Mass adoption of cryptography could centralize cryptography

This year is the year that cryptocurrencies are finally starting to go mainstream.

From Musk and Tesla investing and accepting Bitcoin payments, to the recent token (NFT) craze, the era when blockchain technology was dominated by cypherpunks and programmers has passed. But despite this, blockchain technology has not yet developed to the stage where ordinary people can easily use it.

Moreover, the longer non-technical users have been aware of access to cryptocurrencies, the greater the risk that centralized companies will be tasked with improving ease of use by influencing the way resistance to censorship, as this relatively new Technology finally flooded into mainstream consciousness.

Let’s now take a look at the current state of cryptocurrency accessibility today.

Bitcoin's 'Flash or Crash' Approach Faces Hurdles

When Bitcoin chose to reject on-chain scaling via block transactions, it essentially placed all of its hopes and dreams of being usable as an everyday currency on Layer 2 scaling solutions.

Upbring Uses Crypto to Help Disadvantaged Children in Texas: Golden Finance reports that Austin, Texas-based nonprofit Upbring says it will use cryptocurrencies and blockchain technology to help more than 11,000 people in the Lone Star State children. Upbring provides three main services, education, placement and foster care. The organization seeks to provide aid and assistance to underprivileged children in the area and prevent their exposure to dangerous and unhealthy conditions. In other words, it wants to make child abuse a thing of the past. As of this writing, there are 75 locations in Texas hosted by Upbring. [2022/12/4 21:20:31]

Among them, the most important is the Lightning Network. While the Lightning Network is operational, it also introduces a host of complexities, including liquidity balancing, opening and closing channels, routing payment paths, and more.

Perhaps most challenging for new users, moving funds off-chain to the Lightning Network requires an on-chain exchange, triggering those unpleasantly long confirmation times and high fees.

GameStop is Hiring a Security Analyst Proficient in Blockchain, NFT and Crypto: GameStop is currently hiring a Security Analyst proficient in Blockchain, NFT and Crypto, according to a job ad posted by GameStop on April 8 , which means that GameStop may soon venture into decentralized finance. Applicants must have a bachelor's degree or more than five years of relevant work experience and be available on call. Nako Mbelle, founder and CEO of FinTechRecruiters, a Canadian company specializing in cryptocurrency recruitment, said that GameStop’s recruitment of security analysts may mean that the company is considering minting NFT or is considering issuing platform coins. [2021/4/12 20:09:17]

All in all, a disappointing experience even for savvy cryptocurrency users, and definitely not for a novice.

Thankfully, developers have deployed a new generation of Lightning Wallets that significantly improve the user experience to a level that non-technical users can easily use.

Encryption technology writer: Bitcoin is still the preferred payment method for dark net criminals: News on July 4th, recently, cryptocurrency enthusiast and encryption technology writer Nick Bel published an article saying that cryptocurrency is anonymous, accessible, and easy to use The characteristics of sex and low transaction costs have made it increasingly associated with criminal activities. Bitcoin (BTC) remains a popular payment method among scammers and criminals on the darknet. Cryptocurrencies are very convenient tools for money laundering, tax evasion and defrauding investors. (Cointelegraph)[2020/7/4]

Second-generation Lightning wallets such as Phoenix do this by outsourcing certain functions of regular Lightning nodes (including opening channels, managing liquidity, automatic backups, etc.) to wallet providers.

Essentially, they are similar to custodial wallets in almost every way, except they are not custodial wallets. That is, users control their funds, and service providers cannot take away (or deny users access to) their funds.

Voice | Joseph Young: Japan is making rapid progress in encryption technology: Cryptocurrency analyst Joseph Young tweeted that Japan is making rapid progress in encryption technology. Bic Camera, Japan’s largest electronics retailer, accepts bitcoin; Rakuten, Japan’s largest e-commerce giant, owns a bitcoin exchange and plans to integrate encryption technology; large banks such as Mizuho/SBI are committed to the development of businesses in the cryptocurrency field . [2019/2/25]

Basically, there are two main goals that need to be prioritized: ease of use and user control over funds.

If you use a second-generation Lightning Network wallet, you can easily send and receive messages without being affected by the complex inner workings of the network, and you still have full control over your funds at all times. Compared to just using Bitcoin on-chain, you only need to trust the Lightning Service Provider (LSP).

This approach sees a growing number of users rely on a dwindling number of large LSPs to easily move their bitcoins, similar to the traditional financial system where exchange processing is centered around a handful of major payment companies.

