The cryptocurrency space suffers a lot from its checkered history. For the sector to grow further it needs to be safer, more usable, and mature. The old saying goes: you only have one chance to make a first impression and maybe the best example of this adage is the crypto sector.
From money laundering and exit scams to high carbon footprints and unaudited code, the general crypto landscape has spent most of the last 10 years scrubbing itself of its undesirable and infamous past. For most, the sanitizing of the decentralized ecosystem was quite inevitable; it was simply a matter of when not if.
The mindset prevented the growing sense of urgency that needed to be on display and may have eventually contributed to the doubts shown by the mainstream institutional investors. But currently, the decentralized economy has expanded to become something much bigger.
Even when they encounter market volatility, the culmination of decentralized finance (DeFi), the non-fungible token (NFT) craze, and the year-over-year surge in token prices have now demanded the attention of the same investors who once avoided the decentralized economy.
How now do we change institutional interest into institutional investment? While that answer may seem simple, the execution will probably prove more challenging. Let us look at what needs to be done in the months and years that are coming to retain mainstream institutional interest and secure some institutional investors.
Based on last week’s plunge, it is natural to identify market stability as the main problem that is affecting the crypto market. However, make no mistake, the biggest challenging that is affecting the crypto space is security.
Looking at CipherTrace’s crypto crime and anti-money laundering report, it is seen that there have been many crypto hacks, thefts, and frauds that surpassed $1.9 billion in 2021. That was the second-highest annual value that was recorded. But, the good news is that the figure represents a huge reduction from the $4.5 billion in fraudulent incidents that were recorded in 2019.
Considerable and sustained measures have been adopted by the platforms operating across the crypto space to make the ecosystem safe for traders and investors. With the crypto theft dropping by nearly 60% in 2021, early signs show that the increased security measures are working and space is slowly becoming safer for investors.
That is an impressive feat by all means. Nevertheless, to parlay interest into investment will need a lot more than just reducing fraud in the space. It needs a collective effort across the crypto industry to create and implement measures to ward off nefarious activities. Platforms operating within this sector must demonstrate to institutions that crypto is no longer for unsavory purposes.
The platforms need to show that cryptocurrency is a tested and proven digital economy that cannot be overlooked any longer. The best strategy for attracting mainstream institutional investors is using a wholesale and widespread cleaning of the space. That would be a commitment to delivering to the users of all skill levels platforms and spaces that are exhaustively vetted and that place security at a premium level.
Safe and secure trading platforms are compulsory to support cross-ecosystem trading without fearing any faulty platforms or shoddy listings. Since time in memory, the mainstream institutional investors work by sound strategy in safe environments and not hype cycles that produce misinformation.
The crypto space is currently in the process of maturing. For it to mature to reach a point that translates to institutional dollars, it will need to experience more sustained growth.
The cryptos have long suffered from a usability problem. Taking financial investments into context, security and usability go hand-in-hand. In general, the users feel more secure whenever the platform that they want to use is easy to navigate and its functionality is up to par.
Nevertheless, due to the speed involved when marketing and scaling, user experience (UX) has not been considered as a priority by the exchanges. Removing this perception from the eyes of the mainstream investors has so far proven to be n uphill task.
The early days of the crypto market were quite forgiving. Subpar UX was very easy to overlook since most of the crypto users were speculators and traders who had the technical know-how to navigate most complexities. But when the less technical enthusiasts started joining the space, crypto exchanges and trading platforms moved their focus to create consumer-facing UX.
Though UX has improved tremendously since the early days, there is still a way to go when making transactions easy for the more discerning newcomers who are normally used to seamless UX across different trading apps.
Today, the average crypto trader uses 3.36 cryptocurrency exchanges to acquire, sell, and hold various currencies. It means that the average crypto trader may toggle between four or more separate interfaces, complete three different background checks, and track spot prices across three exchanges.
That is a complex process for even the most experienced traders. This assumes that the space is now ready to welcome new mainstream users into the fray is quite misguided.
Since late last year, there has been an increase in retail and institutional interest in the cryptocurrency sector. Nonetheless, the platforms that are operating currently remain hampered by inadequate UX and cannot be considered to be user-friendly.
To accommodate this influx of institutional users that are not crypto-savvy, it is critical to note that platforms put usability and functionality at a premium to attract these users and retain them.
The crypto sector is creating considerable waves among the traditional investors may be earlier than expected. With renowned investors like Michael Saylor and Mark Cuban normalizing crypto investment and exchanges like Coinbase being listed on Nasdaq, there is a compelling reason to think crypto will make its way into more mainstream investment portfolios.
With that in mind, changing speculators to become investors hangs on the crypto space’s ability to mature in a meaningful manner. For those looking from outside, the cryptocurrency space still appears to have images of basement-dwelling twenty-somethings tinkering on GitHub and Reddit. images of basement-dwelling twenty-somethings tinkering on GitHub and Reddit.
While a majority of the people know that is far from the case, it is now incumbent upon those working within the space to prove the long-term viability of what is being created from within.
2020 increased the interest in crypto in unexpected ways. More centralized laymen entered the decentralized ecosystem, the space does not have any other option but to mature, and rapidly. Rest assured, this space will eventually mature to accommodate this new interest.
Currently, we seem to be in unchartered waters. Crypto’s ascension into the mainstream spotlight has happened faster than most predicted. Nonetheless, for the institutional investors to take the crypto space seriously enough to invest, the ecosystem needs to become cleaner, more usable, and highly mature.
This current iteration of the space keeps suffering from its checkered history, and it is incumbent upon the participants within the crypto sphere to reshape its image.