Web3 meets adoption: Buidlers assemble (Part 1)
A deeper look into challenges in bringing in the next billion users into web3
I remember vividly the first-ever crypto meetup I attended back in 2017. About six people turned up, including the host. They were talking about the next big thing called Ethereum and utility tokens that were being launched (most discussions went over my head, tbh).
One of the meetup attendees was a developer taking feedback for a product with a moving fox head, which I thought was super cool.
Yes, I am talking about the most widely used non-custodial crypto wallet - metamask. It is crazy how crypto has evolved five years since my first meetup.
However, I can't help but notice that 70% of the UI/UX is still the same from when I used metamask for the first time in 2017, back when crypto was a bunch of hardcore believers and developers.
But there is no way we can have the same UX and expect to onboard the next billion people into web3. I am not taking a dig at metamask in particular (I love metamask) but just highlighting that the UX, especially in the onboarding process, is still terrible for your average Joe.
I knew web2 had peaked in UX when I saw a priest accept online payments with a QR code during the 2020 pandemic. Web2 mobile apps have also become mainstream worldwide; I was convinced of this when I saw my grandma use TikTok!
But I can't find a single product in web3 that has convinced me that it could scale to a billion users, atleast not yet!
I wish I could say this was the web3 moment of adoption, but unfortunately it’s not. It’s very much an exception not the norm.
The drop-off
*Coinbase has 89M verified users and 11M monthly transacting users* (source)
*Metamask has 30M monthly active users* (source)
*6M people have ever bought an NFT* (source)
There’s a massive drop-off in each step above. The single biggest reason web3 adoption is still tiny is bad UX!
Before using any dapp, a new user must understand and deal with fiat to crypto exchanges, custodial/non-custodial wallets, gas fees, and complex wallets like metamask and seed phrases.
There are so many cool web3 native products out there, but they lack adoption for one simple reason - Convenience!
They have to significantly compromise on the values of decentralization and user ownership in order to provide a good UX.
I strongly believe that this must be solved now to make good consumer-facing web3 products go mainstream and ultimately build a better internet.
And why web3 adoption matters? Well, if i have to boil it down to 3 words its
Ownership, freedom, and accessibility. Read this thread by Chris Dixon if you’re not convinced.
There are all sorts of PR problems associated with bitcoin, NFTs and crypto in general, not even mention the regulatory hurdles (I've seen firsthand in India) that are holding back many startups from flourishing or launching mainstream products.
But we are not going to focus on that in this blog, we will mainly focus on the utility and convenience aspect of web3 which is still, I think the biggest barrier to mass adoption. And let’s be honest even if I could wave a magic wand and solve all the PR and regulatory issues we would still not have significant adoption if the products are not easy to use.
The Big web3 irony
The biggest irony in web3 is that a majority of users have not experienced the actual benefit of web3, new users are mostly still stuck to trading and speculating in centralised exchanges never having done a single transaction on the blockchain.
Most “web3” users today aren't really web3 native users since their experience with crypto has been no different from trading some stocks on Robinhood, basically all they see is a price ticker on a user-friendly app like Coinbase (a crypto bank) or a professional trading terminal like binance which they use to buy sell and speculate.
Many of these mainstream apps won't even let you withdraw your tokens from their platform!
This is not web3, it's like buying a Lamborghini with no engine. Yes, you can take some cool pictures and post them on Instagram for clout but its not the same as actually driving the beast.
By web3 adoption, i mean the full experience of having ownership and control over your magic internet money through non-custodial wallets where money cannot move without your permission (unless you get hacked by one of those Vitalik impersonators on Twitter)
You can never get the authentic feel of the ethos of web3 without being your own bank!
Most products with somewhat mainstream adoption have accepted the tradeoffs of web3 principles for convenience, and I don't blame them.
You need to make any product convenient for your everyday users to gain meaningful traction and scale. The only way so far has been to provide convenience at the cost of principles (by intent in some products and pragmatism in others).
Enter NFTs - the trailer for the mass adoption movie
NFTs gave us a trailer of what mass adoption could look like, users were forced to use non-custodial wallets as there were no centralised exchanges like coinbase offering “NFT trading” services.
But we saw significant adoption of metamask, especially among the new audience who had never invested in crypto before and did not belong to the class of people who understood and cared about decentralization or the underlying tech.
Sure these new users did have a financial incentive as well, but it's not fair to say it was just that, financial speculation was married to Community (Gary’s Vee friends), Utility (ENS), Gaming (Axie Infinity’s adoption in the Philippines), Art (Beeple’s $69 mn sale) Music (3LAU’s successful NFT drop) and most importantly Culture (BAYC)
I think music NFTs are going to revolutionize the archaic record label dominated music industry, but more on it on another day.
Regardless of how ridiculous one might think of the JPEGs selling for millions, we would not have had Eminem change his Twitter profile to an NFT PFP, we would not have had Gary vee slam launch an engaging project to his hustler community, we would not have had Steve Aoki launch his A0K1VERSE club to his large EDM fanbase.
Like it or not NFTs are the gateway drug into the world of crypto/web3.
But we have barely even begun with web3 adoption, I'm sure there were millions of people that did not buy an NFT because they found it too cumbersome to purchase ETH and pay gas, figure out how this metamask and seed phrase thing works or perform complicated KYC in an untrustworthy crypto exchange.
The sheer amount of jargon and sophisticated tools involved in the onboarding process is overwhelming for most people.
wen mass adoption?
