How do cryptocurrency wallets impact cryptocurrency adoption? Read the guide to dive more into the topic of crypto and wallet acceptance within the society.
Cryptocurrency wallets, primarily designed to store crypto, digital credentials, and NFTs, can play a crucial role in the near future, as they are the gateway to Web3 adoption.
As long as cryptocurrency is in use, tools to store it will be in demand. Moreover, today's technically-savvy user needs a simple, easy-to-use, and all-in-one solution. The lack of such solutions on the market is one of the obstacles to crypto acceptance in particular.
How is crypto adapting among the population and how can crypto wallets play a major role in its hasty adoption if the current problems are overcome? Let's go over everything in order.
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Grassroots crypto adoption: what is the current situation?
In a few years, cryptocurrencies have evolved from digital novelties to an adaptable financial reality (maybe?) capable of disrupting the global financial system. Bitcoin and hundreds of other cryptocurrencies are increasingly being leveraged as investments and used as currency to buy a range of goods and services. What are the specifics of crypto uptake today?
- Millennials are leading the way
For cryptocurrencies to become widespread, they need to become a "working tool" in the hands of not only corporations and crypto enthusiasts but also the average consumer. According to Forbes, the adoption of crypto by ordinary consumers in the U.S. is in its infancy, with their use varying widely depending on which generation the consumer belongs to. For example, 20% of respondents in the 2022 survey indicated that they had already interacted with cryptocurrencies in some way: they had either bought, traded, or received crypto. The most active adoption of cryptocurrencies is among millennials (35%), as well as Gen Z (33%). What’s more, for most users, crypto is more of an asset than a payment method.
Image source: Forbes
- Emerging markets dominate crypto adoption
Global crypto adoption reached its current record high in the second quarter of 2021. Since then, the expansion has been uneven.
Image source: Chainalysis
However, stability in the use of cryptocurrencies is observed within emerging markets. For example, users in lower-middle and upper-middle income countries often rely on cryptocurrency to send remittances, savings, and meet other financial needs. Thus, Vietnam ranked first in cryptocurrency adoption for two years running (2021, 2022). Whereas the Bahamas topped the list of 10 countries that have already launched CBDCs: the Sand Dollar was released in October 2020 for local use.
🤔 Although CBDC is not exactly crypto, its digital nature can significantly affect the development of the digital financial system, where crypto has every chance to become pivotal.
- Acceptance among merchants can directly affect acceptance among buyers
Merchants always strive to provide customers with what is in demand. So, they are seriously considering the introduction of cryptocurrency-enabled payments - all to adapt to a rapidly changing marketplace by supporting customer preferences. According to a Deloitte survey, merchants expect the following benefits from digital currency adoption:
- Improve customer experience (48% of respondents)
- Increase customer base (46%)
- Influence the perception of the brand as a frontrunner (40%).
Similarly, survey respondents cited many barriers to adoption, such as:
- Security of payment platforms for customers (43%)
- The changing regulatory landscape (37%)
- The instability of the digital currency market (36%).
While most people don't currently think about using cryptocurrency for their everyday purchases, the proliferation of merchants and large organizations that accept cryptocurrency payments may alter the situation in the long run.
Key problems hindering the acceleration of global crypto adoption
Since the development of the crypto market goes hand in hand with the crypto wallet market, The problems mentioned below also refer to the latter.
1. Crypto regulation issue
Should crypto be overseen by government agencies? If yes, how should it be regulated? If not, how to protect users from multiple thefts, hacker attacks, and crypto-related crimes?
Well, perhaps a little government intervention and the creation of a regulatory framework can contribute to the safety and popularity of the new payment method. At the same time, it may help attract investors and make crypto less attractive to criminals.
👉 Find out more about crypto regulation in 2023 and beyond.
2. Security issue
Crypto wallet security is the number one concern for those who are seriously considering the introduction of digital currencies as a payment method. For vendors, for example.
If we take the end user of a cryptocurrency wallet, along with the issue of security, the issue of usability is also crucial when choosing a way to manage their digital money portfolio.
3. The issue of user awareness of the crypto market and security measures
The paradox of crypto as "money" is that it is paired with blockchain. By its traditional nature, blockchain is decentralized. It follows that controlling your assets in a crypto wallet is no longer the prerogative of the bank, but your responsibility. But there are two major exceptions:
- There are custodial wallets that are managed by a third-party service, such as a cryptocurrency exchange or wallet provider.
- There is a permissioned blockchain, which has an access control level. Such a blockchain is limited to the persons who have access to it. It allows only "authorized" participants to enter the network and perform certain actions. This authorized person can be a bank, for example.
In both of these cases, the user is already a "secondary person" concerning the management of their data and assets stored in the wallet. This means they are less responsible for managing their assets and data.
🤔 In fact, assets are not stored in the wallet. The wallet stores only the keys that provide access to your blockchain-backed assets.
To provide the highest security while giving control of assets only to the user, there are non-custodial wallets available on the market. Non-custodial wallets - such as the OneArt wallet - give the user full control over the stored assets. The wallet provider has no access to your keys. That is, only you have access to them, which means that you, as the user, are fully responsible for their safety. As long as your keys are safe, your savings are safe.
OneArt Tip: Keep your keys in a safe place and do not give anyone access to them. Otherwise, you risk losing your crypto assets.
4. The usability issue
New things take time to get used to. In the case of crypto, users need a lot of time to analyze, start leveraging, and then get used to the “potential-new monetary system”. So at this stage, the last thing users crave is a difficult-to-use tool related to their assets.
What are modern crypto wallets lacking?
The problem with modern wallets is their complicated interface.
This is often a discouraging factor for new users. If we're talking about the mass adoption of crypto and widespread use of wallets, we need a convenient & multifunctional solution while simple & attractive. Moreover, given that wallets are regarded as a pathway to the Web3 world, adding more features to them, backed by decentralized technologies, will only increase interest in their use. What kind of features? For example, of the social nature.
So, what if a crypto wallet is seen as more than just a tool for storing and making transactions? A kind of global social network, but where everyone is responsible for what and how much of his or her data to provide to other users. What about equipping classic-to-understand wallets with social features that would make them a place to unite users based on their cryptocurrency and NFT interests among others? Just more engaging, interactive, and fun. It could be something like a social crypto profile without informational “gibberish” and with the ability to control one's data.
For crypto wallet usage to shoot to the max, creating a secure technical foundation by providers is not yet enough to make a wallet as secure as possible. Users need to shift the established paradigm of "the bank secures my assets" to "I am responsible for the security of assets”. Unfortunately, given the volatility of the industry, hacking, phishing, money laundering, and other forms of bad behavior, wallet users, as well as their creators, are in a rather vulnerable position. But this can be prevented if users are aware of security measures and scenarios, while the developers ensure the safest possible tech base.
Final Thoughts
As with many new technologies, ease of use and awareness issues are seen as major barriers to wider adoption. Improving the usability of cryptocurrency wallets + increasing consumer understanding of how cryptocurrencies work = crypto & crypto wallet development. However, wallet developers need to make sure that their apps match what users expect from a regular financial app. But at the same time, keep it simple, convenient, and, most importantly, secure.
🔐 OneArt has created a separate Security blog section. There you'll find more insights from our team on how to protect your assets and secure your non-custodial wallet.
https://oneart.digital/en/blog/crypto-wallet-security-basics-you-need-to-know-in-2023
Gentle reminder: We do our best to protect your crypto assets. But the OneArt wallet is non-custodial. That means it gives you full control over your data and funds. No one but you has access to your digital money. But it also puts a lot of responsibility on you, since only you have access to your keys and recovery phrases.
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