This year, cryptocurrencies are finally starting to catch on with the general public. From Elon Musk and Tesla investing and accepting bitcoin (BTC) to the recent outcry over unreadable tokens, the days when blockchain technology was the domain of cipher books and programmers are behind us.
However, the technology is not yet so advanced that the average citizen is comfortable with it. And the longer it takes for cryptocurrencies to reach the level where they connect with non-technical users, the greater the risk that centralized companies will take it upon themselves to increase accessibility, undermining the censorship resistance of this relatively new technology when it finally enters the mass consciousness.
Let’s take a look at the state of the cryptocurrency landscape as it exists today.
Bitcoins approach, lightning strike or coercion hindrance
When bitcoin decided to give up scaling on the big-block chain, it essentially put all of its hopes and dreams of being a useful everyday currency on solutions for scaling at layer 2, specifically the Lightning network. Although the Lightning network is already functional today, it does bring with it some new complexities, such as. B. liquidity balancing, opening and closing channels, routing payment paths, maintaining communication at all times to receive funds, etc. And perhaps the biggest challenge for new users is that moving money off-chain on the Lightning Network requires transactions within the chain (as do many of the other Lightning Network features), resulting in the dreaded time-consuming confirmations and high transaction fees. All in all, it’s not a pleasant experience, even for an experienced cryptocurrency user and a complete beginner.
Fortunately, tireless developers have created a new generation of Lightning Network portfolios that improve the user experience to the point where even a non-technical user can feel comfortable. Second-generation Lightning Network wallets, such as Phoenix, do this by outsourcing some of the functions of a regular Lightning Network node to a wallet provider, including channel opening, liquidity management and automatic backups.
In fact, they are similar to hidden wallets in almost every way, except that they are not hidden. This means that the user remains in control of his money and that the service provider cannot make off with his money (or deny him access to it). In principle, two main objectives were preferred: Ease of use and user control over resources, and all necessary compromises have been made to achieve this. And the results are pretty good: When you use a second-generation Lightning Network wallet, you can send and receive quite easily without being subjected to complicated internal network processes, and have full control over your money at all times. Just rely much more on the Lightning Service Provider, or LSP, than you would if you just used bitcoins on the blockchain.
The problem is the precedent and direction it sets for the ecosystem. This approach is forcing more and more users to rely on a dwindling number of large LSPs to easily move their bitcoins, similar to the old financial system where transaction processing was concentrated around a small number of large payment companies.
Of course, many users will still be able to manage their own money and protect themselves from inflation and currency manipulation, but with the exception of a few technophiles with their own hubs, most people will rely on centralized structures for their transactions.
Even fast competitors do not look like this from the user’s point of view
To be fair, not all cryptocurrencies suffer from the complications of a cluttered blockchain and a burgeoning layer 2 solution. Many chains, especially large bitcoin forks and projects like Litecoin (LTC), have low in-chain fees and regular confirmation times. But even this experience is not enough for the end user.
No matter what Bitcoin Cash (BCH) fans say, transactions aren’t exactly instantaneous, and payments through many popular payment systems or deposits on exchanges still require waiting for multiple confirmations, which can take from minutes to sometimes hours. The average user will not understand why they have to wait, why the wait time is variable, or that the service should have accepted transactions without confirmation but decided not to. They will only find that they had to wait and will be disappointed.
Of course, some pieces, like. B. test pieces, can be considered safe after conformation, thus significantly reducing the waiting time. Depending on the channel, this may or may not be enough to ensure a smooth user experience. Dash (DASH) transactions become persistent after confirmation (approximately 2.5 minutes) and can be considered highly secure in less than two seconds. This creates an experience that matches or exceeds that of proof-of-concept tokens, albeit a proof-of-concept network.
However, not all exchanges and services fully understand the underlying technology, so the experience may not be used. Other networks, such as. B. Nano (NANO), but perform transactions in seconds. However, this may come with significant compromises in terms of system reliability. Nobody cares about getting paid immediately when the whole network can become unreliable in a few days or even weeks due to spam attacks.
Centralised, rudimentary, promiscuous or test usernames
Even after solving the problem of speed and reliability of transactions, there is still an important key to usability, which is necessary for mass acceptance: Alias. While scanning a QR code can be quite simple, copying and pasting long cryptographic hashes is not recommended for websites, remote sites and the like. We need an easy and social way for people to pay with human readable usernames and contact lists.
Today, there are a number of systems that achieve this goal to some extent. However, most have significant drawbacks in terms of ease of use or trust, or both. Solutions like the Ethereum Name Service simply convert to a static address, which often still displays the long, ugly address given in the user interface and creates some privacy issues by exposing your entire transaction history to anyone who can simply paste your address into a block browser. The basics of cross-portfolio functionality are similar, except that the complexity is even greater due to domain-specific and portfolio implementations.
Looks like it: Trading cryptocurrencies should be easier. Here’s how. That’s a headline.
Another solution is provided by HandCash, a popular wallet for Bitcoin SV (BSV) that does not convert to a static address and supports contact lists. The problem is that the solution is centralized: Users must have complete trust in the company and its infrastructure. A similar setup in the BSV ecosystem, Paymail, allows users to easily switch to a new address each time without relying on a single centralized system. As with email, however, Paymail is dependent on the server hosting your domain, so the only option to resist censorship is to host your own server. There is also no universal system for contact lists. These two more practical solutions illustrate the unfortunate direction toward centralization, as easy-to-use solutions are difficult to decentralize.
Again, DASH focused on providing the most elegant solution to the usability problem – building a decentralized application layer that, among other things, provides both user names and protocol-level contact lists in an intuitive, user-friendly, and fully decentralized form. However, the solution is still in the testing phase this year, and it remains to be seen whether there will be large-scale disclosure in time to influence the trend towards mass adoption of centralized services.
Risk that end users simply trust banking companies.
Of course, the real risk is not that user-friendly solutions for cryptocurrencies will struggle or fail to catch on. The biggest risk is that solutions with full storage will just win out and take us back to the same old financial system we tried to escape from, only (supposedly) helped by crypto.
We’re already seeing examples of this, from the motivated blogging platform Publish0x encouraging direct withdrawals, to centralized exchanges to avoid the high cost of Ethereum, to US fast food giant Chipotle offering bitcoins exclusively to exchange accounts. Then there are the forays into cryptocurrencies from payment giants like PayPal and Visa. If we’re not careful, in the future we may issue our cryptocurrencies through the same companies and services we use for our fiat currency, and remain at the mercy of the same players we were trying to get rid of in the first place.
We are at a crossroads: Create usability in a decentralized way or let the mainstream kill decentralization. The challenge is great, but the stakes are too high to give up. Are crypto-currencies acceptable?
This article does not contain investment advice. There are risks associated with all investments and business transactions, and readers should do their own research before making a decision.
The views, thoughts and opinions expressed herein are those of the author and do not necessarily reflect or represent those of Cointelegraph.
Joel Valenzuela is a veteran freelance journalist and podcaster who has been living off cryptocurrencies since 2016, with no money in the bank. He previously worked for the decentralized autonomous organization Dash and now writes podcasts for Digital Cash Network on the decentralized content platform LBRY.
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