How crypto values are going to change consumer behaviour

A common misconception is that crypto is just tech. web3 just being the next phase of digitisation, the next iteration of the internet, which is also implied by the name. Others associate web3 and crypto-technology only with risky investments and gambling. Both takes are missing the context in which crypto currencies were born and the sub-culture that has evolved over the past decade, thus underestimating the impact crypto is going to have on consumer behaviour in the future.

Bitcoin and the financial crisis of 2008

"The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust" - Satoshi Nakamoto 2009

In the first step it is important to understand the context in which Bitcoin, the first and largest crypto currency was created. The whitepaper was published on October 31st 2008 and is to be seen as a response to the 2008 financial crisis and the failure of the centralized banking system. The Bitcoin crypto currency and its according transaction system have been designed deliberately in contrast to the existing system and based in true digital ownership.

Fixed supply instead of infinite money printing

There will not be more than 21 million BTC ever issued. The US Dollar in comparison has lost 96% of its value since the Emergency Banking Act of 1933

Trustless instead of 3rd parties

Blockchain technology allows for trustless peer-to-peer transactions. Doing a classical bank transfer between two parties requires at least one trusted 3rd party that validates and processes the transaction.

Decentralisation instead of centralisation

As the rules of the Blockchain network are given by the code, validation and processing of transactions can be done in a decentralised manner, meaning basically everybody with an internet connection can participate in the network. This goes hand-in-hand with its trustless nature. Without that elements, the role of the trusted 3rd party is usually been taking by a centralised entity we call bank.

Self custody

You fully own your assets by owning your crypto keys. This also applies to fiat money, but the majority of the financial system has developed in a direction, where a centralised entity keeps custody of your assets, think the money in your bank account or the stocks in your portfolio. If the bank is closed on public holiday or the app is down for maintenance, you are having a hard time accessing your assets

Anonymity

Everybody can create a crypto wallet and do transactions, without having to identify theirself. This also applies to fiat money, where you can buy something, without having to provide your ID and your personal data in order to do so. This does not apply for digital transfers of fiat money, where (for good and worse) KYC/AML regulations apply (Know Your Customer / Anti Money Laundering).

How this will affects behaviour of crypto native consumers

Just like there was a generation called digital natives there will be a generation of crypto native consumers, that will have new requirements towards products and services, that are rooted in values, which have been honed over the last decade. The last big wave of changed consumer expectations was based on sustainability. While this was a mere buzzword 10 years ago, by now it is on every companies agenda. What will crypto native customers expect:

Digital Ownership

Before the rise of the internet, we were owning music on CDs. When mp3-technology and internet access spread, many people would just download their favourite song via a peer-to-peer platform. There was literally no willingness to pay for something that only exists in the digital world. This then changed and by now it is widely accepted to pay in order to stream music via Spotify, to buy a digital movie or to do in-game-purchases. But do we really own these assets? can you access them everywhere without a third party? Can you sell them? What happens, if the entity you bought this asset from seizes to exist? I guess we all know the answer. Crypto native consumers will not accept that kind of ownership. They will be asking for real digital ownership.

Appreciation of digital artists and digital art

The ability to own digital assets spawned the wider appreciation of digital art and their creators. The possibility for digital artists to make a living with their craft is already unlocking tremendous creative potential and breeding a new generation of artists. Being able to express digital identity by showing the digital art you own in a web3 native way is being adopted by more and more major web3 platforms (Twitter was first, Meta is following with fb and IG). The integration of digital assets in digital user journeys will not be a nice-to-have but be expected.

Censorship resistance

Winners of web2 were big centralized platform businesses that are prone to manipulation and censorship. Recent global events have highlighted the importance of censorship resistance. Both, decentralisation and censorship resistance are values that are hold dear by crypto natives and companies will do better understanding these values. A current example is Coinbase, which is funding a lawsuit against the U.S. Treasury Department to block sanctions barring Americans from Tornado Cash. Even though they are a centralized player, they are standing up for censorship resistance.

Alignment of consumer and creator interests

web2 platforms such as Spotify are a race to zero for most artists involved. Less than 1 of 1.000s musicians on Spotify is able to make a living from streaming with less than 1 cent being made by a song streamed. Blockchain technology allows for new ways of interaction, monetisation and participation between artists and consumers/collectors. web3 based platforms and business models are emerging and will compete and at some point replace existing web2 models.

Data privacy

Data privacy became more and more important of the past couple of years and by now, especially in the EU there are strict regulations in the form of GDPR. The willingness to share personal data will be further declining. This goes so far, that both consumers and also founders decide to stay anonymous. A prominent example is Punk 6529, a though leader in the web3 space, that also controls several venture funds and whose real identity is unknown.

Improving existing services

With increasing understanding of the capabilities of the blockchain technology, there will be less and less tolerance for poor solutions that do not make use of it. Obvious first cases are e.g. in finance (e.g. instant low cost money transfers) and ticketing (no more fake tickets). With many more cases to come that range from consumer applications to public services administration and notary services.

Conclusion

Consumer expectations will be changing due to crypto technology in a similar extent they changed due to increased awareness of sustainability: it will affect everything. Existing trends will be amplified (data privacy, freedom of speech etc.), acceptance for poor technical solutions will further decline, digital assets will become as valuable as physical assets and new business models will thrive.