{"id":18188,"date":"2020-12-07T19:31:39","date_gmt":"2020-12-07T19:31:39","guid":{"rendered":"http:\/\/ci027cfe66200826c3"},"modified":"2020-12-07T19:31:39","modified_gmt":"2020-12-07T19:31:39","slug":"we-must-solve-bitcoins-custody-ux-problem","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/culture\/we-must-solve-bitcoins-custody-ux-problem","title":{"rendered":"We Must Solve Bitcoin\u2019s Custody UX Problem"},"content":{"rendered":"
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Twelve years is the blink of an eye in historical terms, but it\u2019s an eternity in tech. Just look at the cellphone, which went from niche accessory to absolute necessity in under a decade. Still, new technologies don\u2019t always soar immediately: it took a quarter of a century for the humble washing machine<\/a> to reach even half of U.S. homes.<\/p>\n

This Halloween marked the twelfth anniversary of Satoshi Nakamoto\u2019s Bitcoin white paper. In that short time, Bitcoin has transformed the way we think about money, but it\u2019s still a long way from mass adoption. As a result, we need to ask some uncomfortable questions about what\u2019s holding Bitcoin back. <\/p>\n

What\u2019s The Problem? The UX<\/h2>\n

In my mind, there\u2019s no question that user experience (UX) has always been the biggest single obstacle to Bitcoin adoption. But not in the way you might think. <\/p>\n

UX is a slippery term: it means different things to different people in different contexts. With Bitcoin, for example, UX extends far beyond the intuitiveness of individual exchanges or wallets. Since we\u2019re talking about people\u2019s investment, security is a \u2014 the<\/em> \u2014 crucial consideration in any discussion about UX. <\/p>\n

Bitcoin suffers from a usability problem that can\u2019t simply be fixed with a new interface. This isn\u2019t a technical error but a human one: the assumption that it\u2019s safer to store coins with an exchange instead of keeping custody yourself. This can\u2019t be fixed with a new user interface (UI); it requires a revolution in the way we think about Bitcoin security. <\/p>\n

In the early days, poor UX didn\u2019t really matter, since Bitcoin platforms were mostly used by traders and speculators who had the technical chops to navigate complexity. But when ordinary people started dabbling in Bitcoin, a host of exchanges and trading platforms focused their attention on developing \u201cconsumer-grade\u201d user experiences. Ironically, this was the moment where Bitcoin\u2019s UX problems really began.<\/p>\n

Where Did It All Go Wrong?<\/h2>\n

It\u2019s not like we didn\u2019t see this coming. The world\u2019s first highly-publicized hack, of Mt. Gox in 2014, saw 24,000 people lose everything. But in the six years since, we\u2019ve continued in the wrong direction on security. There\u2019s not enough space here to detail the number of exchanges<\/a> that have gone bust, been hacked or, like OKEx in October, lost access to customers\u2019 keys after the single employee in charge of them was detained by law enforcement. <\/p>\n

In the first half of 2020 alone, blockchain analytics firm CipherTrace found that<\/a> investors lost $1.4 billion worth of crypto, much of it from exchanges that suffered hacks or, sickeningly, committed fraud against their customers. What\u2019s going wrong?<\/p>\n

Instead of making it easy and intuitive for everyone to hold their own keys, the industry has focused on delivering a consumer-friendly, \u201cfull service\u201d experiences where third parties control every aspect \u2014 including key custody. <\/p>\n

That may be a good starting point for the first-time user, since it stops them from making very basic security errors. But it still leaves you vulnerable to a range of threats, both from within and outside the exchange. <\/p>\n

In spite of these well-publicized catastrophes, our industry hasn\u2019t yet turned its attention to developing a standard solution to this gaping, fundamental security flaw. In large part, that\u2019s because it suits platforms to have their customers keep their coins on-exchange.<\/p>\n

Making Security Simple<\/h2>\n

Early Bitcoin UX efforts focused on superficial issues and dismissed the deep problem of helping users own their private keys. They figured that solid UX for users to control their keys was an unwinnable battle and took it off the table. <\/p>\n

While that\u2019s understandable, I believe it was a mistake. The whole ethos of Bitcoin is built on the idea of empowerment: to be your own bank, to control your own savings and to take charge of your own financial destiny. But in trying to make UX more seamless for non-technical customers, exchanges and custodial wallets have (perhaps unwittingly) discouraged self-sovereignty and opened the door for third-party risk. And it\u2019s hard to imagine a worse experience than losing every satoshi of your investment.<\/p>\n

Approachable end-user control of private keys is the holy grail of solving bitcoin UX, and it\u2019s one that the industry has largely sidestepped. <\/p>\n

So, while many new Bitcoin users face a steep learning curve, they are not learning that old security models don\u2019t apply. If you lose your keys, for example, you can\u2019t just hit \u201cpassword reset\u201d \u2014 your coins are gone forever. This, in part, explains why exchanges are so keen to own the whole experience, including custody. <\/p>\n

But sacrificing security in favor of ease-of-use is a false choice. We should not underestimate the challenge, both from a technical point of view and in terms of design. But it\u2019s quite possible to make it easy for users to keep custody of their keys, combining high security with great UX. The harder task is educating the coin-buying public about why self-custody is so important. But it\u2019s well within our industry\u2019s capabilities, if we only give it the priority it demands. <\/p>\n

In the next ten years, Bitcoin will take one of two trajectories: either a cellphone-style surge in adoption or the slow rise of the washing machine. It all depends on how quickly we solve Bitcoin\u2019s biggest UX challenge: making self-custody simple.<\/p>\n

This is a guest post by Nick Neuman. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or <\/em>Bitcoin Magazine.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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