how do we reach more people in crypto?

Over the past few years, there has been a concerted effort by crypto providers to bring crypto to the masses. After all, blockchain technology relies on the collective efforts of the many to mine new tokens (the proof-of-work model) and to invest in Web3 projects such as staking (in the proof-of-stake model). There is certainly an emphasis on bringing more people into crypto; not only does mass adoption usually increase the value of a token, but it also increases the security of these investments. This “one-size-fits-all” approach aims to make the underlying technologies of blockchain easier to understand for the average consumer, and more accessible for this target audience to invest in.

It’s a model we’ve seen before; Just a few years ago, the wave of challenger banks marketed “a bank for the people”. The focus was on digitizing the front-end user experience; radically simplify the way people access a bank account, allowing them to complete the entire onboarding process via an app on a phone. Convenience was championed and banks like Revolut and Monzo let you verify your identity, submit your application and receive your bank card directly in your mobile wallet within minutes. Even the notion of a “bank” was overhauled. Brick-and-mortar institutions were replaced with one app that enabled customers to handle all their transactional needs, instead of visiting a bank branch to spend hours talking to an advisor, only to be turned down for a loan or credit card.

Crypto exchange 2.0

The crypto industry grew in parallel, and companies such as Coin base and Bit stamp have emulated this approach with great results. Crypto users have has grown exponentially in recent years, driven in part by an increasingly simple landscape that removed the need for any technical understanding. While buying crypto would typically involve setting up a wallet and understanding the transaction process, it can now be done with a simple click of a button; more akin to e-commerce giant Amazon than a complicated financial instrument.

Over the past few years, in a similar way challenger banks have evolved, we have witnessed the crypto industry’s ‘The Great Bundling moment. In fact, many crypto exchanges changed their model to combine exchanges and wallets, becoming one-stop shops to serve all your crypto needs, models popularized by the likes of Nexo and Coinbase. It’s a strategy that has seen great success, with the number of crypto users growing by nearly 200% through 2021.

Availability is one factor that has made crypto more attractive to the masses, but we cannot ignore that growth has been accelerated by the fact that people have grown tired of the monetary policies implemented by governments as a response to recent events such as the pandemic, and by the current geopolitical uncertainty. Confidence in the authorities is at an all-time low and inflation is high; the ideal recipe for stimulating a desire in people to take control of their financial future. People are now looking for alternative places to put their money, where they can be in charge of their financial assets, benefit from more favorable returns, and ultimately give them financial freedom in a world where crypto seems the only way they can have real control over it the target. Crypto adoption has been exponential lately, and there has been talk of the number of crypto users surpassing one billion in the next few years, but what do crypto providers need to do to sustain such rapid growth?

A change in consumer demand

2022 has been a period of change not only in the crypto industry, but across the fintech sector as a whole. There has been a shift in focus when it comes to user experience, driven by an increasingly competitive landscape where the one-size-fits-all approach just doesn’t cut it anymore. We are starting to see a trend towards creating more personalized experiences for the end user and I am convinced that the future of the crypto mainstream lies in offering people to be part of a community that matters to them, with services that answer the problems theirs, and platforms that give them the opportunity to educate themselves financially.

In fintech, we have seen the rise of community-centred financial services which is tailored to the audience they serve. Take Yonder as one example; they have specifically focused on reinventing the credit card. Their product removes many of the negative connotations of a credit card; hidden fees, discriminatory credit scoring and rewards schemes that are outdated and irrelevant. At the same time, they are taking a different approach to unlocking credit cards than those underserved by current credit card providers, which number around five million in the UK. They are hyper-focused on Londoners and they deliver exclusive rewards in the form of experiences in London; London society to their city.

It is not just geographies that drive personalization, but also different racial or sexual identities, which have typically experienced challenges when it comes to financial inclusion. Daylight, for example, is an LGBTQ+-led digital bank for the LGBTQ+ community, which rewards customers for spending at businesses that support LGBTQ+. They also offer LGBTQ+ specific financial products for hormone therapy, gender reassignment surgery and adoption (which are currently underdeveloped in the market). There is also First Boulevard, which is a neobank that aims to empower black Americans to take control of their finances, build wealth and reinvest in the black economy. These are just two examples of many hyper-personalized banking products which aims to tackle economic inequality and help users overcome issues such as financial literacy, credit discrimination and access to banking services.

