Why Cryptocurrencies Might Be Too Technical for Mainstream Facebook, Telegram Users

  • Nathaniel Popper, a New York Times writer, has argued that bitcoin is too inefficient as its mining process consumes too much energy.
  • Popper also noted that cryptos are exploited by scammers and criminals, however he seems to overlook the greater challenge which is cryptocurrencies are still too technical for most.

The world’s largest online messaging platforms are now “hoping to succeed” where digital asset and blockchain-related firms “have failed” by “introducing” cryptocurrencies to “mainstream consumers”, according to Nathaniel Popper, the critically acclaimed author of “Digital Gold, A History of Bitcoin.”

In his latest article on the New York Times, Popper wrote that social media and online communications giants such as Facebook, Telegram, and Signal, a leading internet encrypted message system, allow their users to use established payments processors such as PayPal and Venmo in order to conduct cross-border transactions.

Per the best-selling author, Facebook is currently working on a new cryptocurrency that WhatsApp (a company Facebook owns) users may use to instantly transfer value to their friends and family members. Going on to cite anonymous sources, Popper revealed: 

The Facebook project is far enough along that the social networking giant has held conversations with cryptocurrency exchanges about selling the Facebook coin to consumers, said four people briefed on the negotiations.

Popper also noted that internet messaging company Telegram, which has 300 million active users throughout the world, may also be planning to use a cryptocurrency to make it easier for its users to transfer funds. Meanwhile, the developers of Signal could potentially launch their own crypto token as well, Popper wrote.

Facebook, Telegram Have A Userbase That "Dwarfs Backers Of Earlier Cryptocurrencies" 

In his extensive post, Popper argued that these large messaging platforms have “a reach that dwarfs the backers of earlier cryptocurrencies.” He also thinks that Facebook and Telegram have the ability to make digital asset wallets accessible to billions of internet users.

Commenting on the current trend which involves many established organizations and institutions considering launching their own crypto, Eric Meltzer, the co-founder Primitive Ventures, a crypto-related venture capital firm, has said: 

It’s pretty much the most fascinating thing happening in crypto right now. They each have their own advantage in this battle, and it will be insane to watch it go down.

According to Popper, bitcoin and the other cryptocurrencies being developed by these large internet companies may give more of the world’s unbanked population an opportunity to equally participate in the global economy. However, Popper believes bitcoin may have “failed” as he has criticized its “energy-guzzling” mining process.

"Lack Of Central Authority" Makes Cryptos Risky

Explaining that the traditional tech firms will face some of the same challenges encountered by crypto startups, Richard Ma, the CEO at Quantstamp, a firm focused on providing security audits for digital assets, remarked: 

They are all going to run up against these same types of technological limits.

Notably, Popper believes these challenges include criminals and scammers using cryptocurrencies to exploit unsuspecting users - because of the “lack of a central authority over” cryptos.

However, these perceived future problems may not be as challenging to overcome as some of the other issues related to using cryptocurrencies. For instance, cryptocurrency transactions are irreversible. While some financial analysts argue that this brings finality to transactions so that merchants need not worry about chargebacks, there’s still a very large percentage of the world’s population that may not be ready to use cryptos due to their highly technical nature.

Cryptocurrencies Even Give Experienced Users "Heart Attacks"

Simply the process of copy and pasting lengthy alphanumeric strings, which represent cryptocurrency addresses, may seem too complicated or technical for people to understand. Because cryptocurrencies are meant to function as a medium-of-exchange (MoE), they should also be able to function effectively as a unit of account. However, this has been a challenge so far, partly because many cryptocurrencies such as bitcoin (BTC) use up to 8 decimal places to represent value.

Long decimal numbers that represent the value of cryptocurrencies, which is still currently estimated in fiat currencies such as the USD or British pound (GBP), can be confusing for many newcomers to understand. In fact, crypto transactions give “heart attacks” to people who’ve been in the blockchain space since it first started.

That’s because even when you send crypto from a best-in-class hardware wallet to a best-in-class hot wallet, there’s still some a UX lag at times which can be stressful - according to Ryan Selkis, the co-founder of Messari Crypto. Until cryptocurrency platforms become more user-friendly, mainstream adoption of cryptographic assets may not be possible.