It took the internet 36 years to reach a billion users. In contrast, crypto is expected to reach the same milestone by 2027, within a much shorter time frame.
In the midst of the industry’s fifth bear market and the ensuing insolvency of some of its bigger players, it is more important than ever before to focus on providing tangible, safe and reliable solutions as Web3 increasingly onboards mainstream users. With traditional finance juggernauts such as Goldman Sachs that already has ready access to a sizable captive audience taking the leap into crypto, the question remains as to what key elements are needed to support the onboarding of the next billion Web3 users.
In order to tackle the barriers to global adoption, Web3 must make it so that users do not need to grapple with technicalities nor become experts in blockchain technology. Below are five steps the industry needs to address to accelerate mainstream adoption of Web3 to reach one billion users.
1. One-click accessibility with fewer steps to onboard
As it stands, users have to jump through several hoops to open a crypto wallet, and the process can take anywhere from a few hours to a few weeks to undergo the identity verification and approvals necessary just to gain access to the keys to begin exploring the wonders of Web3. Beyond the inaugural step of opening a wallet, aspects of Web3 such as minting and purchasing NFTs remain complex, costly and unintuitive, with stories such as, “It took me 7 steps over the course of a day to buy an NFT, showing just how hard it’ll be for the market to go mainstream” becoming all too common.
Mainstream adoption will happen when users are unconcerned by and don’t know that they are using blockchain at all. Developers will need to create dApps on-chain that are easy to navigate, have clear, functional purposes, are safe and easy to use, and have low entry costs for mainstream users. Users will initially onboard Web3 via custodial and often regulated applications (for example, centralized exchanges), and will gradually move toward decentralized applications where they can have full ownership of their assets (for example, the decentralized finance apps). Crypto wallets, aggregators and browsers will play a big role in displaying the information that users need to make informed decisions, such as the status of security audits and risks associated with the transactions that they sign.
2. Onboarding businesses so their customers follow suit
Like Web1 and Web2, Web3 started by building on a blank sheet of paper rather than by integrating with the previous generation of businesses. For example, looking back to the late 1990s, PayPal achieved much more success by riding the wave of eBay and e-commerce, than by trying to revolutionize bank remittances and bill payments. Pure play web companies like Amazon in Web1 and Facebook in Web2, still have a huge early mover advantage to this day. However, the digitization of brick-and-mortar stores like Walmart and Target has helped tremendously to make the Web mainstream.
In the case of Web3, it is likely that the pure-play DeFi, non-fungible token (NFT) and GameFi protocols of today will be among the winners of tomorrow. However, Web3 will also need to encourage widespread adoption by collaborating with traditional industries and creating offerings that prove profitable for businesses and accessible to consumers. Recent collaborations between Starbucks and Polygon, and Shopify and Crypto.com are examples of this trend.
3. Celebrities taking stakes in Web3’s creator economy
Web3 will foster the creator economy alongside individual prosperity by disintermediating existing social and economic systems, providing new, sustainable revenue models for creators, and granting true autonomy through the digital ownership that smart contracts enable. Linktree data revealed that of the 200 million people participating in the creator economy, only 12% of those doing it full-time make more than US$50,000 per year. The company also found that 46% of full-time creators make less than US$1,000 annually.
While the average users may not be at risk of de-platforming or as concerned about revenue streams, creators and influencers will have the most to gain from the new economic models, disintermediation, and ownership of followers and contacts that Web3 social media offers. Consequently, celebrities and creators will play a key role in advocating for the space to build greater trust among users. Taking a personal stake in Web3’s creator economy will be the first step in doing so.
4. Improving interoperability between layer-1 chains
Web3 is already multichain to a large extent, with Ethereum’s market share of total value locked having decreased from 95% to 58% since 2020 according to DefiLlama.
While the dominant narrative in Web3 used to oscillate between “blockchain maximalists,” “Ethereum killers” and the next great chain to beat out competitors, there is a growing recognition that the future of Web3 will be more nuanced given that blockchain technology makes it inherently difficult to create “walled gardens” like the FAANGs. However, greater strides for seamless and safe interoperability need to be made within Web3 through open-source, peer-reviewed standards. ERC20 tokens, WalletConnect and IBC bridges are excellent case studies of how such standards emerge organically.
5. A clear and consistent regulatory landscape
While some would argue that there remains a lack of regulation in Web3, others such as Chris Dixon, general partner of Andreessen Horowitz, have said, “one of the big myths in crypto is it’s unregulated. Okay. I will tell you we have more regulators and policy and lawyers and things. I’ve practically become a lawyer.” Crypto exchanges and other fiat-crypto on-ramps are already largely regulated.
What can be said is that there is certainly a lack of regulatory clarity in Web3. As such, regulators must strike a balance — creating an environment that simultaneously prevents criminal activity and fosters innovation by collaborating with key stakeholders and referring to technical experts. We are seeing promising instances of this through regulatory sandboxes taking place, where regulators engage with companies and projects in the space to workshop and test regulatory frameworks with their input. A clear but progressive and collaborative regulatory environment will remove additional barriers to scaling the industry and will be able to support the next wave of 1 billion users.
On the other hand, a regulatory landscape that lacks consistency or is overly influenced by banking lobbies may disincentivize investment, cultivating an environment where promising projects lack the capital and talent necessary to accelerate growth.
Once users are unaware and unconcerned by blockchain technology itself, the journey to onboard the next billion users will rapidly accelerate. Rather than an overt dismantlement of traditional infrastructure, widespread adoption of blockchain technology will be found in the subtle integration between Web2 and Web3 — in turn bringing the mainstream audience into the next generation of the internet.