Is boarding too difficult? Crypto adoption still faces major hurdles

Web3 has been the subject of speculation for many years, and predictions of what will spur mass adoption are frequent, as well as potential obstacles that slow the onboarding process.

Some, like Web3 game execs, have underestimated the crypto market hype, and the much-anticipated blockchain games could be the key to mass onboarding.

According to a Feb. 22 survey from key management network Web3Auth, which received 3,378 responses from Web3 users, developers and decision makers worldwide, respondents think there are still a number of issues before mass adoption becomes a reality.

Robert Hoogendoorn, head of content at blockchain analytics platform Dapradar, told Cointelegraph that he thinks two hurdles in particular need to be overcome: “a simpler interface and user experience” and an increase in general user knowledge about cybersecurity.

“One of them has improved a lot over the last few years, and the other could use some work. Did you know that 60% of US users use the same password for multiple accounts?” he said.

It's the same audience you want to get on board with Web3, and who's surprised MegaPepeBitcoinToken is a rug puller? That is just one of the challenges ahead of us.”

At the same time, Hoogendoorn says it's not uncommon for “technological advances” to come with onboarding challenges. Although he thinks that the Web3 industry has made “great progress” in this area.

“Onboarding Web3 is challenging. Insiders praise the technology, but for the end user, it's all about the experience.

“We're only just now getting to the point where Web3-powered financial services or video games can reach a level of sophistication that can engage millions of people,” Hogendoorn added.

The main barrier to Web3Auth's adoption among respondents in the Web3Auth survey is security concerns and threats to people's assets.

According to Hoogendoorn, the broader crypto industry has been “labeled the Wild West for a decade, and that's not something that resonates with the general public.” He thinks that poor cyber security awareness is a barrier that keeps users away from Web3.

Related: Web3 Can Benefit From Adopting Web2 Optimization: NBX Berlin

The major coverage of the FTX collapse and the subsequent trial of Sam Bankman-Fried, who was sentenced to 25 years in prison for fraud, did not help this perception.

Other high-profile crypto companies such as the $10 billion Singapore-based crypto hedge fund Three Arrows Capital have collapsed in 2022, also contributing to the negativity that prevents end users from accessing Web3.

Carpet dragging and hacking is also a thorn in the side of Web3. In the year According to a Feb. 29 research report by blockchain security firm Immunefi, more than $200 million worth of crypto was lost in 32 separate instances in 2024 due to hacking and remote mining.

Education and positive PR can be the answer

Hoogendoorn believes that the negative perception of Web3 needs to change in order to inspire mass adoption of the technology, and that this will probably require “a lot of positive PR” from the industry.

A change is needed to educate the general public about best security practices.

“People in general are bad at managing their usernames and passwords, because most of them don't use 2FA and a lot of people use the same password all the time,” Hoogendoorn said.

“People value safety but do not act responsibly. In Web 2 this can cause problems, but in Web3, this can cause your money to be stolen instantly. And when that happens, again – it negatively affects our industry.

Speaking to Cointelegraph, the BNB Chain Core Development team said that “many obstacles can be like roadblocks” when onboarding people to Web3. Most prominent are the lack of education and lack of accessibility or incentive mechanisms for unfamiliar user experiences.

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“Mass adoption of Web3 can be facilitated by several key factors, including user-friendliness, secure and reliable infrastructure, and education,” he said.

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

Overall, the BNB Chain Core Development team says strong infrastructure, user experience and performance are all critical to onboarding more Web3 users.

“The road to mass adoption of Web3 is likely to be gradual and multifaceted, involving innovative technology, user-friendly interfaces and education,” he said.

Rather than relying solely on breakthroughs to help the transition from Web2 to Web3, priority should continue to be given to improving the use of existing technology.

Complex technology and uncertain regulations slow Web3 adoption

Pavel Salas, chief development officer at the Gear Foundation – the organization behind the Gear protocol – says that logging into Web3 is complex and difficult for non-technical users to understand.

He told Cointelegraph that Web3 apps aren't always user-friendly, which creates a huge barrier to adoption and alienates new users.

“Let's take an on-chain game as an example. Initially, users need to download a wallet and get the necessary tokens – these can be specific to the game, or they can be generic protocol tokens like Ethereum or Solana,” he said.

“Once set up, they face an ongoing requirement to pay for gas with every transaction.”

Sammy Starr, founder and CEO of developer integration toolkit Transc, told Cointelegraph that fiat-to-crypto onboarding is at a critical bottleneck.

According to him, “Less than 10 percent of the world's Internet users own cryptocurrency, reflecting significant barriers to entry.

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

Regulatory complexities and integration with existing financial systems can also make the transition to Web3 daunting for new users, according to the startup.

In May 2023, the European Council approved the first comprehensive legal framework for the crypto industry.

However, other countries and regions have been slow to create a framework for crypto, with some banning its use.

Start also thinks that because the Web3 space is fragmented across multiple blockchains and protocols, this could confuse users and limit network effects that drive adoption.

“As an industry, it's important to streamline these processes so that converting fiat to crypto is as easy as any traditional online payment,” he said.

“By addressing these challenges, we can make blockchain's transformative potential accessible to a wider audience and significantly increase adoption rates.”

Ken Timsitt, managing director at Web3 startup accelerator Cronos Labs, told Cointelegraph that for most crypto users, onboarding is done on a secure crypto exchange platform.

He says, “This move is currently working well as major exchanges have adjusted and implemented KYC [Know Your Customer] controls.

Related: Aussie corporate regulator to build ‘results-based' crypto policies

KYC is a set of steps crypto exchanges take when onboarding to verify the identity of customers and perform due diligence to understand financial activities and risks.

“We all want to ship more end users,” Timsit says, but he thinks the key issue is how the technology evolves. In particular, it should focus on end users, not those experienced in crypto.

“Many of the recent success stories, such as liquid reprocessing, modular staking protocols and memecoins, have been driven by an experienced user base,” he said.

“As a result, projects are currently encouraged to be built mainly for OGs, Welsh and Djinn. At the same time, some end users are still missing out due to lack of regulatory clarity.”