Why Is Crypto So Hard To Buy?
I’ve heard that question so many times, “Why is Crypto so hard to buy?”. It has prevented many friends and family from taking the plunge into investing. It has been a discussion on many Reddit threads I’ve read from people wondering the same thing. Today we will tackle why it is so hard to buy crypto, and what this means for you if you’re starting your investment journey.
Ethan’s Crypto Escapade
To start things off, I’m going to introduce you to Ethan. He is a know-it-all and claims he has predicted every major win and loss the crypto market has experienced. I’ve sectioned the story out below so you can jump to just the article on why if preferred. If you want a possible laugh though, read through the all too familiar process of getting into crypto.
April 7th, 2021 – 6:00 AM
Ethan was determined to prove me wrong, he couldn’t sleep. His bragging is more than words, and he’s decided to buy all of the coins he knows will pump. He’s determined Bitcoin will be his start. Then, he’s going to look at fresh altcoins that have a professional feel to them.
Buying Bitcoin
Ethan knows that Bitcoin is the easiest to buy, so he starts there first. He signs up through Coinbase, goes through the hassle of scanning his ID, links his bank account, and goes to the purchase screen. Everything is greyed out.
He apparently has to wait for approval for his newly linked bank account.
That’s fine, he’s determined to start today right away. To avoid the time limit, he purchases some bitcoin with a debit card and moves to the next task, Altcoins.
Buying AltCoins
After hearing me talk about this over and over again at family dinners, he knows he needs to sign up with something called MetaMask. After 20 to 30 minutes of googling, Ethan adds the chrome extension and creates an account. He’s pumped and realizes he needs some funds to get going. He goes back to Coinbase, purchases some Ethereum and transfers it to his MetaMask account.
Time for some research. While looking through coins talked about on Reddit, he finds one called DEOR that everyone has been pumped about for the last month. He goes to their website and finds a cool-looking site. It’s official, THIS is the coin that will get him rich. After looking on CoinMarketCap, he is even more excited to see it has been going down the last few days. “Obviously”, this means it will only rebound and he’s buying it on the low. Using Uniswap, Ethan buys 1000 DEOR for $240 with a gas fee of .007 ETH ($23).
Different Networks
This isn’t the end of Ethan’s purchases though, after all, there is money to be made. He decides he is going to go buy this coin he’s heard of called CAKE. He finds it on PancakeSwap, which seems to integrate with MetaMask already, but he just can’t quite figure it out. After some googling and hitting his keyboard, I get a call at 10:00 AM, “Christoph, what is BSC Mainnet? I signed up for MetaMask but I can’t buy CAKE, I think it is broken.”
Painful Realization
I ask him what he’s done so far.
“Well, I removed my account from MetaMask to try and add it back in. It’s now asking me for a private key.”
I tell him to just put in the private key he wrote down. I will help him through setting up Binance Smart Chain Network with MetaMask after he’s recovered his wallet.
Ethan responds, “I didn’t write it down…”
I responded with “Ethan, did you read the important notes during sign up?! You can’t recover your wallet without that key. How much did you invest? I’m positive it even asks you to type it back in during sign up, how do you not have it?!”
This was the end of Ethan’s crypto adventures. He was livid and claimed he was going to talk to the owner of MetaMask so he could be refunded. I explained that’s not how it works, and he wanted to know why. Why is crypto so hard to buy? Why is it so complicated? It is like they want people to fail. He to this day still proclaims that the “people at MetaMask” stole his money, and crypto is a big scam. Even more unfortunately for Ethan, he would not have had much luck with his investments. The next day DEOR was labeled a scam and dropped from $0.24 per token to $0.05 per token.
Technical People Are Who Buy Crypto
This one I’ve found more true than most realize. While most of my friends in the tech industry have or at least have looked into how to buy crypto, it still seems to be a rarity. Currently, 22% of American Adults own Bitcoin1, and that’s with Bitcoin purchasing no longer being a complicated process. Why is that? There is a two-part answer to this that needs some explanation.
No Understanding of the Benefits of Crypto
Try explaining what a decentralized blockchain is to anyone that can use a computer for more than email, and you’ll likely have a decent conversation. Try explaining it to anyone that is outside of that group though, and all you’ll get is “Oh you kids and your computers” or “I wish I knew more about technical stuff”.
In a study across 33 rich countries, researchers defined 4 levels for technology proficiency, with a possible 5th level for not even attempting to use a computer2. From those levels, I would argue that Levels 2 and 3 of technically proficient people are the only ones currently capable of looking into purchasing crypto on their own. The kicker there is that it only accounts for 31% of the adult population, as 40% can’t efficiently use a PC for basic tasks, and 29% only know how to use basic applications.
Lack of Need for a Simpler System
Since even understanding the benefits of crypto seems exclusive to those proficient in technology, I would argue those who want to figure it out have already figured it out. This goes back to the old adage “If it ain’t broke, don’t fix it”. This means there is no foreseeable demand for a better system as the current one just works.
