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The User Experience Problem of Bitcoin Custody Must Be Solved

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What is holding back the development of Bitcoin?

Original title: "Viewpoint | We must solve the user experience problem of Bitcoin hosting"

Original source: Mengyan Finance

From a historical perspective, 12 years is a blink of an eye, but in the tech world it is an eternity. Just look at the mobile phone, which has gone from niche accessory to absolute necessity in less than a decade. However, new technologies don't always develop rapidly at once. It took a quarter of a century for washing machines, for example, to find their way into half of American homes.

This year’s Halloween marks the 12th anniversary of Satoshi Nakamoto’s publication of the Bitcoin white paper. In this short time, Bitcoin has changed the way we think about money, but it is still a long way from mass adoption. So, what is holding Bitcoin back?

Issue: User Experience (UX)

In my opinion, there is no question Yes, user experience (UX) has been the biggest single barrier to Bitcoin adoption, but it's not as simple as you might think.

User experience (UX) is tricky: it means different things to different people in different contexts. For Bitcoin, for example, the user experience extends far beyond exchanges or wallets. Since we're talking about people's investments, security is a critical consideration in any discussion about user experience.

Bitcoin has a usability problem that cannot simply be solved with a new interface. This is not a technical issue, but a human error, the assumption that it is safer to store coins on an exchange than to keep them yourself. This kind of error won't be fixed by a new user interface (UI), it will require a revolution in the way we think about Bitcoin security.

In the early days, poor user experience didn't matter because the Bitcoin platform was dominated by traders and speculators who were technically capable and able to navigate the complexity in use. But when ordinary people started dabbling in Bitcoin, a host of exchanges and trading platforms focused on developing a "consumer-grade" user experience. Ironically, though, this is also when Bitcoin’s UX problems really popped up.

Where is all this wrong?

It is not that we did not expect such a thing to happen. The world's first high-profile hack, Mt. Gox in 2014, cost 24,000 people everything. But in the six years since, we've continued to head in the wrong direction when it comes to security. Events like exchange bankruptcy, hacking, or like OKEx in October, loss of access to customer keys after key principals were detained by law enforcement are numerous and will not be detailed here for space reasons .

Blockchain analytics firm CipherTrace found that crypto investors lost nearly $1.4 billion worth of cryptocurrencies in the first half of 2020 alone, with most Part of this is due to exchanges being hacked, and some exchanges have even committed fraud against their customers. So, what is the problem?

(Because) instead of making it easy and intuitive for everyone to hold their own private key, the industry is focused on providing consumers with a convenient "all-round "Service" experience, that is, every link is controlled by a third party, including the custody of private keys.

For first-time users, this can be a good starting point, as it saves users from making very basic security mistakes. But this still exposes you to a range of threats both on and off the exchange.

Despite these well-publicized risks, the industry has yet to turn its attention to developing Standard solutions to address this fundamental security flaw come up in the void. In large part, this is because this allows platform customers to continue to deposit coins on the exchange, and the exchange can profit from it.

Making Security Simple

Early Bitcoin UX work focused on surface issues above, while ignoring the underlying problem of helping users control their private keys. They believe that a solid user experience that puts users in control of their own private keys is a battle that cannot be won, and avoid talking about it.

While this is understandable, I think it is a mistake. The whole ethos of Bitcoin is built on the idea of empowerment, which is to be your own bank, control your own savings, and control your own financial destiny. But in trying to make the user experience perfect for non-technical customers, exchanges and custodial wallets have (perhaps unknowingly) hindered self-sovereignty and opened the door to third-party risk. It’s hard to imagine a worse experience than losing every satoshi you invested.

Friendly end-user control of private keys is the holy grail of Bitcoin user experience, but it is also a problem that the industry has largely avoided.

So while many new Bitcoin users face a steep learning curve, they don't realize the inadequacy of the old security model . For example, if you lose your private key, it cannot be retrieved through a "password reset", and you will lose the coins forever. This partly explains why exchanges are so keen to control the entire experience, including custody.

Sacrificing security for ease of use is a wrong choice. We should not underestimate this challenge, both from a technical and design perspective. It is entirely possible for users to easily keep their private keys and combine high security with excellent user experience. The harder task is educating the coin-buying public about why self-custody is so important. And that's well within the capabilities of our industry, as long as we give it the priority it demands.

Over the next decade, Bitcoin will travel on one of two trajectories: either wild adoption like the cell phone, or a slow rise like the washing machine. It all depends on how quickly we solve Bitcoin's biggest user experience challenge, which is making self-custody simple.