Is UX ready for the new cryptocurrency world?

So, as the poet said, times are a-changing. But … Are we, as UX professionals, prepared for the new world of cryptocurrencies and all that it brings?

Well, let us see if we can shed some light on this matter.

Understanding cryptocurrencies

The concept of cryptocurrency (or crypto for short) is no longer a brand new one. However, and this is the interesting thing from the researcher’s point of view from UX, it remains a mystery to most of the population. And not only that: as we will see later, it is also a mystery for the vast majority of users of such coins.

But before we get into that, let us start at the beginning: the genesis and origins of cryptocurrencies.

Blockchains 101

The most important concept to understand how crypto works is the concept of blockchain.

In layman’s terms, a blockchain is a series of blocks. Each of these blocks has a cryptographic hash (a unique identifier).

The key to this chain of blocks is that each block contains the information of the previous block. So if someone hacks or tampers with one block, all other subsequent blocks become invalid and that block will be nulled.

Since computers today have incredible processing power, it could be possible for hackers to hack one block and then all subsequent blocks. To counter this, a block can only be changed after 10 minutes, making tampering nearly impossible.

Proof of Work (PoW) and Proof of Stake (PoS)

Proof of Work (PoW) and Proof of Stake (PoS) are consensus mechanisms that govern the process by which transactions between users are verified and added to the public ledger of a blockchain, without the help of a central party.

In other words, these consensus mechanisms are the cryptographic proof that tells the blockchain that “this block is valid” (or not).

There are a few consensus mechanisms, but PoW and PoS are the most common.

Proof of Work is a method that requires miners to prove that they have expended a certain amount of energy to solve complex mathematical problems. PoW is assymetric: the energy required to “prove” is very high (but feasible), but the energy required to verify the solutions must be very low.

Because of this way of working, PoW has been criticized for its huge energy requirements and slow transaction rate.

The main coins that use PoW are Bitcoin and Ethereum.

Proof of Stake is a protocol that works by selecting validators in proportion to their holdings of the associated cryptocurrency. Unlike a Proof of Work (PoW) protocol, PoS systems do not incentivize extremely high energy consumption.

A Proof of Stake operation consumes about 0.01% of the energy required by its PoW counterparts. Therefore, coins using PoS are considered “green”.

In the beginning it was Bitcoin

Bitcoin (symbol: BTC) was created in 2008 as an alternative to FIAT money. Its inventor, a certain Satoshi Nakamoto (the name is not real, but a pseudonym), proposed an alternative system for digital money that is not controlled by a bank or a central entity. For this reason, the word “decentralization” is crucial to understand the how and why of crypto’s existence.

This digital money was not the first (conceptually we can go back to 1992), but it was certainly the most successful and today the only one to take root.

The idea behind Bitcoin, and by extension crypto money, is to be a digital means of payment to compensate for solving large-scale mathematical problems. The one who solves the problem “mines” the Bitcoin. In other words, the process of “bitcoin mining” is basically a reward for solving a mathematical problem.

This mining process is not without its critics either, because solving these problems requires hardware so large that it is not available to everyone. On the contrary, the only “competitors” in this mining process are the so-called “mining farms”. Also, there are clusters of users who provide the computing capacity of their computers. In this way, they manage to create a network of thousands of users grouped by companies or applications that keep most of the reward from mining.

For this reason, there is a lot of disagreement about whether Bitcoin can be considered a decentralized currency, as control is in very few hands.

The evolution of the crypto world

After Bitcoin, other currencies emerged, some of which are directly based on Bitcoin, while others are unrelated to it. We can cite LiteCoin, DogeCoin, Ripple, Dash, Stellar, etc. These cryptocurrencies are called “altcoin” (short for “alternative coins”). These coins are the first generation of blockchains

But it was not until 2017 with the emergence of Ethereum (ETH) that the crypto world saw a currency with as much potential as Bitcoin.

Ethereum is the second most important cryptocurrency at the time of this writing and bases its success on so-called “smart contracts” and decentralized applications (Dapps).

A smart contract is a computer program or a transaction protocol which is intended to automatically execute, control or document legally relevant events and actions according to the terms of a contract or an agreement. , arbitrations and enforcement costs, fraud losses, as well as the reduction of malicious and accidental exceptions.

