Crypto Adoption Problems

Diagrams | Matrices | Thinkers

What is the point of money that you can't use to buy a bite to eat?

What are the biggest problems limiting crypto adoption? What is being done to make meaningful progress about them?

Headline Problem	Category	Complexity	Importance
Security Threats (Hacks/Scams/Robbery)	Security	High	Critical
Lack of Real-World Utility	Adoption Barriers	Medium	Critical
Regulatory Uncertainty	Governance	High	Critical
Centralization of Infrastructure	Decentralization	High	High
Volatility and Market Instability	Financial Stability	Medium	Critical
Complex User Experience (UX)	Usability	Medium	High
Environmental Concerns	Sustainability	Medium	Medium
Public Distrust and Bad PR	Perception	Low	High
Fragmented Standards and Interoperability	Technology	High	High
Speculation Over Innovation	Economic Dynamics	Medium	High
Privacy Erosion via Centralized APIs	Privacy	High	High
Unproven Business Models	Economics	Medium	Medium
Geopolitical Risks (Sanctions, Crime)	Geopolitics	High	Medium
Overhyped Promises vs. Delivered Value	Perception	Medium	High
Institutional Hesitancy Due to Regulation	Governance	Medium	Critical
Ransomware and Criminal Exploits	Security	High	Critical

Saying you don't own crypto is not an answer to scaling crypto adoption.

Relatability

Most people starting protocols come from investment banking backgrounds, most 'normal people' don't trust.

• The industry is currently infrastructure-heavy, with a lack of user adoption and applications compared to the technical progress made.
• There's an ongoing debate about whether crypto is primarily for infrastructure (financial rails, payment systems) or if it should focus more on consumer-facing applications.
• The current cycle is unusual, with prices running ahead of user adoption, which is a deviation from past patterns.

Lack of Credibility

Bad Press through scandals, controversies, and bad actors.

• OM RWA Rug
• Wintermute Trading Practices
• Optimism loses 20M OP tokens
• Not so Smart Contracts - Andre Cronje, Jan 2022
• Web3 First Impressions - Moxie, Jan 2022

Standards

There's no GAAP accounting in crypto that define revenue, cost and what legit token issuance looks like.

Financial Reporting and Transparency Issues

• No standardized accounting principles for crypto
• Massive data and transparency problems despite being "open source"
• Discrepancies between stated circulating supply and actual on-chain reality
• Difficulty tracking token allocations and verifying information

Market Structure and Governance Problems

• Non-transparent exchange listing requirements with "egregious policies"
• NDAs preventing disclosure around token listings
• Unclear relationships between foundations, labs entities, and market makers
• Lack of standard disclosure around team token sales and insider activities

Capital Efficiency Concerns

• "There is generally going to be less money than people expect. Every year over the last five years, we have less money than the previous year from a venture allocation perspective"
• Need to be "efficient with the money that we're using as an industry"
• Concerns about sustainability of revenue sources, particularly for L1 blockchains

Security Threats

• LARGEST Crypto Exchange Hack of All Time

User Experience

• Complex learning curve, cost of learning by failure.
• Need agents that can be trusted to implement good intentions.

Unified Purpose

• The industry is grappling with finding the right balance between decentralization and practical application development.
• There's a growing recognition that crypto might need to focus on use cases that don't require users to deeply care about or understand crypto technology.
• The concept of "restaking" and shared security is evolving, with ongoing debates about its implementation and necessity.
• Some argue that the industry needs to return to basics, focusing on achieving global-level payments as a "hello world" application before moving to more complex use cases.