Cryptocurrencies

Web3 has been the subject of speculation for many years now, and speculation about what it will stimulate

Web3 has been the subject of speculation for many years now, and predictions about what will spur mass adoption are frequent, as are potential hurdles to slow down the onboarding process.

Some, like Web3 Games executives, have predicted hype in the cryptocurrency market, and several upcoming blockchain games could be the key to crowd-sourcing.

According to a February 22 survey report from major management network Web3Auth, which received 3,378 responses from Web3 users, developers, and decision-makers around the world, participants believe there are still many issues that need to be resolved before mass adoption becomes a reality.

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

“One has been greatly improved in the last few years, while the other could use some work. Did you know that 60% of American consumers use the same password across multiple accounts? He said.

“This is the same audience you want to bring to Web3, and who will be surprised when MegaPepeBitcoinToken turns out to be a rug pull? This is just one of the major challenges ahead of us.”

At the same time, Hoogendoorn says it is not uncommon for “technological advances” to come with employee onboarding challenges. He believes the Web3 industry has made “significant progress” in this area.

Web3 Has Been The Subject Of Speculation For Many Years Now, And Speculation About What It Will Stimulate

“Setting up in Web3 is a challenge. Insiders praise the technology, but for the end user, it’s all about the experience.

“Only now have we reached a point where financial services or video games based on Web3 are reaching a level of sophistication that can attract millions,” Hogendoorn added.

Web3Auth survey respondents 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 a “Wild West” for a decade, “and that’s not something that goes down well with the general public.” He believes that this perception of weak cybersecurity is an obstacle that prevents users from using Web3.

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

Issues such as mainstream coverage of FTX’s collapse and the subsequent trial of Sam Bankman Fried, where he was sentenced to 25 years in prison for fraud, did little to help this perception.

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

Rug pulling and hacking are also a thorn in Web3’s side. More than $200 million worth of cryptocurrencies have been lost due to hacks and rug pulling in 32 individual incidents so far in 2024, according to a research report released on February 29 by blockchain security firm Immunefi.

Education and positive public relations may be the solution

Hogendoorn believes the negative perception of Web3 will need to change to incite mass adoption of the technology, and that will likely require “a lot of positive PR” from within the industry.

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

“In general, people are known to be very bad at managing their account names and passwords, as most of them do not use two-factor authentication and a large number of them use the same password all the time,” Hoogendoorn said.

“People value safety but do not act responsibly. In Web2, this can cause problems, but in Web3, this can result in your funds being stolen instantly. When this happens, it – once again – negatively impacts our industry.

Speaking to Cointelegraph, the core development team for BNB Chain said: “There are multiple hurdles that can act as blockers” when onboarding people to Web3. Most notable are the lack of education and access to unfamiliar user experiences or the lack of incentive mechanisms.

Related: Web3 Domains Are a Modest Force in Mass Cryptocurrency Adoption — COO at Unstoppable Domains

“Widespread adoption of Web3 is likely to be facilitated by several key factors, including ease of use, secure and reliable infrastructure, and education,” they said.

According to the team, Web3 can be difficult to navigate for those new to the field, 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 a strong infrastructure, user experience, and performance are all essential to onboarding more Web3 users.

“The path to mass adoption of Web3 is likely to be gradual and multi-faceted, involving innovative technology, user-friendly interfaces, and education,” they said.

“The priority must remain to improve the usability of current technology rather than rely solely on advances that help move from Web2 to Web3.”

Complex technology and uncertain regulations are slowing Web3 adoption

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

Web3 apps aren’t always easy to use, which poses a major barrier to adoption and can keep new users away, he told Cointelegraph.

“Take playing a game on a string as an example. First, users need to download a wallet and obtain the necessary tokens – it can be game-specific or a public protocol token like Ethereum or Solana.

“After setup, they face ongoing requirements to pay for gas with every transaction.”

Sami Start, co-founder and CEO of developer integration toolkit Transak, told Cointelegraph that the transition from fiat to cryptocurrencies faces a critical bottleneck.

“Less than 10% of global internet users own cryptocurrencies, which reflects significant barriers to entry,” he says.

According to a market size report from cryptocurrency exchange Crypto.com, the global number of cryptocurrency users increased by 34% in 2023, rising from 432 million to 580 million people. Online data platform Statista estimates that as of April 2024, there were 5.44 billion internet users worldwide.

Web3 Has Been The Subject Of Speculation For Many Years Now, And Speculation About What It Will Stimulate

Regulatory complexities and diverse integrations with existing financial systems make moving to Web3 daunting for new users as well, Start says.

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

However, other countries and jurisdictions have been slower to create a framework for cryptocurrencies, with some outright banning its use.

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

“As an industry, it is essential to streamline these processes, ensuring that converting fiat currencies into cryptocurrencies is as simple as any traditional online payment,” he said.

“By addressing these challenges, we can make the transformative potential of blockchain accessible to a broader audience and dramatically increase adoption rates.”

Speaking to Cointelegraph, Ken Timsit, managing director at Web3 startup accelerator Kronos Labs, said that for most cryptocurrency users, setup is done on a cryptocurrency exchange first.

“This is working very well at present because the major exchanges are regulated and implement KYC (know your customer) controls,” he says.

Related: Australian corporate regulator sets ‘outcomes-based’ crypto policies

KYC is a set of steps that cryptocurrency exchanges take during setup to verify a customer’s identity and conduct due diligence to understand financial activities and risks.

“We would all like to attract more casual users,” says Timsit, but he believes the issue that needs to be addressed is how to develop the technology; Specifically, it should be geared toward everyday users, not those with crypto experience.

“Many recent success stories, such as liquid recovery, standardized measurement protocols, and memecoins, have been driven by an experienced user base,” he said.

“As a result, projects are currently being incentivized to build mainly OGs, whales and dinos. Meanwhile, some major users remain troubled by the lack of regulatory clarity.

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