From https://en.wikipedia.org/wiki/Smart_contract

The emergence of Ethereum led to the development of ETH -based tokens, which have created a more decentralized economy and new players in the crypto ecosystem. This has allowed Ethereum to position itself as the cryptocurrency closest to developers, despite its problems ( it is very slow and the cost of operation is very high). Ergo, the most widely used (after Bitcoin, of course).

Because of the new game-changing capabilities that Ethereum enabled, this is known as the second generation of blockchains. The 2nd generation coins add a layer of “terms” to transactions, allowing people to agree on terms in smart contracts instead of relying on intermediaries.

One thing common to most first and second generation coins is that they use PoW consensus mechanism

Third generation coins

Third-generation blockchains are designed to address fundamental weaknesses such as scalability and interoperability. This means that blockchains can gain widespread adoption without causing problems such as slow transaction times and the associated costs.

Examples of third generations coins are Cardano, Solana and Ethereum V2 (still not launched at the moment of writing this article)

UX and crypto: a marriage made in hell?

So how did UX embrace cryptocurrency (or vice versa)?

To be honest, after about a decade, I have seen virtually no adoption of principles or lessons from crypto and blockchain on the UX side.

On the crypto side, we could say that there is “average to good” usage of UX on major sites, and then we have the usual mix of “some UX” and “no UX” on all other sites.

Now you may be wondering: what can UX experts learn from the crypto industry perspective?

So let us go back to the first concept we mentioned: Blockchain.

The blockchain concept was originally developed to combat email spam. In other words: Blockchain development existed even before BTC.

So here you have a solid application of Blockchain approaches to improve the user experience of emails.

And what else could we do with a blockchain concept?

The answer is: almost everything.

The sole concept of blockchain and encrypted data blocks should immediately give us ideas. The most obvious one is NFT (Non Fungible Tokens), but it is not limited to that.

The entire concept of the Internet revolves around the transmission of data. So if we work on electronically transmitted digital experiences (web, mobile, IoT, intranets, satellites, etc.), everything we do on a daily basis can be ported to a blockchain approach.

Imagine how easy and secure it would be to transfer all kinds of sensitive data without worry. From emails to metaverse pages, from search engines to identification services, from IoT to finance.

Personally, I fail to see how is this NOT a thing yet.

Talk is cheap

Now you might be saying, “Yeah, that sounds right in theory. Then why don’t YOU do it ?”

And the answer is: we have already done it for three different projects, and we are now working on our own project, ArsMuse, using the same logic. And we have our first patent-pending invention based on blockchain.

ArsMuse is turning things upside down at NFT. Although the whole project is about NFTs, and at first glance it really is an NFT marketplace, it’s not that simple.

It starts by redesigning the entire logic of NFTs: Instead of focusing on the object itself (an image, a song, a clip), ArsMuse focuses on the contracts that govern those digital and physical objects. Just in case you want to learn about the intersection of digital and physical dimensions, you can read about it in our Quantum UX articles.

So it’s not just talk. It can be done, and with relatively scarce resources.

Crypto Currency, Blockchain and User Experience: a conclusion

I hope this article did not get too long and boring. And hopefully you learned something new, or I gave you something to think about on a topic you already know.

The most important thing is: where do we go from here?

Obviously, blockchain is a game changer from a purely technical standpoint. And also from a conceptual point of view.

If you want, you can even compare well-known frameworks like Material Design or Atomic Design and you’ll quickly see connections. It’s really that simple.

The thing is: UX, as we knew it, no longer exists. What’s the point of researching user behavior if we can actually CHANGE user behavior for our (hopefully ethical) purposes?

And with that in mind, using technical and theoretical frameworks from areas like AI, machine learning, blockchain, cryptocurrency development and many others is almost mandatory for any serious UX developer, researcher, or analyst.

Otherwise, I fear we will simply be living in a glorified past that no longer exists.

Fabio Devin

Fabio is Bachelor in Marketing, Master in Human Computer Interaction and a UX Evangelist.

He worked for some of the biggest companies in the world. As such, he has developed entire systems and businesses for clients of all sizes.