From PayPal to Web3: Digital identity could play key role in unlocking mainstream adoption
The advent of the consumer internet in the 1990s brought unprecedented opportunities, democratizing access to information and communication, and revolutionizing digital commerce.
Email revolutionized communication by facilitating instant messaging across borders. This soon led to numerous attempts at introducing digital money systems, but none were as successful as PayPal.
Source: Unsplash
Founded in 1998, PayPal made it easy for people to send and receive payments securely, regardless of their location or currency. PayPal stood out when it first launched because of two key features: security and simplicity. This solved the problem of online card fraud and made it easy for users to purchase products without sharing their card details with merchants.
Today, information and money are transferred seamlessly via numerous online services. The protocols that power these services may have been developed in the 1990s, but it took several years before they were intuitive enough to be used by the masses.
In the past, sending an email or shopping online required users to navigate through a fair amount of complexity. For example, downloading email clients and configuring them to work with their ISPs was a task that users often had to undertake. Similarly, online shopping was seen as a risky endeavor in its infancy due to the limited adoption of HTTPs, the web traffic encryption protocol created by Netscape in 1994.
Users who were not safeguarded by this protocol faced the danger of fraud, as their card details were transmitted without encryption, thus rendering them vulnerable to digital fraudsters and perpetrators.
Fast forward 20 years, online users are at another pivotal juncture
The financial payments industry finds itself, yet again, at a momentous turning point, bearing remarkable parallels to the birth of the information age in the 1990s.
Banks used to be places where customers went to cash checks and apply for mortgages, among other things. Today, consumers have turned to apps that facilitate and allow them to carry out all of their daily banking on their phones. Whilst this makes banking more convenient, these apps still follow a gated model, also known as Web2, that does not offer users any freedom or autonomy — this method stands in stark contrast to the era of Web1 in the 1990s.
Web2 payments identity
As the financial industry moves toward more open and seamless peer-to-peer (P2P) payments, companies such as Venmo, Revolut and Cashapp have built a gated ecosystem where users can send and receive payments and messages using their proprietary name tags.
Source: Unsplash
While these Features are impressive, they remain limited to their respective ecosystems, thus representing a significant drawback. The gated nature of these ecosystems prevents Web3 from reaching its full potential as it restricts user autonomy and the growth of a more open financial system.
Open digital identity in Web3
Cue Web3, otherwise known as a trustless open database, has thrived autonomously and gained significant momentum in recent years through the support of its community and developers who value sovereign financial empowerment. Despite possessing all the necessary building blocks — such as blockchain technology — to create this open, decentralized future, the current state of front-end applications in Web3 falls short of the standards needed for mainstream adoption.
Primarily, the necessity and use of public keys, better recognized as long strings of alphanumeric characters that serve as unique addresses can be a hindrance for many. Their length makes them challenging for people to read, leading to an increase in the likelihood of errors.
Thus, decentralized digital identity providers began to emerge as a solution to simplify the process of sending and receiving payments by offering users a more user-friendly approach to managing their public keys, such as wallet addresses.
There has been a number of notable solutions surface and aim to provide this offering, including:
- Ethereum Name Service (ENS)
- Unstoppable Domains
- Y.at
ENS is a decentralized domain name service that simplifies communication between users and blockchains through human-readable addresses known as a domain name for a one-time fee with indefinite validity upon registration. Similarly, Unstoppable Domains provides website domains that are stored on a blockchain, enabling owners to create permanent online identities that can accept payments.
Source: Y.at
However, Y.at takes digital identity to a whole new level by allowing users to represent their digital identities through a string of between one and five emojis that can be used as their digital username, website URL, and even payment address for their respective (digital) wallets.
Web3 — An ongoing uphill battle
Although open digital Identity protocols offer a range of potential benefits including enhanced security, autonomy and transferability of digital assets, their widespread adoption and understanding by the average user are still limited. This is due in part to the limited use cases around Web3 ID as well as the technical expertise required to utilize these existing systems.
Undoubtedly, one of the main challenges Web3 must overcome is the “mom test,” which aims to achieve widespread adoption by assessing both the usability and user experience of software based on how easily a mother would be able to use it.
Therefore, to drive mass adoption, it is vital to focus on improving user experience and making software not only more user-friendly, but more importantly, seamlessly accessible.
Final thoughts
While the current state of Web3 front-end applications may fall short of the standard needed for mainstream adoption, the potential has never been more expansive as it is now with the rise in decentralized digital ID and focus on user-friendly interfaces.
The future of digital Identity is full of promise. Whether through the creation of new systems or the improvement of existing ones, significant advancements in this field can be anticipated in the coming months.
Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you with all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor can this article be considered as investment advice.
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