Prime Trust CEO on the Future of Crypto

Announcements, Blockchain, Investing, News, Opinion | May 20, 2022 By:

The recent headlines around market volatility and the fluctuations in crypto prices don’t tell the whole story of what is going on in the industry. Because the industry and technology are still relatively new, especially when compared to similar areas of the market, it is more susceptible to drastic swings in price. However, none of this takes away from investor interest and long-term investment opportunities.

With Web3 using blockchain to change the way information is stored, shared, and owned, there will be a host of new products, economies, and services that will come online in the coming years. But for those concerned about the near future prospects, there are a few areas that point to the strength of cryptocurrency beyond the current market volatility. 

  1. Crypto as a Payment

Earlier this year, Shake Shack ran a promotion where customers received Bitcoin as a reward for purchases made through Block’s cash app. While customers couldn’t pay in Bitcoin specifically, promotions like these continue to expose the broader market to Bitcoin and encourage customers to dabble in cryptocurrency. Also, the Central African Republic recently joined El Salvador in adopting Bitcoin as a legal currency. These are promising indicators of growth, but the challenge still exists.

Only 23% of global consumers say they are familiar with cryptocurrencies. Additionally, roughly 1% of the world’s population has a unique crypto wallet and only 40% of investors see crypto as providing long-term stable growth. It’s proven to be the most popular in emerging markets, but the public largely sees it as risky and volatile; however, it continues to capture the attention and interest of younger generations. This shows that familiarity, understanding, and education are key to the wider adoption and future of cryptocurrency. 

  1. Consolidating a Fragmented Market  

Right now, the industry is young and fragmented. Every day seemingly brings news of emerging technologies like NFTs, tokens, and unique use cases. It’s difficult for the most avid users to keep up with the evolving landscape let alone casual investors and consumers. This fast-paced, fragmented market creates uncertainty, which most people shy away from. 

In many ways, today’s crypto landscape mimics Web1’s reception during the 1990s. There were definite market leaders that are still around today, but there were also hundreds of copycats or poorly thought-out startups that ultimately fizzled out. Many of those companies were bought out by the larger, more stable companies. Given the current environment, the market can expect more of the same.

Blockchain companies that come out ahead will be investing in the technologies that use smart contracts to improve service levels or offer a new product. Companies that take current technologies in market offerings to claim as their own innovation will eventually fold and be acquired by companies that are using smart contracts to build profit and gain a market advantage. 

That doesn’t mean that there isn’t still room for innovation and new services. There are many great solutions out there, but they only cover parts of the journey the user goes through to get into the cryptocurrency space. For example, if you take a closer look at compliance, companies are using three or four vendors to onboard users while meeting regulations. With new companies, technologies, and tokens entering the market, this fragmentation will continue in the short term. But investors shouldn’t let this hinder their interest.  

  1. The Secret to Adoption: Targeting Enthusiasts

For the most part, consumers are aware that crypto exists, but they don’t understand its benefits or utility in their day-to-day lives. With blockchain games and GameFi as well as reward redemption platforms that trade airline miles into crypto on the horizon, expect this to change in 2022.

We’ve seen some of this already in 2021 with NFTs that cater to art collectors and sports enthusiasts. This will branch out into other areas such as wine, sneakers, and other collectibles, bringing in new users. 

For the mass consumer, understanding these technologies can be challenging, but when it is tied to something they know and are enthusiastic about, it’ll start to grow among that community. Already, we’ve seen NFTs that cater to art collectors and sports enthusiasts. Other areas, like wine and sneakers, will likely follow suit. By tying crypto to something that people already know and are enthusiastic about, we make crypto easier to understand, which will help it grow within these communities. Keep an eye on more enterprising companies pushing into these areas–specifically collectibles–to broaden the reach of crypto and blockchain in 2022.

  1. A Simplified End User Experience

When a customer registers for a new service and they are happy about it, they typically reference how easy the process was. Building toward this user experience isn’t just good practice, it’s necessary. New mobile apps will come to market with the promise of making the entire process simple for the average user. With new technologies such as DApps, the cost to develop apps will become faster and cheaper, and allow creators focused on the customer experience to create new experiences. 

DApps are decentralized applications that run on a P2P or blockchain network. Users don’t have to submit their personal information, which limits fraud and risk for the individual. What started with a Shake Shack promotion will eventually lead the way for new methods of purchasing goods and services such as tipping or asset payments through cash apps. Companies who succeed in making the onboarding process, for their platform or app, user-friendly will inevitably win out, separating themselves from the rest. It starts with a Shake Shack promotion and extends into tipping or asset payments. And the ones that make onboarding and using crypto the easiest and painless will inevitably win out. 

And winning creates consolidation. 

There will be a consolidation of crypto apps from payment platforms to crypto lending, accelerating consumer usability and utility. Some technologies and players will inevitably be left behind, much like the dotcom crash of the early 2000s. But consumers and investors will benefit from increased regulation, clearer use cases, better protection, and increased stability. Therefore, having a strong supporting infrastructure that includes fiat rails, compliance requirements, and an easy onramp to tokens will empower these businesses to create innovative, yet reliable, decentralized finance solutions. 

  1. Technical Innovation Will Lead to Scalability

Right now, many hold Bitcoin and digital currencies as a store of value or speculative investment. However, technological advancements are speeding up transactions, lowering costs, and providing more usability, which could soon lead to mass adoption.

Along with volatility and lack of regulation, transaction speed and costs are common barriers for most consumers. New layer 2 protocols provide better scalability and faster payments, which can transition digital currencies from peer-to-peer digital cash transactions to crypto-to-fiat and vice versa. This transition is key for billions of users to get involved. Having fiat currency or central bank digital currency supporting crypto transactions, users will trust the system more than they do now. 

The Takeaway: The Future is Consumer

New technologies, new uses, and new comfort levels can change the mindset of Bitcoin as a commodity to hold to something that can be used. Right now, it’s seen as a reward or “cash” back proposition for many companies, which undercuts its usefulness and positions it as something to be stacked and held for future returns. With other tokens and blockchains being introduced in many exciting new ways, this might ultimately reduce the effectiveness of Bitcoin as a major transactional player. Consumers move toward what is the most useful and easy to use and whoever figures that out will shape the future of crypto.