The term Consumer Crypto is increasingly heard in discussions about the development of new products in crypto, and the reason is the existing technological availability to develop this type of apps. In recent years, Web3 technology has made tremendous strides and has now reached a level of maturity where the infrastructure enables developers to interact with the blockchain in a manner that is nearly invisible to the user.
The concept of Consumer Crypto is difficult to define precisely, but it can be described as products that use web3 technology and can be used by users without prior knowledge of crypto. This means that users do not encounter the frictions that previously existed in all crypto apps, where they had to handle the technical management of their wallets or sign transactions themselves with all the complexity that entails.
Additionally, I would add a crucial characteristic: the absence of an economic incentive. This might be controversial, but the vast majority of crypto products, both web and mobile, that I have used throughout my life have always allowed you to earn money in one way or another. And this was the main reason users utilized them. Does it make sense for the goal of a video game to be earning money? I doubt it.
A recent example that has made me reflect deeply on this new evolution of crypto products is Warpcast. For those who are familiar, Farcaster is a protocol on which social networks can be developed, and Warpcast is a client that uses it. Warpcast uses web3 technology to offer certain functionalities, but despite this, users can perfectly use this app without knowing how to create a wallet, fund it, pay transaction fees, etc. The definitive detail that distinguishes a Consumer Crypto product is that the user does not need to know that they are interacting with a blockchain.
There are many products currently used only by crypto expert users, and the primary reason they don't have more users is the difficulty of learning and starting. For any typical decentralized application, users generally need to first get funds on the blockchain, which involves registering on a centralized exchange and withdrawing them. They also need to set up a wallet with a seed phrase to receive those funds. Just choosing between wallets is difficult enough to make many give up. After that, users need to connect with the application, sign transactions each time they want to do something, and refund if they need more funds to pay the fees. Not to mention, most mistakes can result in fund losses. Now, compare this user experience with other apps you use daily.
We Are Ready
It's not that product designers didn't know years ago that the user experience should be as smooth as possible, but rather that until very recently, it was difficult or outright impossible. However, the web3 infrastructure has evolved enough for the barriers to entry for using any crypto app to be reduced and, in some cases, to disappear entirely.
One of the biggest entry barriers that crypto applications had to face was that the price of fees to be paid on the blockchain was too high. It is well known that the great challenge of Ethereum and other blockchains is scalability while maintaining their decentralization and security. Fortunately, L2s have largely solved this problem, as have other blockchains such as Solana.
Ethereum L2s not only open the door to a reduction in blockchain fees and therefore lower costs for using apps, but they also allow for specialization, with each L2 likely focusing on specific use cases. This creates a range of possibilities from which developers can choose the one that best fits the context in which they will develop their product.
Another problem that any decentralized application faced was the need to initially configure your seed phrase and delegate its management to the user, creating significant friction for all non-crypto users. This is no longer necessary thanks to recent developments such as embedded wallets or account abstraction. Without going into details of how they work, what they allow is for the user to use the app with an onboarding process similar to any other application, with the app itself taking care of the management of the wallets used.
It is also typical that when using a crypto app, funds need to be deposited and withdrawn, or even moved from one blockchain to another. Until now, these tasks were complementary and necessary but fell on the user. Fortunately, there are now enough on ramp/off ramp and bridging solutions available that allow these actions to be integrated into products, even in a transparent manner.
Even though all these advances allow for the development of products where the end user does not have to worry about what many consider unwanted friction when interacting with wallets and blockchain, it is still possible for these same products to offer that capability for more advanced users. In other words, simplifying the user flow does not mean eroding any of the advantages of being able to act at a low level directly with wallets in the same way that is currently done in most apps.
In the coming years we will see an explosion of new products in various fields that will bring a multitude of new users onchain. All these new users, without prior knowledge of crypto, will be able to benefit from the advantages of using this technology and enjoy incredible products. Additionally, the increase in demand for these tools will lead to infrastructure improvements, ultimately generating widespread adoption.
