Sep 278 min read

Survey Insights: The Future of Crypto

In the wake of the 2007-2009 financial crisis, Bitcoin was born as a means to let individuals take back control of their finances without the need for an intermediary like a bank. However, it would go on to become the catalyst of a worldwide movement and bring the potential of blockchain to the center stage. Today, the global cryptocurrency market is estimated to be worth over $2 trillion despite the fact that less than 7% of people use them. (Triple-A) Bitcoin and cryptocurrencies have gone on to question how we think about money and finance. As more people start using cryptocurrencies, they’re paving the way for a fairer and more secure financial future.

But this begs the question: If cryptocurrencies are so impactful, why are only 7% of the population using them? How many everyday people are actually using them? How much have they invested? What concerns do they have that are hindering more widespread adoption, and how can we work towards resolving those issues? To answer these questions, we surveyed 148 people from the general public, aged 18-65, in September 2024 to gain some additional insight into their opinions and perceptions of cryptocurrency.

With all of that out of the way, let's take a look at the results!

Cryptocurrency Usage Trends

Our first question was simple: Have you ever purchased or traded cryptocurrencies? Out of 148 people, 58.8% said they had, while 41.2% hadn't. This was surprising, considering most estimates suggest that less than 7% of people are involved in crypto trading. However, this unique insight gave us a great foundation point to better understand the reasons why people choose to engage or not in the crypto world.

Have you ever purchased or traded cryptocurrencies? Yes (58.8%), No (41.2%)

With that in mind, we wanted to see how much those active users have invested in the crypto market. What we found was a wide range of responses. While the majority invested less than $1,000 (16.9%), 12.8% had invested between $1,000 and $4,999, 10.1% had invested between $10,000 and $14,999, 6.1% had invested between $5,000 and $9,999, another 6.1% had invested between $15,000 and $19,999, 4.7% had invested between $20,000 and $24,999, with 2.7% investing more than $25,000 in the past 12 months.

According to the data, even though 41.2% of respondents chose not to invest in cryptocurrencies, those who have invested upwards of $25,000-but why did the 41.2% decide not to invest?

If Yes, how much have you invested in the past 12 months? less than $1,000 (16.9%), 12.8% had invested between $1,000 and $4,999, 10.1% had invested between $10,000 and $14,999, 6.1% had invested between $5,000 and $9,999, another 6.1% had invested between $15,000 and $19,999, 4.7% had invested between $20,000 and $24,999, with 2.7% investing more than $25,000 in the past 12 months.

Top Crypto Concerns

When asked why they chose not to invest in cryptocurrencies, respondents highlighted a few key areas of concern. The majority (41.9%) cited too much risk and volatility in the market as their primary concern, followed by its complex nature (33.8%), lack of understanding (33.1%), lack of interest (31.1%), security concerns (25.7%), lack of regulation (22.3%), and high fees (18.9%).

Market Volatility

These concerns aren't without merit. The crypto market as a whole remains extremely volatile, with drastic shifts between high and low markets being relatively common. Bitcoin, for example, has experienced seven price drops of 50% or more since its launch. (Yahoo Finance) The world of cryptocurrency can feel like a rollercoaster ride, and there are a number of good reasons for that.

For starters, the crypto market is still relatively young, with a smaller market cap of roughly $2 trillion, a far cry when compared to something like the U.S. stock market, which boasts a market cap of about $55.2 trillion. This size difference plays a huge role in stability. In the stock market, a $1 million transaction barely makes a ripple, affecting just about 0.00000181% of the total market cap. However, in the crypto world, that same $1 million can create a more devastating impact, representing around 0.00005% of the total market cap.

Larger markets tend to have more liquidity, meaning they can take bigger hits caused by more significant trades. This is why liquidity pools are so important in cryptocurrency exchanges: the more liquidity is provided, the more resilient the price becomes in the event of a large buy or sell. So, getting more people to use crypto and growing the market cap will create a more stable market, but how do we achieve that?

Addressing The User Experience

If you want people to invest in something new, you need to help them understand it first and streamline the process as much as possible. Our data shows that 33.8% of respondents didn't invest because they view it as too complicated, with another 33.1% stating they don't understand it enough- and that's understandable. I mean, who in their right mind would invest thousands of dollars into something they don't understand? That's not investing; that's gambling.

Thankfully, these issues are already being addressed, with cryptocurrency exchanges like Binance, Bybit, and Coinbase doing their part to create easy-to-use platforms and educational material for new users. These exchanges also solve security concerns by enabling key features like traditional passwords, two-factor verification, account recovery, and more for their users' accounts. However, these exchanges all share one vital flaw: centralization.

The Problem

When you buy cryptocurrency on a centralized exchange (CEX), you typically don't have direct control over the private keys associated with your assets. Instead, you must trust the exchange to securely hold these assets and honor your transactions when you decide to sell. Users also have to trust these exchanges with potentially sensitive personal information, such as financial information, which could be leaked in the event of a hack or data breach. Unfortunately, there have been instances where this trust was broken, most notably with the fall of FTX in 2022.

In November 2022, financial documents revealed that FTX had illegally transferred billions of dollars in user funds to Alameda Research, a crypto trading firm closely tied to FTX founder Sam Bankman-Fried. As this news broke, FTX users rushed to withdraw their assets, triggering a liquidity crisis. Since FTX hadn't properly held its users' funds, the company couldn't fulfill the wave of withdrawal requests, leading to a complete halt in operations. It was later revealed that rather than honoring their users' funds, FTX had been sending customer deposits to Alameda Research to cover risky bets, violating users' trust and standard financial practices. By mid-November, FTX filed for bankruptcy. The fall of FTX is a permanent stain on the crypto community and serves as a stark reminder that trust itself can't be trusted.

