Why Crypto’s Future Depends on Grandma

Introduction

The future of cryptocurrencies has been a topic of constant debate and speculation. In recent years, we have seen the crypto market experiencing wild price volatility, hampering its adoption by average individuals. This blog post will discuss why the crypto market is so volatile and why the adoption of cryptocurrency is hindered by the inability of the "grandma", aka the average person, to easily make purchases and simple financial transactions using cryptocurrencies. To ensure a stable future for cryptocurrencies, it is crucial to address these issues and create an environment where "grandma" can effortlessly utilize the crypto ecosystem.

The Three Major Issues

1. Technical Sophistication and Ecosystem Fragmentation: The cryptocurrency ecosystem is fragmented, complex and requires a level of technical expertise that most people do not possess. "Grandma" is not comfortable navigating blockchain networks, cefi/defi platforms, reading white papers or managing private keys. And while basic custody apps to buy, sell and send crypto are making strides at becoming more user friendly, the ecosystem at large is far from being user friendly.
2. Borrowing and Lending: Cryptocurrency lending is often over collateralized, cumbersome and lacking the tried and tested basic traditional finance functionality such as credit scores, not only making it riskier for lenders to safely participate but also making it impractical for "grandma".  In such a world, "grandma" must put up more money than she wishes to borrow, which works for speculators looking to make a quick buck but does little to serve the needs of "grandma" and the general public. While there are ways to take loans without collateral requirements such as "Flash loans" (which are loans that need be repaid back within the same block), these loans often serve little to no practical purpose for real world productive purposes and again tend to help a speculator.
3. Price Volatility: Due in large part to the two issues mentioned above, crypto capabilities are mostly geared towards delivering functionality which helps speculators and not geared towards increasing the productive capacity of mankind, like a simple loan to "grandma" so she can start her knitting business. So there is no wonder that we observe wild price fluctuations which make cryptocurrencies unreliable for financial transactions. After all, volatility is a feature for speculators to make money! This volatility deters "grandma" and limits her use of cryptocurrencies for everyday transactions.

The Need for a Pragmatic Solution

Notice I have not mentioned much about crypto regulation, governments and such in this post. While I do agree these issues can be a huge added challenge for mass adoption of crypto, I plan to discuss this more in a future post. Assuming a world where crypto regulation was no longer an issue; the fact still remains that "grandma" would not use crypto for every day transactions. Addressing the three interconnected issues above is vital for the widespread adoption of cryptocurrencies. By creating human-friendly products and services that cater to the needs of "grandma", we can help foster a more stable environment for cryptocurrencies to thrive.

To achieve this, we must develop ways for "grandma" to use cryptocurrencies effortlessly and reliably without needing to understand the intricacies of the technology. This can be accomplished by:

1. Simplifying User Interfaces: Develop easy-to-use applications and interfaces that streamline the process of buying, selling, and transacting in cryptocurrencies, without requiring humans to have deep technical knowledge.
2. Innovating Lending Solutions: Create lending platforms and services that offer simple, practical solutions for borrowing and lending, without the need for over collateralizing.
3. Stabilizing Cryptocurrency Prices: Introduce mechanisms to help reduce price volatility, such as stablecoins, self-stabilizing blockchain features that fluctuate token supply to moderate price fluctuations, 1 person 1 vote governance backed currency intervention mechanisms and other financial instruments that can provide stability to the market.

Conclusion

The future of cryptocurrencies depends on their adoption by the "grandmas" of the world. If we can successfully address the issues of technical sophistication, lending, and price volatility, cryptocurrencies can become a simple and practical financial tool for the masses. By focusing on creating human-friendly solutions that cater to the needs of average individuals, the crypto market can experience stable mass adoption and avoid the pitfalls of wild price fluctuations and skepticism. Ultimately, the success of crypto will be realized when "grandma" has no idea or no care that, under the hood, they are using crypto for their personal financial transactions. It is time for the crypto community to prioritize the needs of the "grandma" and build a more inclusive and accessible financial system.

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