Now that we have seen the trailer for mass adoption, now is the time to get ready and watch the entire movie unfold.
So is it gonna take us 20+ years to get the same level of adoption as the internet or 13 years of smartphone? I don't think so, It is going to be much shorter than that.
We have already passed the bell curve from early adopters to early majority, crypto is now entered the mainstream consciousness. I am guessing it's going to take off within the next five years, but its next to impossible to predict the exact timing, I am no Balaji :(
The good news is we don't need to build infrastructure from scratch that’s necessary to reach the masses, global smartphone penetration is already at 83% (developed rapidly in developing economies like India, Nigeria, LATAM - read about UPI adoption and online payments in India here)
We don't have to worry too much about internet access, tech giants like Google and Facebook are working on increasing connectivity in Africa on a massive scale, companies like Jio have given cheap internet access to over 400 mn people in India)
These problems have reached maturity and are already being tackled by heavy hitters.
Blockchains are scaling (slowly but surely) and developer tooling is objectively getting exponentially better.
We have our work cut out for us, all we have to do is to give a web2 style or hell even a better experience!
The Apple moment
Apple made boring corporate computing machines into cool PCs, boring black box phones into smartphones and boring Bluetooth professional headsets into AirPods. Apple was not the first mover in any of these product lines, but they were the first to shift the culture into adopting technology on a different scale.
But I don't think we need Apple again to create a culture-defining web3 product, however, we definitely need an apple moment.
Unlike apple, web3 is an open ecosystem, it is composable and truly global. So any progress made by any team however big or small matters, we don't have a Steve Job in web3 but we have Satoshis. Yes, not one but many, we are all Satoshi.
Okay that’s enough of preaching and talking theory, why don't we get our hands dirty and think about how we can solve the web3 onboarding issues in the real world shall we?
Welcome to the Interakt club
Prashanth and I built interakt.club for a hackathon (HackFS 2022) a few months ago, Interakt is a web3 native interaktion (yes with a k) tool that lets you video chat with anyone while streaming crypto tokens in real-time.
Wouldn't it be cool if you could get paid in tokens in real-time, valuing every second of your time…literally, all without having to trust any middleman. The money streams across any border from one 0xsomethingsomething1227y4fd wallet to another.
If you feel someone is wasting your time and you don't feel like paying anymore you can simply exit the call and stop streaming tokens without worrying about getting scammed or wasting money.
We built the product to be completely decentralized, giving complete control to the individual. All the call recordings are stored on a decentralized storage network called IPFS (Inter Planetary File System) and can only be accessed by the wallet holders of the call.
Can't be evil, instead of don't be evil, again literally.
This is revolutionary!
(Ok that's enough hype)
P.S: I am biased
Here is a demo video, check out how it works:
For all the web3 nerds who want to know the tech stack and how it's actually implemented, we used Ceramic network for individual control and access to data, IPFS for decentralized storage (via web3 storage) with end-to-end encryption using the Lit protocol SDK, all processed on the front end (we literally don't have a backend for interakt)
Link to our Ethglobal showcase page: https://ethglobal.com/showcase/interakt-z8dit
It was pretty obvious that the target customers for interakt would be people who value their time and get paid by the hour, which are consultants, therapists, doctors, freelancers, lawyers, etc
So we gained a lot of traction from these users early on and are now going mainstream!
Kidding, not so fast.
Notice that pretty much all of the categories of users mentioned above are generally web2 native and might not have a deep understanding of web3, that should not be a requirement to use a consumer-facing web3 product.
Just like you don't need to understand SMTP to email someone, you only need to understand the benefits.
When we approached some potential users, this is how we had to explain the onboarding process
First, you need to download this chrome extension wallet called Metamask, which is a non-custodial wallet
Consultant: What's a non-custodial wallet? (led us down a rabbithole)
You have to create an account on Ceramic and sign in to gain control of your data
Consultant: What's ceramic and how will they ensure my data is safe (Oh boy!)
Once you get paid in crypto, to convert it into fiat you will need to transfer it to a crypto exchange like coinbase and then place a sell order
Consultant: So am i supposed to open an account in coinbase now? Cant i spend my crypto directly?
Yes you can, either through a Crypto debit card (who usually charge ridiculous fees) or you will have to buy gift cards (doesn't sound like a convenient way to spend money either!)
Consultant: This seems like too much work, I think I'm good using zoom and getting paid via stripe
This is the actual flow for a newbie who wants to stream money on an Interakt call:
And walla!
You can finally use our product!
It was even exhausting for me to type it let alone communicate it with non web3 native users and get adoption.
Now in principle interakt is a better solution than any web2 alternative as it provides complete ownership over your data, privacy by design, real-time wallet-to-wallet payments that guarantees payment for your time, by the second.
But the sad part is that it can never become a mainstream product with the current challenges in UX, this is not just the story for interakt but most web3 native products.
They are better products in theory but when it comes to people using it in real life we are still far away from mainstream adoption (with the exception of financial speculation and gambling, for which a few people don't mind spending time learning the complex UX)
So how do we solve this problem for Interakt?
To solve the problem of user onboarding, we need to first understand the problem in depth and from a perspective of an everyday user.
Next week I am going to be diving deep into the exact points of friction and some potential solutions with examples from other projects that are solving this well (somewhat).
I want to know your thoughts, how can we solve this?
Feel free to leave your comments below or reach out to me on twitter (DMs open)
Nice article, thanks