However, there is some good news to come from the fall of FTX. Governments around the world are now working toward robust regulation to protect investors and bring stability and trust to a market often deemed the "Wild West of trading." We are already seeing this in action with the EU passing the world's first comprehensive regulatory framework for cryptocurrencies, known as the Markets in Crypto Act, or MiCA, in 2023.

While the United States has yet to codify crypto regulation, the SEC has been working on establishing more trust in the crypto market. Most recently, Binance and its founder, Changpeng Zhao, were sued by the SEC for $4 billion after the company admitted to knowingly engaging in anti-money laundering, unlicensed money transmitting, and sanction violations. (Justice.gov) While these are steps in the right direction, security and trust in the market remain a concern for investors. So, where do we go from here?

The Future of Crypto

The answer: A fully decentralized cryptocurrency exchange that offers the security and ease of use of a centralized exchange but on a fully decentralized platform. In a perfect world, we envision a fully decentralized exchange, similar to Uniswap, Curve, or PancakeSwap, that eliminates the middleman and allows users to buy, sell, and trade digital assets directly with one another. These platforms rely on a decentralized community of users and liquidity pools to execute transactions and set currency prices while validating transactions directly on the blockchain.

Since the fall of FTX and other centralized exchange blunders, decentralized exchanges (DEXs) have seen a rise in popularity. In Q2 of 2024, DEXs saw spot trading volume grow by 15.7%, while CEX trading volume fell by 12.2%. (Crypto Briefing) Though DEXs are often held back by subpar user experiences and complexity challenges, the benefits of improved privacy, transparency, and true asset ownership have proven to be a deciding factor for several investors.

This data shows us that the market is eager for a decentralized exchange that offers robust security, privacy, and direct ownership, as well as a streamlined, easy-to-use interface similar to that of CEXs. So why don't DEXs have better user experiences? In short, crypto wallets.

Traditional crypto wallets, or Externally Owned Accounts (EOAs), are designed only to approve or deny transactions. Due to this simplicity, they often rely on seed phrases as opposed to passwords and don't support traditional security measures, such as simple passwords, two-factor authentication, account recovery, biometric verification, etc.

The vulnerabilities tied to the use of seed phrases are often the source of hacked or stolen funds, acting as a top contributor to the loss of over $3.8 billion in cryptocurrency in 2022. (Persona) These phrases are often sourced through phishing attacks, where users unknowingly share their seed phrases with hackers pretending to be representatives of another entity, such as MetaMask. Once a seed phrase is exposed, the bad actor has full access to the account and can simply send all of the crypto to another wallet.

Because of this, the majority of users opt for CEXs. Their user accounts are more reminiscent of Web2 accounts, supported by centralized software and databases that allow users to benefit from traditional features like passwords, two-factor authentication, etc. While these features offer a sense of security, they come with inherent risks tied to the centralization model and go against the grain of cryptocurrency's sole purpose: decentralization. All the data you share with the CEX, including sensitive personal information, is stored in a centralized database and at risk of being exposed in the event of a hack or data breach.

So, we are left at a crossroads. Do we choose simplicity and ease of use at the cost of our data and lack of true asset ownership? Or do we choose a more complex platform with limited account security but complete control of our assets, data, and privacy? Or, what if there was a way we could have both?

Introducing: Pensamento Swap

Pensamento Swap is a fully decentralized cryptocurrency exchange designed to offer a streamlined user experience without compromising its users' rights to security, privacy, and individual autonomy. It is an integral component of the Pensamento Web4 Ecosystem and makes use of the Pensamento Blockchain and Pensamento Cloud natively.

A core component of the Pensamento Ecosystem is its Native Smart Accounts, which work by turning every user account into an individual Smart Contract. This approach empowers users and developers to create a user experience like that of a CEX, with the security and privacy benefits of a DEX. No more seed phrases, traditional passwords, two-factor authentication, biometric verification, account recovery, account delegation, and so much more are now possible without relying on any centralized entity to store and host your sensitive personal information.

Another benefit of the Pensamento Ecosystem is the ability to take advantage of its advanced features. For example, if you want to make a transaction private, you can do so through the Pensamento Private Chain. This way, the transaction is anonymized through cryptography, and only your Pensamento ID has the private keys you need to access it. However, if you ever want to share it, you can also share access through the app.

At Pensamento, your data belongs to you, and only you, always.

When asked whether or not they would consider using a fully decentralized cryptocurrency trading platform that addressed the current security risks and offered a simple user experience with low fees, 67.6% of our respondents said they would, while 32.4% said no. However, with our continued commitment to education, security, privacy, autonomy, and the user experience, on top of ongoing regulatory clarity and mainstream adoption, we believe Pensamento Swap will be the foundation for the next generation of investors.

Would you use a decentralized exchange that focused on the user experience, security, privacy, and autonomy? Yes (67.6%), No (32.4%)

Here at Pensamento, we're on a mission to address these concerns through the world's first Web4 ecosystem. Comprised of a fully decentralized blockchain, cloud, and cryptocurrency exchange, the Pensamento Ecosystem is designed to power the next generation of the Internet. Thanks to its innovative design and native smart accounts, users and developers can leverage the ecosystem to create seamless and personalized experiences like never before without compromising security, privacy, and individual autonomy.

Web4 isn't just a buzzword; it's the future we deserve, where everyone's rights are protected and unconditional freedom is paramount. To learn more about Web4 or our mission here at Pensamento, please visit our website at www.Pensamento.io or read our deep dive into Web4 here.