for web, remote, and other situations isn’t a beginner. We need a simple, social payment method that uses human readable usernames and contact lists.
There are quite a few systems nowadays that achieve this to a certain extent. Most, however, have significant tradeoffs in terms of ease of use or trust, or both. Solutions like Ethereum Name Service simply resolve to a static address that still often shows the long, ugly address in the user interface, and it creates some problematic privacy issues by making your entire transaction history accessible to anyone who can simply put your address in a block. Explorer can insert. The basis for interwallet usability is similar, with the exception of an even higher level of complexity due to wallet-specific domains and implementations.
Connected: Crypto transactions need to be easier. That’s it. That’s the headline
Another solution is HandCash, a popular wallet for Bitcoin SV (BSV) that does not resolve to a static address and supports contact lists. The problem is that the solution is centralized: users have to rely completely on the company and its infrastructure. With a similar setup across the BSV ecosystem, Paymail, users can easily set a new address every time without having to rely on a single central system. Just like with emails, however, Paymail relies on the server on which your domain is located. The only option for censorship resistance is to host your own server. There is also no universal contact list system. These two more user-friendly solutions highlight the unfortunate direction towards centralization, as user-friendly solutions are difficult to decentralize.
Once again, DASH is concentrating on providing the most elegant solution to the usability problem – building a decentralized application layer that, among other things, offers user names and contact lists at the protocol level in an intuitive, user-friendly and completely decentralized form. This year-long solution is still in the test network, however, and it remains to be seen whether a broad release will come in time to influence the trend of mass adoption towards centralized services.
The danger that end users will simply trust bank-like companies
The real risk, of course, is not that user-friendly cryptocurrency solutions will struggle or fail to catch on. The bigger risk is that fully custodial solutions will just catch on and bring us back to the same old financial system we tried to escape from, only backed (supposedly) by crypto.
We already see examples of this, from the blogging platform Publish0x with incentives that encourage withdrawals directly to centralized exchanges in order to avoid high Ethereum fees for the US fast food giant Chipotle, which gives away Bitcoin exclusively for exchanging accounts . Then there are the crypto forays that payment giants like PayPal and Visa have made. If we’re not careful, in the future we could spend our cryptocurrency through the exact same companies and services that we used for our fiat currency and still be at the mercy of the same players we initially sought freedom from.
We’re at a crossroads: create decentralized usability or let mainstream adoption kill decentralization. The challenge is formidable, but the stakes are too high to simply admit. Is the cryptocurrency up to the task?
This article does not contain any investment recommendations or recommendations. Every step of investing and trading involves risk, and readers should do their own research in making their decision.
The views, thoughts, and opinions expressed here are the sole rights of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Joël Valenzuela is an experienced independent journalist and podcaster who has lived without cryptocurrency since 2016. He previously worked for the decentralized autonomous Dash organization and now writes and podcasts mainly for the Digital Cash Network on the decentralized LBRY content platform.