Your product may be technically superior, but that is not the edge you think it is. Betamax was a better format than VHS, but it lost the videotape war. Linux is more stable than Windows, but it only has a tiny slice of the desktop OS market. EOS had better scalability and throughput than Ethereum, but it faded into obscurity. History is littered with examples where the product with better technical features doesn’t win.
This is important for blockchain companies to remember, because it’s tempting to focus on how good your trade execution is, how low your latency is, and how advanced your features are. While users care about these things, they care more about something else: They want to know that their assets are safe.
It’s a bull market now. This means more users, more inflows, and the Trump-Vance administration looks to be much more crypto-friendly than the Biden-Harris administration. The pie is growing. Now’s the time to build your competitive moat. And that’s about building platform security and making it visible to your users.
A Great Barrier to Crypto Adoption
A 2024 Security.org survey of 1,500 Americans discovered that 80% were familiar with blockchain technology, but only 40% owned any actual crypto. The difference is even starker in the UK, where a 2024 YouGov survey conducted on behalf of the Financial Conduct Authority (FCA) found that 93% of UK adults are aware of cryptocurrencies but only 12% own any digital assets. In other words, there is a large gap between awareness and adoption that the blockchain industry needs to close.
Blockchain is inherently a technical invention. It deals with public keys, private keys, ledgers, and other complicated concepts. Additionally, the first blockchain products were built by developers for a technologically savvy audience. That made the industry hard to navigate.
But over the years, much of that complexity has been abstracted away. It’s now relatively easy to invest in crypto through platforms like Coinbase, MetaMask, and Ledger. The primary obstacle to mass adoption is no longer the complexity of the industry. Instead, a 2023 CoinCover report showed that the two main barriers are:
- market volatility
- security concerns
Market volatility is an inherent characteristic of an emerging asset class. You can’t control it. Nobody can. But you can absolutely control security. If you have a platform that prioritises security and protects its customers against hacks, fraud, and theft, you remove one of their biggest concerns about cryptocurrencies.
Chart extracted from CoinCover report "Building your trusted exchange status"
The Psychology of Trust
The one psychological principle that explains why security matters more than technical excellence is loss aversion. First documented by Nobel laureate Daniel Kahneman and Amos Tversky, loss aversion shows that people feel a loss roughly twice as intensely as an equivalent gain. In other words, the pain of losing $500 feels about twice as bad as the pleasure of getting $500.
This has profound implications for crypto platforms. The industry has innumerable stories of people who have lost access to their money because they clicked a wrong link, sent crypto to a wrong address, or forgot their seed phrase. There’s relatively strong consumer protection in place for fiat money, but not (yet) for crypto. As a result, people don’t invest.
Even with a US administration that has a more favourable view of the blockchain industry, it will take years before there’s enough regulation in place to remove security concerns as a barrier to crypto adoption. It’s the blockchain industry itself that will have to do the work. Leading platforms like Ledger, BitGo, and MoonPay already understand this. They have partnered with CoinCover to address their users’ concerns about security. Here’s what that means specifically:
- Protection against theft and unauthorised transfers
- Warranty-backed transaction screening to protect user assets
- Robust key recovery solutions
- Regular security audits and updates
Chart extracted from CoinCover report "Building your trusted exchange status"
The Benefits of Security
With regulatory tailwinds ahead and Bitcoin having broken through $100,000, the industry is seeing another bull market. The platforms that will capture the next wave of adoption won't just be technically excellent. They'll be the ones that are trusted because of their comprehensive security measures. The benefits of security are tremendously compelling:
Better customer retention: Every time there’s a bear market, the number of active addresses on any blockchain crashes along with the price. But if you invest in robust security measures, you stand to see significantly lower churn during market downturns. When users trust that their assets are protected, they're more likely to maintain their positions rather than exit the market entirely. Instead of losing users forever, they stay on your platform.
*Chart from Glassnode. The number of BTC active addresses drops 40% or more every bear market
Lower customer acquisition costs: Every business leader understands that acquiring a new user is expensive. It can cost hundreds or even thousands of dollars in marketing and sales efforts. But satisfied users of security-focused platforms become advocates. You are likely to see more organic growth during referrals and word-of-mouth, which is particularly valuable during bear markets.
Differentiation in a crowded market: You probably have quite a few strong competitors. Security is one of the few genuine opportunities for differentiation in the crypto market, where transactional features can be copied and performance advantages are often temporary. But comprehensive security infrastructure, which includes key recovery systems and proactive protection measures, creates a sustainable competitive moat that deepens over time.
Institutional adoption: As traditional financial institutions continue their entry into crypto markets, they bring with them stringent security requirements and due diligence processes. If your platform is built on strong security foundations, you will find yourself at a significant advantage for capturing this lucrative market segment.
How to Become a More Secure Platform
Comprehensive security audits should be your first priority. These aren't just checkbox exercises. They’re thorough examinations of every potential vulnerability in your system. This goes beyond basic penetration testing and includes threat modeling, code reviews, and operational security assessments. The goal is to understand not just where you're vulnerable, but how those vulnerabilities could impact user confidence.
Next are multi-layered protections. A set of preventive, detective, and responsive security measures. This includes but isn’t limited to real-time transaction monitoring, fraud detection, backup systems, and automatic failsafes. Each layer should work in concert with the others and create a security ecosystem that's greater than the sum of its parts.
Then comes staff training, about security protocols and incident response. Your team needs to understand not just the technical aspects of security but also how to communicate about security with users. This includes everything from handling routine security questions to managing crisis communications during security incidents. Regular drills and updates ensure your team stays sharp and prepared.
More generally, clear security communication strategies are essential for building user confidence. Users need to understand what protections are in place and how they work, but this information must be conveyed in a way that reassures rather than alarms. The goal is to help users feel protected without overwhelming them with technical details.
Finally, robust recovery and warranty mechanisms address users' deepest fears about crypto assets. When they know that there's a way to recover from worst-case scenarios, whether through key recovery systems, transaction screening, or other protective measures, they're more likely to stay invested through market volatility. These mechanisms should be clearly documented and regularly tested.
Yes, the above may be a handful. But market dominance isn’t supposed to come on a platter. It requires work. Additionally, you can work together with established companies like CoinCover to guide you through the process of becoming an extremely secure and trusted cryptocurrency platform.
Build Tomorrow’s Platform Today
In a market driven by trust, security is the ultimate competitive moat. While technical excellence remains important, it's security that will determine which platforms thrive through market cycles and which ones become cautionary tales.
The gap between awareness and adoption represents an enormous opportunity. But capturing and retaining an audience new to crypto requires unshakeable security that directly addresses their fundamental fears about the safety of their assets. Understanding and acting on this is what will separate tomorrow's industry leaders from the rest.
The real choice isn't whether to invest in security, but how quickly you can implement comprehensive protection measures that will set your platform apart. There will be more bear markets. During a bear, users won't remember which platform had the fastest execution or the best features. They'll remember the platform they trusted to keep their assets safe.
To understand how CoinCover can help your company navigate better the ever changing market, and protect your customers, just contact us.