The Barrier to Mainstream Crypto Adoption Isn’t UX — It’s Product-Market Fit
To move forward, web3 products must solve core human needs better than legacy products do.
This piece was also published at CoinDesk.
Discussions about accelerating adoption of crypto often focus on improving UX. The popular thinking goes: web3 products lag behind from a user experience perspective, onboarding poses multiple points of friction, and technological concepts come with learning curves; creating a more seamless experience for using web3 apps will unlock greater adoption.
While improving crypto UX is certainly important, I believe that the more significant and urgent barrier to adoption is building things that people want. Web3 has a product-market fit problem, not a UX problem.
Product-market fit is when a product satisfies a strong market need. For consumer builders, the elegance and challenge in building for consumers is that humans have remarkably consistent needs across time. That’s why Maslow’s hierarchy of needs continues to resonate nearly a century after its introduction, with universal needs ranging from the physiological (food; shelter; clothing) to psychological (belonging; love; entertainment; esteem).
The history of consumer startups is one of continual innovation in solving for human needs in novel ways. Though people often dismiss new consumer apps as incremental innovations in flippant categories (“teens making dance videos”), the truth is that successful startups offer a step-function improvement in enabling people to achieve a core need. Amazon sold us books (and everything else) in just a few clicks, dramatically easing the process of procuring goods. Facebook enabled us to connect with those we care about instantly. Tinder exposed us to an order of magnitude more potential romantic partners than anyone could stumble on in real life.
There is a lot of evidence that when the user benefit is great enough, users are willing to jump through UX hurdles and learn new behaviors, in crypto and beyond. Examples include the first iPhone (which lacked a touch keyboard), the internet itself, and all crypto assets and applications that have had significant adoption to date (NFTs during the last bull market being a primary example). For products that solve a core need, unfamiliar and complicated UX hasn’t been a blocker.
Despite the long list of multifaceted user needs, so far, explorations of the opportunities that crypto can uniquely address have been largely limited to the financial realm. While income is a widespread need, products where income derives from speculation work when the market goes up, but lose their appeal as prices fall. It’s a tough sell, especially when there are alternatives for users to attain income with less risk and uncertainty.
There is an opportunity for crypto builders to build products that better address other human needs, such as belonging, community, and entertainment. What could that look like?
On a small scale, NFT communities and DAOs have satisfied some people’s need for belonging, forging novel social graphs on the basis of asset ownership. To those who say that shared financial interest can’t be the basis for “real” relationships, consider that many of our real-world connections are predicated on ownership, whether that’s neighboring homeowners, startup employees, or Pokémon card collectors. There’s an opportunity to leverage onchain assets as the basis for new communities that solve for belonging, esteem, and connection. In August 2023 alone, 94.5 million NFTs were minted across Ethereum and L2s; as the volume of user activities grows, imagine inferring users’ interests based on onchain actions and exposing connections based on a rich activity history.
Onchain media expands our entertainment options, giving us skin in the game for what we consume and create online. On platforms like Sound.xyz, Friend.tech, and Mirror, users can bet on media and creators they believe in, enhancing their experience of the content and turning these networks into financialized games. In a world where all media is incepted as NFTs, there will be a new economic dimension that can enrich our experience of the internet.
These are just starting points for what it could look like for crypto to find product-market fit and address needs beyond just income. There’s room for much more experimentation from here. To achieve widespread adoption and evolve beyond their current niche, crypto products need to enhance the human experience—through solutions that wouldn’t be possible without crypto.
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Variant is an investor in Sound and Mirror.