That’s not to say there aren’t systems being built, if you look at exchanges such as Coinbase, Kraken, or Voyager, they are ever-increasing their support for new crypto tokens and trying to grab the most popular altcoins. The issue though is that new coins will not be available as they would be when using Uniswap or PancakeSwap.
Crypto is a Decentralized Trustless System
Going back to that discussion of Crypto being decentralized, this is also one reason why crypto is so hard to buy. There is no governing system that has to account for use difficulties. Since it is controlled by the majority, it will take the majority to all agree on a single solution or exchange for all purchases going forward.
Bitcoin was created with the idea that there was no single institution or authority to govern its use (for more information on that, see our article “What is Satoshi and Bitcoin? – EXPLAINED“). The idea here is that everyone would hold their own wallet, and then send funds to a wallet ID they are given when a transaction is agreed on. What we are seeing now is a mix of people holding their own wallets, exchanges holding wallets on your behalf, or exchanges holding the amount of bitcoin you “own” while not giving you any access to your wallet.
It is apparent no one can agree on a proper system for managing these which is why there are so many options, which only contributes to the complication of buying crypto.
Crypto Still Has Low Participation/Buy In
While I’ve already touched on the lack of need for a simpler system, there are more pieces that we can discuss. Simpler systems are developed when there is high participation and need. Due to the repercussions of a trustless system, and lack of government buy-in, this is causing some avoidance that could be curtailed if addressed with more concise information.
Repurcussions of a Trustless System
While being a trustless system is great and you no longer have to worry about payment failures, reversals, or guarantees of delivery, it does present one problem. You cannot mix a system that is trustless in a trust-based transaction.
For example, ransomware attacks have been hitting companies in the tech industry hard lately. There is a trust (or lack thereof) that your files and systems will be unlocked if you only send them 10 bitcoin to a certain address. This still requires trust of the action after sending a non-reversible (trustless payment). I have been given this as a reason from individuals technical enough to understand the system, as to why they avoid it.
To combat this there is now the development of blockchain Smart Contracts, however, these systems do not account for everything. It also requires even more technical understanding from individuals that may already have a hard time understanding the system as is.
Government Protection
This one is plain and simple, governments and banks are protecting their current FIAT systems and have a hesitancy to crypto as a whole. There have been restrictions or outright bans in many countries now such as Turkey, Egypt, and Vietnam. We would obviously see more use from the public leading to simpler systems implemented if we could get various governments’ buy-in. Unfortunately, there are many that are hesitant simply because it doesn’t have that government stamp of approval.
It’s Near Impossible For Impatient or Emotional Buyers
I wish I had data from crypto networks to back this up, however, just like with Ethan he wanted his money then and now. He lost money because he didn’t pay attention, and now he’s gone from crypto for good. With gas fees when buying NFTs or doing almost anything with MetaMask to delays due to various exchanges’ policies, it is not a good market for those that have no patience or are emotionally attached to their gains/losses.
Just like with the stock market, performance chasing is always risky and most often ends with you buying at the top and selling at the bottom. When entering into buying crypto whether it is mainstream tokens or altcoins, it is important you take time to understand what you are doing, and do solid research on your investments. This is already hard for the impatient in the stock market when purchasing fractional stocks. It is even harder when you have to learn how to use the system and network before learning about your investment.
Don’t Worry! It is Getting Easier To Buy Crypto
With all of those reasons, it is still important to note it is getting easier. I was pleasantly surprised while doing research for this that Kraken already supports some coins I’ve been looking into buying. Uniswap and PancakeSwap both have some great videos and tutorials out there for people looking to start investing. I am sure with Smart Contracts and other Launchpads we will see better alternatives come to light forcing the improvement of already created solutions.
Unfortunately, what this means though is patience is key. If you are avoiding investing right now due to its complexity, it will be simpler in the years to come. While you may be worried about missing out on some gains, don’t fret. We aren’t supposed to be performance chasing anyways, and I recommend long-term over short-term investments any day.
Hey, if this article has been helpful/not helpful, let me know. As a reminder, I am as unqualified as I can get and am not a financial advisor or life coach. You just might see some success in the things I am saying don’t work. I’m okay with being wrong but am always looking for friendly discussion or constructive criticism when I am.
Helpful Links (superscript number references, also known as sources)
- About 46 Million Americans Now Own Bitcoin – https://www.nasdaq.com/articles/about-46-million-americans-now-own-bitcoin-2021-05-14
- The Distribution of Users’ Computer Skills: Worse Than You Think – https://www.nngroup.com/articles/computer-skill-levels/
Christoph is a technical integrations analyst who specializes in security infrastructure and coaching. He has found he thoroughly enjoys experiencing major market losses, falling for get-rich-quick schemes, learning about upcoming market trends, stocks, crypto, or anything related to investing and building income.
Well written
Thank you!