Fintech may be leading the way in reaching more people via personalized products, but there are some crypto providers that are also leveraging the same sense of community, and cooperation with brands or events to offer users of their platforms tailored experiences that appeal to their interests. A theme we often see now is crypto providers partnering with key brands in the sports industry. Crypto.com has partnered with many high-profile sporting events; one is the UFC. In a recent collaboration, they opened a fan vote where the top three athletes who were voted for were paid a bonus in the form of Bitcoin. Back in April, Blockchain.com signed a long-term partnership with the Dallas Cowboys, offering fans who use the wallet the opportunity to win exclusive experiences and rewards ranging from VIP trips to away games to player-hosted events. There are countless other examples, but all have the common theme of exploiting existing communities and adapting their own product to these values ​​and identities.

Despite these efforts to promote inclusivity, there are many demographic groups that have increased their uptake in crypto and yet are underrepresented in the products and services available to them, giving crypto providers plenty of opportunities to address these specific needs. A study published by Bitstamp in 2022 showed that the proportion of female crypto traders has quadrupled to 12% in the last 5 years. Yet less than one in ten active users in the crypto trading community are women. This opportunity will only continue to increase as the audience for crypto grows.

The future of crypto exchanges

The initial push to unlock crypto to the masses depended on a number of variables, but the primary driver was education. Providing dedicated financial services to underserved groups is not enough, and many crypto platforms have understood the challenges of educating themselves about crypto. For this reason, many of the aforementioned partnerships came together with a dedicated crypto literacy initiative, such as the “Block Party” fan experience from Blockchain.com, or the partnership between Crypto.com and LeBron James to teach inner-city schoolchildren the skills needed for Web3.

But for crypto to become mainstream, people don’t need to understand the underlying technology or mechanisms, but they need to understand how crypto can help them improve their existing personal situation when it comes to finances, feeling part of a journey many people that they go through and potentially encouraged to start using it through incentives. Take American Express; those who use their service will have little or no interest in what an acquirer, issuer, processor and network does and how it all works. Instead, they are invested in the sense of exclusivity provided by the brand and the rewards that come with it. It may be a large company, but it leverages the American Express brand to give its members a sense of community, inclusion and most importantly trust. The same can be said about blockchain technology; Nicolas Julia, CEO and co-founder of Sorare stated that:

“In the same way that you don’t talk about the HTTP protocol when you talk about Airbnb, you’re not going to talk about the technical infrastructure when you talk about NFT companies. You must talk about what you do for consumers. In five years, I don’t think we’ll have ‘NFT’ on our website.”

More brand-driven companies are also leveraging their brand power and adopting Web3 technologies to bring these brand values, this sense of society, to more people around the world. Nike Teamed Up With Roblox To Create “Nikeland” in the metaverse, producing a selection of NFT sneakers in the process. Again, they are not teaching consumers about the underlying technologies of Web3, rather they are using Web3 to improve their current offerings and stay relevant by meeting their audience where they want them. It’s also an example of the Recording Academy releasing an exclusive NFT drop to commemorate the 64th Annual Grammy Awards Show earlier this year, including animated 3D renderings of the Grammy Award. So what can crypto exchanges learn from this success?

Looking ahead, we can see the emergence of “crypto exchange 2.0”. These exchanges will benefit harnessing the inherent loyalty and trust in brands to overcome any negative perceptions of the crypto industry. When users of crypto invest in something they are passionate about, the crypto exchange 2.0 does not need to rely solely on regulation to be trusted by potential new users. The focus is less on the mechanism of the underlying technology and volatility of tokens and instead is on the sense of community and belonging; a move towards tribification rather than revenue generation.

Tribification is significant when a market becomes saturated; what makes Coinbase different from a Bistamp or a Gemini? In the end, the answer is not much, and instead we see a race to the bottom, and a completely commoditized market. That’s what happened to traditional banks, and what resulted was that customers simply chose HSBC or Barclays, not because of a differentiated offering, but simply because it was the bank of choice for their parents. Will future generations simply choose the same exchange as their parents? It is unlikely. If crypto exchange 2.0 can deliver specific value to a specific tribe, as a Yonder or a Daylight has done for fintech communities, they can distance themselves from the race to the bottom and focus on providing differentiated experiences that provide relevant value to a tribe willing to pay (often more) for that value. Just as consumers are willing to pay hundreds of dollars for a pair of Nike sneakers.

The possibilities for the crypto exchange 2.0 are endless; there is a multitude of communities that crypto providers can look to serve. Whether it’s the power of identity, or the power of a brand, crypto exchanges now have the opportunity to mirror the shift in direction that we’ve seen in the wider fintech community, leveraging this sense of community to deliver a product tailored precisely to the needs of users .