Voice | Professor of Shanghai Jiaotong University: Cryptocurrency itself is not encrypted, and encryption is realized through encryption technology: On December 8, the CCF Pujiang Lecture Hall "Blockchain and Digital Finance" forum was held in Shanghai. Lai Xuejia, a professor at Shanghai Jiaotong University, said in a speech titled "Blockchain's Contribution to Cryptography" that the so-called cryptocurrencies, such as Bitcoin and Ethereum, only use signatures and Hash, and there is no encryption in fact. With zero-knowledge proof, commitment, ring signature and other technologies to realize the encryption function. The blockchain itself is the only center, not a decentralized center, but a strong center. Bitcoin just removes the bank that issued the currency. The only consensus in the blockchain is that participants only recognize the content-zce of the longest chain. The so-called consensus is only for the right to bookkeeping, because the right to bookkeeping means the right to issue currency. For example, Pow is a referendum, and Pos is a shareholding system. Money is what matters. [2018/12/8]

Of course, many users will still be able to control their funds from inflation and currency manipulation, but apart from a few tech enthusiasts who can run their own nodes, most will rely on centralized entities to operate.

User Perspective Even Competitors Don't Like This

Not every cryptocurrency will be affected by the congested main chain and Layer 2 complications. Especially major Bitcoin forks and projects like Litecoin have low on-chain fees and regular confirmation times.

However, even an experience like this is not enough for the end user. Regardless of what Bitcoin Cash proponents say, in practice the operation is not instant, and paying or depositing via many popular payment processors still requires multiple confirmations, which can take anywhere from a few minutes to a few hours.

The average user won't understand why they have to wait, or why the wait time is variable, or that the service should be able to trust zero confirmations but doesn't. Users just know they have to wait, which is a very frustrating experience and feeling for users.

However, not all platforms and services fully understand the underlying technology, so this experience may be haphazard. However, there are other networks that can do this in seconds as well, but this can come with significant network reliability tradeoffs.

The Troubling Privacy Concerns About Usernames

Even after solving the problem of fast, reliable exchange, there is still one important key to usability for mass adoption: usernames. While QR code scanning can be simple enough, copying and pasting long cryptographic hashes is not an easy task for network, remote and other situations.

We need an easy, social way to get people to pay with a readable username and contact list, and there are quite a few systems out there that do this to some degree.

However, most make great trade-offs between usability or trust, and solutions like the Ethereum Name Service simply resolve to a static address, which still often displays long and cumbersome addresses in the user interface.

And it creates some troubling privacy concerns by exposing your entire transaction history to anyone who can simply paste your address into a blockchain explorer.

The basis for interoperability between wallets is similar, but more complex due to wallet-specific domains and implementations.

Crypto swaps must be easier

Another solution is provided by HandCash, a popular BSV wallet that does not resolve static addresses and supports contact lists. The problem is that the solution is centralized: users must rely entirely on the company and its infrastructure.

With a similar setup in the BSV ecosystem, Paymail allows users to easily resolve to a new address every time without relying on a single centralized system. However, like email, Paymail relies on the server hosting your domain name, and the only option to resist censorship is to host your own server.

Also, there is no universal contact list system. Both of these friendlier solutions are unfortunately in the direction of centralization, because easy-to-use solutions are difficult to decentralize.

Again, DASH focuses on providing the most ideal solution to the usability problem - building a distributed application layer, which includes providing usernames and contact lists in an intuitive, user-friendly, fully decentralized form at the protocol layer.

However, the solution, which has been in the works for years, is still on the testnet, and it remains to be seen whether it will be released in time to impact the mass adoption trend of centralized services.

Summary

Of course, the real risk is not that cryptocurrency ease-of-use solutions will be difficult or impossible to succeed. The greater risk is that fully custodial solutions will win out easily, leading us back to the old financial system we once tried to escape, only (allegedly) backed by cryptocurrencies.

We’ve seen examples of this, from incentivizing blogging platform Publish0x to encourage direct withdrawals to centralized platforms to avoid high Ethereum fees, to American fast food giant Chipotle distributing bitcoin exclusively to exchange accounts.

Additionally, payment giants such as PayPal and Visa have also begun to venture into the cryptocurrency space. If we’re not careful, in the future we could be spending cryptocurrencies through the same giant companies and services, still at the mercy of those players.

We are at a crossroads: create ease of use in a decentralized way, or let the power of mainstream players accelerate the death of decentralization. The challenge is daunting, and while the stakes are too high, it is not easy to admit defeat.

Are cryptocurrencies up to the task?

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