Jan 23, 2020 05:25 AM | Kyle Torpey


A number of different companies and developers have tried to make Bitcoin more user friendly, but the general usability of the world’s most popular cryptocurrency remains rather poor.

Long strings of randomly-generated letters and numbers are still widely used as payment destinations, instead of addresses that are easily readable by human beings. Specific wallets are needed to ensure better privacy, and loss of funds due to human error is still common. And these are just the issues that can be controlled. There’s also high price volatility and tax issues on cryptocurrency-based transactions.

The problems associated with usability were on display again over the weekend, with noted gold bug and Bitcoin skeptic Peter Schiff tweeting about how he lost access to the Bitcoin that was gifted to him years ago.

Will Bitcoin ever reach the levels of simplification of extremely popular apps like Facebook and Gmail? Maybe not. Bitcoin inherently requires a large amount of personal responsibility for its users, as the general idea is to be your own bank.

Technical improvements at the network level may eventually make Bitcoin more easy to use for the average person. But the reality is that Bitcoin, as it exists today, requires that users understand why they’re using it in the first place as well as the tradeoffs being made.

While the user interfaces built around exchanges have come a long way over the years, non-custodial wallets are still facing incredibly hard-to-solve issues. These issues mostly revolve around key management and the irreversibility of Bitcoin transactions, which are still difficult for the average person to grasp.

Bitcoin Payments Can’t Be Made Simple

It’s difficult to make Bitcoin payments simple because they work completely differently than any other online financial system. Most people are used to working with a bank, where the security of funds is in the hands of a third party. When the user is in control of their own money, there is a high learning curve in the onboarding process.

Some of Bitcoin’s complexity serves as protection. If it’s easy to make a Bitcoin payment, it’s also easy to accidentally send an irreversible transaction to the wrong person or have your money stolen by a hacker.

It’s much easier to build payment apps around completely centralized systems because they’re less vulnerable to user error. Accidentally send a payment to the wrong person? They can reverse that. Someone hack into your account? They’ll make sure everything goes back to how it was before the hack. These sorts of safeguards are currently unavailable in Bitcoin wallets. When the user makes an error, they can end up paying a huge price for it. 

The best example of a centralized solution would be a custodial wallet like Coinbase. The company has been able to create the single greatest app for onboarding new users to the Bitcoin network, but it does so at the cost of becoming a Bitcoin bank. Obviously, many of the benefits of Bitcoin as a payment system go out the door when allowing someone else hold the private keys, especially a highly-regulated entity like Coinbase. However, it works well for those who just want to gain some exposure to the Bitcoin price, which is currently the vast majority of users.

But these centralized solutions aren’t perfect, either. Even with Bitcoin banks like Coinbase, accounts can be hacked and users need to use best security practices such as two-factor authentication. On top of that, turning on text-based two-factor authentication has turned out to be worse for security than only having a username and password to input.

Additionally, when Bitcoin software is developed in a way to lower personal responsibility on the user’s end, there is always some sort of tradeoff there in terms of removing the properties that make Bitcoin valuable in the first place.

What Does Good Bitcoin Wallet UI Look Like?

So, how do you build quality user interfaces that retain the permissionless nature of a decentralized financial system? There’s simply no way to get the benefits of personal responsibility without also taking on the downside risks. At this point, mom and dad could easily end up losing funds due to user error — unless you just give them a piece of paper or hardware wallet to store in a file cabinet for ten years, which takes payments out of the equation.

That said, there are interesting tools that can be built for those who wish to take on that additional responsibility. For example, Blockstream Green is a wallet that uses green addresses to increase the level of security offered by the wallet. It’s sort of like adding bank-level security checks to a Bitcoin wallet without handing over control of your funds to a third party. A 2-of-2 multisig address is used to hold the user’s funds, and one of the private keys is controlled by a server that will only sign off on a transaction if the user successfully inputs a form of two-factor authentication. There is no risk that the funds will become unavailable if the server goes offline because a pre-signed refund transaction can be broadcast to the network in a situation where the server becomes unresponsive.

Non-custodial (not necessarily decentralized) exchanges are another area where tremendous strides have been made in providing knowledgeable Bitcoin users with user interfaces that allow them to trade without handing over funds to a third party. ShapeShift’s combination of a non-custodial exchange with the KeepKey hardware wallet may be the most relevant example here. Arwen has also been working on bringing non-custodial functionality to exchanges that are already live.

Technical development will be needed in order to make it truly easier for the average person to use Bitcoin without reverting back to centralized servers. The Lightning Network is the most obvious example to point to here, but other improvements, such as “Bitcoin vaults,” should be able to reduce the commonality of user error at the wallet level. But if people want to use Bitcoin for payments, there’s simply no replacement for personal responsibility.

If you have a good idea for a data story, please don’t hesitate to reach out! Please send pitches and tips to:

Email:[email protected]

Most Popular Articles

Top Hashtags

Firebase Subscribe