Today, there are ~200 million unique wallets on Ethereum based on data from Etherscan. Most users have more than 1 wallet, and there are other Ethereum-based chains like Solana, however let’s use this as a very crude assumption of market size. The world has approximately 5 billion internet users. This puts us at roughly 4% adoption. We’re very early in Web3. Let’s look at what it’s going to take for us to move to the next phase of the adoption cycle.
Most technology follows a bell curve in terms of adoption, with 4 distinct phases. Web3 is in the “Early adopters” phase. The technology is revolutionary, but the current experience is not. Many users perceive the space as complex and dangerous, and it is. There are three big barriers right now.
First, the onboarding experience. Wallets are not the easiest to navigate, and a self-custody wallet is not for everyone.
Second, transaction fees are high for chains like Ethereum, although innovation in this space is well underway with chains like Solana and Polygon.
Third, there is no central authority. Yes, this is one of the best parts about Web3 but it’s something users need to get accustomed to. You can’t call your bank or credit card provider and ask them to void a transaction. When it’s gone, it’s really gone.
Users in Web3 today are not representative of the users who will enter the space in the future. Many of the next phase of users will want ease of use and simplicity. They will most likely delegate trust to a more competent authority, especially if the assets they hold are large enough. We will have truly reached the next phase of adoption when most users don’t even realize they are transacting on the blockchain.
Users in Web3 today are not representative of the users who will enter the space in the future. Many of the next phase All of the above points to opportunities for builders in Web3. Anyone who combines the technology offered by blockchain, with real user value and a seamless user experience stands to win. Coinbase made two exciting announcements in the last week that offer great examples of this. First, users will be able to access Web3 apps directly from the Coinbase app.
This is exciting because it will allow users to experience Web3 without having to deal with private keys (Coinbase takes care of this). Second, Coinbase announced an SDK for wallet developers to integrate crypto payments easily into their apps. Today, you need to buy crypto on an exchange, transfer it to a wallet like Metamask, and then use it for transactions in Web3.
This experience has many points of failure, and Coinbase pay is making it better – users can buy crypto using their credit card directly in Metamask.
For anyone building in the space, the opportunity often lies in simplicity and a slick user experience. Careful consideration of a user’s journey, particularly non-native Web3 users, will benefit builders. There are many lessons we can take from Web2, and we should. Builders can differentiate themselves from the crowd by focusing on offering the simplest experience for customers.
