How to break the barriers to blockchain adoption

Blockchain has game-changing potential and will revolutionize many areas of technology and finance. This year’s Ethereum merger, where the underlying consensus model moved from proof of work to proof of stake, improving energy efficiency and security, is one example of such a breakthrough. But there are still barriers to overcome.

To fully realize this potential and drive widespread use of Web3, there is a need for robust, enterprise-quality architecture.

This must include good security and risk mitigation to ensure a solid foundation that will further accelerate institutional adoption, which in turn will fuel the adoption of Web 3.0 by the masses.

Blockchain’s transformative potential

Institutional use of blockchain technology is an important driving force behind the growth of Web3. Businesses and governments worldwide are increasingly embracing blockchain for its transformative potential.

Real-world blockchain applications are being developed in various industries, ranging from the protection of intellectual property and creative ownership rights to piracy prevention, environmental sustainability and more.

But in this exciting period, we must continue to focus on driving value from the technology itself. To achieve mass adoption, we also need to overcome several barriers that still stand in the way.

Why we should care about Web3

Blockchain is the great equalizer between individuals. They are immutable and advocate ownership and decentralization of assets.

If blockchain technology alone can deliver meaningful real-world use cases, why should we even care about the development of Web3?

Despite common beliefs, the Web3 is more than just a virtual realm or metaverse. Its benefits will increasingly transcend the physical world.

In the Web3 world itself, users can also enjoy entertainment from games, with the difference being ownership of in-game digital assets through non-fungible tokens (NFTs), and democracy through participation in governance, voting, and community development, among other features.

There has been a constant focus on improving accessibility through simplifying the user interface (UI) and user experience (UX), scalability and infrastructure. A pragmatic approach is needed to further push the growth of Web3.

But for Web3 to reach its full potential and achieve widespread use among institutions, security and risk mitigation issues must also be addressed.

Support institutional participation in blockchain

Blockchain is the technology that powers the Web3 world. With the growing growth of proof of stake as a foundation, validators of these networks are a core pillar of Web3.

Institutions are increasingly interested in increasing asset value through proof-of-stake blockchains. This includes staking tokens and drift validator nodes. However, more attention should be paid to the consequences of incorrect operation.

For example, significant downtime of the validator node will affect the performance of the designated blockchain network and reduce operator rewards.

Validators are also punished for malicious behavior, through what is called slashing. While slashing is necessary to hold all validators in the network accountable, it can put staked assets at risk. Incorrect operations or errors can cause validators to be cut.

A minimum stake of 32 ETH is required to run an ETH validator node, and validators can lose anywhere from 0.5 ETH to their entire asset stake by hacking – the latter case only in extreme circumstances.

To support the institutional adoption of blockchain infrastructure and the growth of Web3, support and infrastructure must be in place to reduce errors and maximize uptime and performance.

Risk-reducing tools such as slashing insurance are thus an essential part of the countermeasures that must be implemented against bad actors and losses, which provides consistency and sustainability.

Protect digital assets

With the recent spate of hacks and exploits on decentralized networks and the lack of reliability of centralized platforms, security measures must still be emphasized.

This can come in the form of quality audits, know-your-customer (KYC) and anti-money laundering (AML) processes, and reliable and secure custody infrastructure to protect seed phrases and access to crypto wallets.

Making the ongoing process of digital assets as seamless and secure as possible will drive the continued use and application of blockchain technology, and the development of the Web3 world will benefit from it.

Paving the way for blockchain adoption

Blockchain undoubtedly offers great potential, but it needs to be underpinned with solid and secure foundations to facilitate institutional adoption on a larger scale.

Practical applications and the utility of Web3 and blockchain technology should be prioritized over distractions from hype and speculation.

As blockchain technology evolves, we all need to remain focused on the right things, such as valuable business cases, institutional infrastructure and security.