PEOPLE NOT UNDERSTAND DECENTRALIZED CRYPTOCURRENCIES

Updated: 04/22/2020 06:21
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people dont understand decentralized cryptocurrencies
DeFi the Savior For Mainstream Adoption? Think Again
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DeFi the Savior For Mainstream Adoption? Think Again DeFi, the much-lauded savior for cryptocurrency, currently shows that those with financial knowledge who are interested in the various value propositions such as lending, derivatives on the blockchain are still a tiny pool of users.

Although the coronavirus crisis presents one of the largest opportunities to create cashless economies, the underlying barrier for crypto mainstream adoption remains the user's lack of trust and knowledge of the fundamentals of crypto. Many still consider centralized solutions to be the better option.

According to Dappradar, the top four DeFi projects include Synthetix, the top DeFi platform in terms of 24H user count has 259 users in the past 24 hours and is the most widely adopted DeFi protocol. In the past 24 hours, MakerDAO has seen 216 users with a $7.3M volume and 151 transactions, Compound has seen 203 users with a $3.4M volume and 386 transactions and dYdX has 200 users with $5.3M volume and 1.4K transactions

On the other hand, top DApps overall tend to be games: EOS Dynasty has 4.5K users with $7.4K volume on EOS and 122.3K transactions, Dice a gambling game on EOS has 2.6K users with $202K volume on EOS and 23.8K transactions and My Crypto Heroes has 2.2K users with $51 volume on ETH and 2.5K transactions

Why the big disconnect? Decentralized solutions in the DeFi field are not only technically hard to wrap one's head around but they also often require larger sums of money to experiment with compared to crypto games, which operate on a casual free to play model or with small amounts of cryptocurrency to buy-in.

There could be reasons why users feel wary around committing larger amounts of cryptocurrency to DeFi platforms. On April 19, dForce a DeFi project saw $25M drained from its smart contract in a hack. And that's just the most recent example – there have been others.

Lack of Trust And Knowledge Gaps

According to an Economist report, 54% of people would trust a government-backed digital currency compared to only 26% who'd trust one that's not backed by any organization. Hence, people still don't trust decentralization fundamentally, possibly because there is no "lender of last resort" when things go south with hacks or other exploitations such as the bZx exploitation.

What remains to be seen is which parties in the tech ecosystem will be able to spend the money to educate users and usher in mainstream crypto adoption. One thing stands for sure: the high upfront costs of educating users before measuring customer acquisition costs will have larger positive externalities for the crypto ecosystem.

However, these education costs will be massive, and those players who can afford to finance such campaigns will be those with existing cash flow from other areas of their business, such as Facebook or Reddit. It remains to be seen in 2020 and 2021 how the larger crypto ecosystem will grow in light of the fact that 44% of users choose not to engage with cryptocurrency due to their inability to understand or trust the basic underpinnings of cryptocurrency.

Source: https://cryptopotato.com/adoption-challenges-people-do-not-understand-decentralized-cryptocurrencies-survey-says/


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