Why Crypto is so terrible?
Despite thousands of best brains working on blockchain technologies, Crypto currencies are still terrible to transact. They are great to gamble and speculate!
Although Blockchain is a powerful technology that has the potential to change the way values moves across the globe, the current state of blockchain has several flaws that are still not addressed.
- Ease of Use
For an average person who is not much into tech, investing into cryptocurrencies could be a nightmare. The onboarding itself is so difficult to comprehend.
As a speculator, If I wish to buy a token that’s not traded on the centralised exchanges yet, the process could be daunting. Here is how a process could look like —
Step 1: I land on the token’s website home page. It asks me to download their safest wallet app.
Step 2: Next, it asks me to download decentralised app like Uniswap, Sushi. Then I realise I cannot buy ETH from fiat due to country restrictions. So I wonder where do I get ETH from?? After several hours of reading, I figure out that I need to open an account with one of the centralised exchanges and convert INR to USDT then buy ETH from USDT. I realise that my bank card does not work because my bank thinks crypto is dangerous and leads to terrorist funding!! So, I try another bank account and another until I find one which works!
Step 3: Then I need to figure out my wallet address. Once I find out my wallet address, I then initiate the transfer of tokens.
Step 4: After few minutes the funds arise in my tokens wallet address.
Step 5: Now if I need to sell these tokens, and get INR bank into my account, that’s another challenge!
Even if you are somewhat an experienced folk, investing in crypto products can be intimidating! Here is how one of the reddit user described their experience —
I wanted to get into a liquidity pool offered by a dex the other day. My first foray in to defi.
I watched a how to YouTube video. I have to first swap one coin for another, then I have to move those coins to the layer 2, then I have to pair or move them to the LP(? I dont remember anymore). Then I can go in and choose to add to the liquidity. But! Now I have to harvest. Best to harvest often so, log back in harvest everyday, convert those harvested coins to another coin, push them back to the liquidity pool and reinvest them..
And then do it all in reverse to get your coins out and back in your wallet, when you’re done. Holy fuck is it overwhelming. I watched the video twice. Still haven’t gone through with it. It seems like there are so many opportunities to screw up and lose money.
All of this is happening because of the greed to earn quick money and the fact that crypto is made by developers, who think everyone can follow their creations!
- Technical Jargon
Private keys, key phrase, connecting wallets, gas fees, Proof of stake, Smart Contract, DApp, token swaps, staking, etc are terms that an average person is not familiar with and this lack of knowledge creates a wall of fear that prevents people from getting into web3. The challenge with Web3 has been that it is developer driven. Take any home page of a succesful crypto company, and you would realise how hard it is to even figure out what they are doing! Hardly any company is able to explain there product offerings in a simple manner. You will hardly find any dedicated product managers or UX designers in lot of these firms.
In the banking world, banks have been using the term debit and credit since centuries. However, Half the world population would still be confused with what adds the money and what subtracts. Today, terms like “deposit” and “withdrawal” have been replaced by more easy to understand terms like “send” and “receive.” It seems straightforward now, but it took quite some time for the transition from complex to simple language to occur. We continued using the complex terms because the banks had no clue what an average person understands. The thought has always been “We will create something, then we will just pray that customers understand us”.
Not just crypto companies, but most of the banks and popular apps have a terrible user experiences. Even the next gen banks like Revolut and social media apps like Facebook and Twitter have terrible UX. You only find them better today because you have surpassed that learning curve by making few mistakes and figuring out the right way! You put a new comer tech savvy person on one of these apps and ask them to perform the tasks, half of them will struggle to complete them in one go!
In the need to simplify technical jargons, wrong ideas are being percolated to the users. For example — Binance and Coinbase both call where you hold your coins on their exchange your “wallet,” so when I kept reading how I needed to move my coins to a wallet for security, I thought all these years my funds are already in wallet!!
- Bad Enginnering — Enter a wrong wallet address and lose all of your money
If you enter a wrong wallet address, you are not getting your money back! There is no customer care in Crypto world and you can’t sue them either for this!
That’s a highly stupid engineering to begin with. Monetary value is being moved. If a solution is to be adopted at a scale, the solution needs to warn a user that the address is wrong! And if it’s wrong and user still moves the money, the money should be reverted!
Here is how a wallet address may look like —
0xb394f5ea0ba12594cd834313ffgba74239561249
Instead of Zero, you type in a letter O and all of your money goes to the big bang hole!
- Countless Scams
Crypto scams are a result of bad engineering, lack of regulations and bad morals. It’s not like scams do not happen in the traditional banking world. Where ever you find immoral humans, you will find scams! However, the current banking world has evolved to put regulations and systems in place to prevent and minimise the damage. You lose your netbanking password, there is a way to recover it. Your credit card gets misused, there is a way to recover your money. You get scammed, there is a way to recover your money! There is none ways in crypto to recover your money if it reaches bad hands!
There are hundreds of crypto scams that happen every month across the globe. Molly white records some of them on this ledger — https://www.web3isgoinggreat.com/
- Expensive, Insecure and slow transactions
Moving money on ethereum or bitcoin is not cheap. It’s neither secure. Even the most secure Ethereum platform had a 60 million USD theft which led to a highly controversial hard fork.
Bitcoin blocks take forever to compute. Literally, a transaction takes 10 minutes to an hour to compute and verify! There is lightning network that tackled this problem. However, seems like it’s still light years ahead of mass adoption.
Transaction fees are unpredictable and brutal. Even moving 1 USD worth of ETH can cost 60 USD at times! Traditional banking has made moving money free and immediate. Payment rails should be built and maintained by government just like they control money. India moved 290 billion USD worth of funds in May 2024 alone via UPI stack built and managed by NPCI which is not-for-profit organisation. 99.99% of the transactions incur zero transaction fees.
Paying fees in 2024 to move money is ridiculous!
- Lack of Regulation
‘Regulations’ are against the philosophy of decentralisation. If the Cryptocurrencies and the blockchain technologies are to be adopted at a massive scale, there is a need to have either external regulation like the traditional world has or an embedded regulation in the decentralised system. The regulations can be coded into Smart contracts which are upgradable. Implementing governance via DAO is a good step forward to ensure things happen within a controlled environment.
- Non Eco-friendly Enginnering
Mining Bitcoin is extremely resource intensive, generating as much carbon emissions globally as an entire developed country.
It’s a contentious issue: some praise its decentralized nature, while others criticize it as an environmentally damaging alternative to traditional currencies that will exacerbate the financial sector’s carbon footprint.
If it’s so bad, why do people still buy bitcoin? Well, We all love money!
Ethereum solved this problem by switching to Proof of stake consensus mechanism which solved the energy problem by 99%.
Here is an interesting video on the uselessness of NFTs —
