If crypto assets become as mainstream as fiat currencies, security and privacy are going to be the most important obstacles to tackle. First, the public will need to understand how to use public and private keys, which is not the case today. There will need to be mass education, and also mass reassurance that cryptocurrency providers are as trustworthy as banks. How can this happen, and is it already happening? David Gold, CEO of FIO Protocol, a company that aims to make crypto as easy to use as Paypal or Venmo, led a panel of experts that are envisioning a future where everyone has a crypto asset wallet.
If ordinary people are going to use noncustodial wallets, it implies that they are going to take their trust away from banks and trust themselves only. And as most people aren’t experts in blockchain, according to Pierre Noizat, “it will take a lot of education before people will use their own private keys.” For the moment, it’s simply too complicated. He thinks that for mass adoption there would first have to be “a mix of crypto assets in the gradient,” and then eventually people will become more and more comfortable with them.
Even though blockchain has made it possible for everyone to manage their own private keys, is that a better option than trusting banks? Ouriel Ohayon explains how it goes against human nature in a way, as “human beings are not designed to keep secrets, they are not security experts, and they never will be.” The only options today are either to “be your own bank” or to “trust someone that can be hacked,” but he is hopeful that cryptography will provide “a new type of service, where a user will not have to choose.”
Most people use credit cards and online transactions every day, without even thinking about whether or not they can trust them. This requires a huge amount of trust, but will those same customers eventually put their trust in crypto assets in the same way? The panellists discuss the fact that often, when banks fail, customers decide they don’t trust them anymore and then want to take their money out, because there is no other option. However, Pierre Noizat points out that if the banking system is totally decentralized, there’s no way to reverse the payments in case of a crisis, and also no one to blame or turn to for help. For that reason, many crypto assets are both decentralized and centralized, in the sense that they are based on blockchain technology, but there is also an intermediary to turn to if something goes wrong.
There was a bit of a debate about the level of simplicity that should be portrayed when marketing crypto exchange solutions. While Brian Norton believes that marketing techniques that make crypto sound easy are much more effective, Ouriel Ohayon is more sceptical. He warns that while that may be true, it leads to questions afterwards, because the solutions are easy to explain but difficult to set up. He feels that this is a big problem in the industry, and that “onboarding needs to be as simple and as fast as the explanation itself.” However, something that was agreed upon was the need to use cryptography that is sure to work, not new technologies that are being experimented on, because that can quickly lead to a lack of trust among consumers. The interface must also be very simple and attractive to use, and according to Ohayon, “sending money should be as easy as sending a message.”
Brian Norton argues that “third party custodianship has a place in wealth management for a reason,” and that most likely won’t change for some time. However, he does believe that crypto allows users to have a “broader set of assets” than they would have now, if they “become more comfortable with the idea of taking that custodianship for themselves.” Yves-Laurent Kayan adds that “trusting the bank with our private keys is kind of an issue because it depends on how robust the exchange is. If you don’t trust the exchange, then you go back to the noncustodial solutions, and we are not used to that.”
This was only a sample of the takeaways from the “Wallets: How to manage Public and Private Keys” panel. The full transcript of the panel is available below for more insights.