10 November 2022 |

Rebuilding Trust Market Fit In Crypto


Hey y’all—unfortunately not in a mood for a Drake/21 Savage album review; been a pretty depressing week all around for me. 

I’ll have some stuff on FTX and the crypto ecosystem next week—I’m gonna spend a few days asking my much smarter wife/co-GP Stevie to coauthor something about it. 

Something I’ve been thinking about though is: where does crypto go from here? FTX really screwed a lot of folks—financially, sure, but now the crypto/Web3 brand is toxic once again. 

For an industry, consumer trust takes decades to build. I don’t even think we have “Trust Market Fit” in fintech yet—the average person is warming up to the idea of digital finance thanks to tremendously popular apps like Venmo and Cash App, but for most people the idea of banking on your phone is pretty foreign. Crypto is significantly behind fintech with Trust Market Fit; lots of folks still think of it as something used to buy drugs or other shit online, or a method to commit money laundering and other financial schemes. The thing is…are they wrong? There’s a ton of evidence that points to crypto being a big scam—that’s because a ton of crypto is a scam. 

Now, I’m not writing crypto off completely—I actually think this is a great opportunity for brands and companies to build trust with their users. Transparency is a major key, the right protections is another one. The opportunity is ripe but the path to navigate all this is more difficult than ever—one misstep and you’ll not only alienate your users but most likely invite regulatory scrutiny as well. 

Another area to focus on is making this simpler and easier to understand. Financial literacy is such a major part of finance that continually gets underappreciated, both in fintech and crypto. 

Let’s take DeFi, for instance. I’ve seen a lot of folks online talk about how FTX’s spontaneous combustion is amazing for DeFi and a kiss of death for centralized DeFi. I don’t necessarily disagree—DeFi seems to provide the checks and balances that a financial ecosystem needs. And it’s clear that centralized authorities in DeFi act as an obfuscation layer, but a layer that seems to let these companies do sketchy shit behind the scenes. 

Can you imagine going to an average retail investor and tell them to invest in a DeFi product and while centralized DeFi is bad and how DeFi protects them through transparency etc? Half of these DeFi platforms are even confusing for me to us, much less someone less sophisticated. 

The Wild West era of crypto is definitely over—regulators and regulations are coming (and probably quickly), consumer trust has been irrevocably damaged, and there’s a lot of rebuilding to do from here. But the future of crypto lies in simplicity, ease, and function—things need to work in a simple and easy to understand way. By focusing on that, we can rebuild trust in the crypto markets.