Crypto's Next Challenge: Getting People to Use Its Products

The crypto industry has spent years developing infrastructure for financial products and creating novel creations on top of those rails. However, it's now facing a new challenge: getting people to actually use these products. Asset managers have tokenized funds, exchanges are expanding into lending, payments, and other financial services, and blockchain networks are courting institutions. The industry is no longer just focused on proving that these products can be built, but figuring out what will make consumers and institutions choose to use them.

For companies like Coinbase, this means thinking less about the technology itself and more about what customers are trying to do with their money. Ben Shen, Coinbase's head of financial services and loyalty products, said that the industry has been 'very technology oriented' in the past. This has led to products that are heavy on jargon or expose users to the underlying technology.

However, as crypto starts to overlap with more traditional financial services, customers are looking for products that are easy to use and provide clear benefits. Shen described this as 'magic moments' - instances when a customer can immediately see why a product is useful. But getting someone to try a product once is only part of the challenge. Coinbase thinks about adoption as a cycle: money comes onto the platform, customers have a reason to hold it there, and then they have ways to use it.

One way to get this cycle started is through rewards. Some rewards are part of the product itself, while others are temporary and designed to persuade someone to move money from a product they already use. These incentives can help 'break inertia,' said Shen. However, Coinbase doesn't want customers to move money onto the platform for a promotion and then pull it out as soon as the promotion ends. The bet is that once the money is there, customers will find other things to do with it.