Are Transaction Speeds Really a Driver of Mass Adoption for Crypto?
We are still early in terms of web3 adoption. You go on CT (Crypto Twitter), and you’ll likely see this point stated in various forms. To hear it told, we are somewhere in the equivalent of the 1990s in internet adoption, and thus we await the explosion in cryptocurrency and the blockchain technology that will herald the next generation of the internet.
However, one of the (many) criticisms of the web3 industry is that there is a struggle to define its use cases. As anyone launching a tech product will be well aware, investors usually ask – what problem does this solve? And with web3, it can be hard to define that. Sure, we get some more abstract answers, such as crypto bringing in a new era of finance and technology free from centralized (banks, big tech, governments) control. But these are big concepts, and they are not likely to persuade your grandma to buy Bitcoin or Ethereum.
Transaction speeds are promoted as a crypto benefit
And yet, one of the most trotted-out examples of cryptocurrency adoption revolves around the speed of transactions. You’ll often see memes pointing out that banks are closed on the weekend, whereas Bitcoin is always ‘open’. Moreover, you might see crypto proponents arguing that cryptocurrency solves a problem with cross-border transactions, making it cheaper and faster than traditional banking. Some of this is true – just ask anyone trying to send money from say, New York to Cairo, and explain the hoops they have to jump through.
But there is always an argument that web3 is trying to solve a problem that doesn’t really exist. If you have used PayPal, or Venmo, or numerous other examples of internet wallets to send money, many of the transactions are almost instantaneous. Moreover, it should be noted that there are recently-launched applications that can provide fast transactions cross-app, so you send money to Venmo via PayPal and vice versa.
People expect – and get – fast transactions
Of course, the speed of the transaction is important. We know, for example, that experienced players will look for online casinos with fast payouts. Most sophisticated casino review platforms will discuss this information, highlighting the sites that have quicker payout routes. But this is not an issue with the underlying payment methods – many casinos have PayPal and similar options – it is rather the casino itself and its processing times. In short, it’s not quite clear what crypto does to fix this, or even if there is a problem to be fixed in the first place. Cryptocurrency casinos exist, but it is certainly not the case that they promote fast payouts as their USP.
Perhaps one of the important ways to look at this is that the traditional finance sector can already make speedy transactions possible. Many people, for example, can use banking apps to instantly transfer funds from one account to another. It may take a couple of days for a BACS payment to arrive, but this is something that can be solved should there be a will within the traditional banking sector. As such, we may bare witness to a scenario where web3 forces the traditional banking sector to act, or more aptly, improve. We have already seen evidence of this with VISA, which has released a host of new technologies for faster and smarter payments.
Getting back to the main crux of our argument, it would seem that the use cases for faster payments are somewhat limited. Few of us have stood in a coffee shop and wondered what the hold up was as we paid for our latte with Apple Pay or MasterCard. It may be the case that we see a host of use cases for crypto in the coming years, including the introduction of decentralized finance products, the use of NFTs for verifying identity, and many other novel concepts that transform the web.
But right now the masses simply don’t have a huge issue with transaction speeds when sending money. And if you want to drive mass adoption, then you want to showcase the use cases that anyone can easily pinpoint as useful. Crypto might do that with some things, but the idea of transaction speeds as a problem to solve is somewhat overblown.