WhiteBIT Coin (wbt) 
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Current State of Cryptocurrency Adoption
The number of cryptocurrency users globally has reached approximately 425 million, representing about 8% of the world’s connected population, estimated at 5.44 billion. While this number is significant, it falls short of the earlier optimistic adoption estimates. For instance, some predictions had expected the market to exceed one billion users by 2022.
Impact of a Slow-Growing User Base
A slow-growing user base has negatively impacted the value of cryptocurrencies. Reduced liquidity in smaller markets makes it challenging for traders to execute large orders without affecting prices. This leads to increased volatility, making cryptocurrency a risky investment for many people.
Efficient markets with higher user participation create more realistic market prices, offer diversification opportunities, improve price discovery, and support a wider selection of crypto tokens.
Barriers to Cryptocurrency Adoption
Several factors deter investors from entering the cryptocurrency market:
- Lack of understanding of blockchain technology
- Security concerns
- Regulatory issues
However, one often overlooked factor is the stringent Know-Your-Customer (KYC) protocols designed to prevent fraud.
A Fraud-Frightened Environment
The process for new users to sign up to an exchange should be simple and quick. Ideally, buying cryptocurrency with a credit card should take seconds. However, due to fraud concerns, this process is often cumbersome.
New users are subjected to lengthy KYC processes involving email and telephone verifications, captcha solving, picture ID verification, and face video capture. Credit card transactions are not always allowed, and ACH transfers are limited to small amounts. Transactions often go through 3DS, where they can be unnecessarily rejected.
The KYC Conundrum
Exchanges are legally required to comply with KYC regulations, but many go beyond the law’s requirements, hoping to protect against fraud. For example, in the United States, KYC is required for transactions above $3,000. Yet, many exchanges enforce KYC protocols for purchases as low as $100.
An estimated 80% of fraud comes from KYC-verified accounts, making KYC an additional barrier for new investors. Fraudsters have found ways to bypass KYC by purchasing verified accounts cheaply on the dark web.
KYC creates the illusion of protecting exchanges against fraud but often results in lost business and artificial barriers to wider cryptocurrency adoption.
Improving the Onboarding Process
Every industry has an ecosystem of businesses and suppliers that rely on its performance, and cryptocurrency is no exception. A smaller investor base means fewer opportunities for publications, advertisers, investment counselors, and blockchain developers.
The cryptocurrency market can grow significantly if it streamlines the onboarding process for new users. Reducing unnecessary KYC protocols, moving away from rule-based credit approval systems, and adopting behavioral-based AI screening solutions can help.
AI can make accurate transaction approval decisions in less than 300 milliseconds, fast enough to keep up with crypto purchases. This technology can approve more first-time users while effectively detecting and rejecting fraudulent ones.
As cryptocurrency exchanges adopt AI for fraud detection, the market will reach its full potential.
