Decentralized but Inaccessible: Crypto Entry Barriers Are Holding Back the Market

By Michał Domarecki, CEO and Co-Founder of Synapse Network

Despite Bitcoin’s recent market struggle, its market cap still exceeds over $390 billion, showing an increasing interest in the asset class. But the industry has much to learn from the retail-investing surge that occurred at the start of the COVID-19 pandemic. As crypto receives some bad press regarding the recent Luna crash, it becomes critical for the industry to be more accessible than ever to achieve its lofty goals of decentralization in order to pull more HODLers into the fold.

But crypto entry barriers hold many of these potential crypto enthusiasts back. It’s challenging to enter the crypto space without an in-depth understanding of the crypto ecosystem and without the knowledge required to begin trading in the space. But how can crypto become more accessible? The answer to this question is critical for the industry to endure what could become a crypto winter. 

Making investments accessible for normies

The post-pandemic boom paved the way for a new surge of investors via online brokers. One of the biggest motivations for new investors during this time was the ability to make smaller investments, as stated in the FINRA Consumer Insights: Money & Investing 2021 report. For example, Robinhood, a platform allowing newbie traders to dip their toes in the stock market pool, exploded during the pandemic, with a current user base of around 31 million verified users as of May 2022.

In addition to trading small amounts of money, Robinhood’s easy-to-use platform made investing less daunting to younger investors and proved a great entry point for those looking to use their spare change to open a crypto portfolio. While Robinhood’s platform offers crypto trading with little fees, it only supports taxable brokerage accounts and doesn’t offer any fixed-income investment products.

But other crypto trading platforms that offer more crypto options, such as Coinbase, have their own set of issues to sort out, mainly navigating a seemingly complex UX. Artkai, a global digital product design and development team, ran a study with more than 30 blockchain-related projects and found that most crypto platforms’ UX design was inaccessible for those who are not crypto and tech-savvy.

In order to be accessible to newcomers, the crypto space needs to think strategically. Combining the UX of Robinhood and the plethora of crypto trading options of Coinbase could help break down the crypto-entry barriers and bring new players into the space.

Crypto Education 

But solving the UX issue only skims the surface of some of the issues crypto newbies encounter. Twenty-nine percent of people who have never bought cryptocurrency say their doubts about what to do with it prevent them from buying, according to a study conducted by CES Tech. That would’ve been expected three years ago. But considering the undeniable push towards mainstreaming digital assets in the latest bull run, that over a fourth of investors don’t even know what to do with the novel assets should worry developers across the board.

Educating the public on how and what they can do with their crypto assets becomes crucial in moving the needle towards mainstream crypto usage. Digital payments have entered a new era, one where many are living with crypto and digital assets, but there are still those who are clueless. Just like credit cards weren’t immediately accepted, a new form of digital assets needs time to become normalized. A recent bill signed last year in Georgia perfectly exemplifies how currency education in high schools pushes forward educating the public about crypto.

But a more pressing problem arises from the abundance of crypto scams. Scams and security issues hold back normies from entering the crypto market, and for good reason. Therefore, before investors can even start small, they need to know what they are getting into and have some baseline of education about what crypto is and what to look out for.

Creating apps or educational materials helps users understand how to spot a scam and educates the public on what to be aware of when investing. Along with this, creating accessible user-friendly wallets will push normies towards joining the crypto sphere. Hopefully then the market can jump back and even prosper in the next bull cycle. 

About the author:

Michał Domarecki is a multi-entrepreneur and investor with over 15 years of experience in business management. After founding and running successful international businesses, in IT, transport, and logistics, Michał became co-founder and CEO of Synapse Network. Passionate about cryptocurrencies and blockchain, Michał also founded a crypto community and acts as an advisor and investor in promising blockchain start-ups.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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