Bitcoin
We really need Bitcoin ETFs
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After five years of drama and dozens of rejections, ETFs (exchange-traded funds) based on the spot price of Bitcoin have finally been approved.
A total of 11 ETFs are making their market debut, allowing US investors to gain exposure to Bitcoin (Bitcoin) without directly owning the cryptocurrency in itself.
While this could see billions of dollars flowing into the market, it is important to take a step back and consider the ramifications of traditional financial institutions’ involvement in the space.
BlackRock, the world’s largest asset manager, is among those which launched a Bitcoin ETF. This, when combined with centralization in current ETF systems, should ring alarm bells.
There should be a more decentralized approach – and the reason one hasn’t materialized yet is simple: Web3 was built with a clunky infrastructure that is difficult for newcomers to trust.
If Web 3.0 had championed ease of use from the start and been as easy to use as conventional financial applications, we wouldn’t need ETFs in the first place.
Challenges Hindering Mainstream Adoption
Cryptocurrencies are growing in popularity – there’s no doubt about that. Bitcoin emerged by 150% in 2023, and with the halving approaching, 2024 appears to be equally optimistic.
But despite this, widespread adoption of Web 3.0 technology is proceeding at a slow pace – especially when compared to established payment methods such as PayPal and Zelle.
New users are put off by the prospect of managing seed phrases and understanding long addresses made up of a random string of letters and numbers.
Hardware wallets are also expensive, which means accessibility is a major concern for consumers in emerging economies.
Right now, cryptocurrency users are primarily interacting with Web 3.0 through their wallets – but when it comes to usability, fiat-focused fintech platforms remain light years ahead.
Changes to the user experience
It doesn’t have to be like this. The answer is infrastructure that expands the user experience so that crypto transactions are as intuitive as PayPal transfers.
Features like ‘send to name’ eliminate the need to understand long and daunting cryptographic addresses. Instead, funds can be transferred to human-readable contacts with just a few taps.
Fundamentally, this eliminates the need for centralized databases.
On platforms like Unstoppable Domains, users have to set up a separate Web 3.0 wallet and then paste in addresses – making it difficult to know whether a party involved in a transaction is trustworthy and verified.
This also increases the risk of phishing attacks, where wallets can be drained in a devastating exploit.
Payment solutions of the future will be more than a mere plug-in for Web 3.0 – they will be a versatile choice for both users and B2B wallet developers.
Features like staking should be readily available in a wallet, eliminating additional, complicated steps that create friction.
Additionally, the addresses that users transact with must be verified using a cryptographic proof of identity – adding an extra layer of protection.
These safeguards help make it virtually impossible to fall victim to phishing attempts.
The path to mass adoption of Web 3.0
Next-generation Web 3.0 wallets need to champion accessibility and become more accessible to users who are already versed in fintech.
By ensuring security, faster transfers and secure custody – covering on-chain transactions and DeFi – Web 3.0 wallets that get it right have the potential to become crypto’s answer to PayPal.
Simplifying user experiences and ensuring that the complexities of Web 3.0 are hidden behind the scenes is the way forward – meaning anyone can make the most of this technology without having to understand how it works.
By building a secure and easy-to-use application, ETFs will not be required to participate in crypto trading. Instead, investing can become as easy as transferring funds from A to B.
Now that Bitcoin ETFs have been approved, attention must turn to how to decentralize them.
Ensuring consumers can gain exposure to crypto easily and intuitively – without requiring exhaustive education about the process – is the answer.
By addressing the challenges of today’s Web 3.0 adoption, we can pave the way for a future where cryptocurrency transactions are as simple and secure as traditional financial transactions.
Michal “Mehow” Pospieszalski is an experienced technology leader with a track record of pioneering innovative solutions in the crypto world. As co-founder of Swiss Fortress and co-founder/co-inventor of MatterFi, Michal combines visionary strategy with practical technology know-how, driving both companies forward in defining the future of digital asset management.
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Disclaimer: Opinions expressed on The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investment in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk and any losses you may incur are your responsibility. The Daily Hodl does not recommend the purchase or sale of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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