September 22, 2022
Cryptocurrency has become a global phenomenon with shockingly fast acceptance in recent years. The global crypto user base increased by 190% within just two years from 2018 to 2020, and this rate is expected to further accelerate in the following years. Currently, there are over 300 million crypto users worldwide.
Public curiosity about crypto even intensified as big companies like Tesla and Mastercard announced their interests in cryptocurrency. In 2021, El Salvador became the first country to make cryptocurrency legal tender.
Cryptocurrency’s rising popularity primarily comes from its rapidly growing value. When Bitcoin was first released, it was only worth less than a cent. On November 10, 2021, it reached its all-time high price of $68,000. Crypto offers traders substantial profit potential along with low downside risk in a highly volatile market.
Moreover, cryptocurrency is playing a significant role in the transformation of the financial industry. Because of their decentralized nature, these virtual currencies attract users with low transaction fees, high interest rates, and more opportunities to diversify their investments. Their peer-to-peer payment capabilities also offer flexibility in the way consumers mobilize their funds.
The fast adoption of digital assets means greater opportunities for services like crypto exchanges and digital wallets. However, this also has resulted in tighter competition among these niche service providers. Developers now race to attract new crypto traders and users to their platforms by offering promotions or trying to distinguish themselves from the herd.
A few common characteristics exchanges and digital wallets leverage to compete against each other are security, low to no fees, and an exceptional technical foundation. But crypto companies need to establish a strong differentiator to stand out and gain more customer trust.
By building a unique or superior feature into their service offering, exchanges and wallets can distinguish their platform from competitors who offer similar services. If successfully executed, these distinguishing factors could influence the consumers to switch providers.
Differentiators For Crypto Exchanges and Digital Wallets
There are various ways crypto exchanges and wallets can make their platforms stand out.
- Simplify the complexity of crypto trading
Crypto users are no longer just tech-savvy individuals. The diverse demographic of crypto users means companies need to consider the needs of beginners in crypto trading in addition to existing advanced audiences. Delivering a great user experience that caters to both experts and novices is a good differentiator. Exchanges can adapt to the growing crypto market by providing a smooth, easy-to-learn, and navigable interface for users of every level.
- Rewards, coupons, and discounts for digital wallet users
As more people use digital wallets to complete day-to-day transactions, enticing them with cost-saving promotions and unique capabilities might be the reason why they would make a switch. For example, wallet developers can offer a 5% cashback for specific transactions like paying utility bills. Similar to the impact of traditional loyalty programs, employing a rewards system in digital wallets encourages consumers to use the application more frequently.
- Integrate FIDO2 passwordless authentication solutions
Virtual currency accounts are fast becoming targets of various cyber-attacks. Decentralized finance or Defi-related hacks and crypto thefts totaled $4 billion in 2021, making these major channels targets for fraud and other crimes.
Safety and security are two key factors that influence users’ trust in exchange. Yet when addressing security risks, only a few companies help customers protect themselves from the threats that target user carelessness and lack of knowledge.
When a client’s cryptocurrency gets stolen on the blockchain, they are extremely difficult to track down and highly unlikely that it will be returned. Therefore, service providers need to assist traders in preventing these attacks. One way they can deliver this is through biometric authentication.
Distinguishing Crypto Services with FIDO2 Authentication
The advancing technology, cyber attacks, and data breaches make passwords ineffective in safeguarding user accounts from today’s digital threats. Verizon’s 2021 report unveils that using stolen credentials is the most frequent technique cybercriminals use to bypass security and steal from account owners. Hackers breach passwords through brute force, phishing, credential stuffing, keylogger, man-in-the-middle, and dictionary attacks.
Eliminating passwords removes the vulnerabilities of knowledge-based user validation. In effect, it makes exchanges and digital wallets more trustworthy to crypto traders and users. With a strong real-time fraud prevention measure, customers do not have to worry about engaging the platform and keeping their resources secure because they know they can rely on the system to keep them safe.
Incorporating FIDO2 passwordless authentication solutions further makes the crypto platform more competitive by enhancing not just security but also the user experience. While other passwordless authentication programs require third-party software or plugins to work, FIDO2-certified solutions like LoginID utilize the user’s devices’ existing biometric tools. So, when the platform needs to verify the user, the user simply taps the smartphone’s biometric sensor or takes a selfie.
Almost all devices and browsers presently support FIDO2 standards, allowing users to initiate multi-factor or biometric authentication on a wide range of electronic devices. Without the hassle of recalling passwords, logging in and confirming transactions with a biometric digital signature are quicker and more secure no matter what gateway customers use.
Integrate LoginID to Gain Competitive Advantage
The more users gain experience investing and transacting with crypto, the more they realize what they want from the exchange and digital wallet service providers. Developers and companies need to anticipate and deliver these needs to rise above the flood of new market entrants and the prominence of well-established crypto platforms.
Keeping pace with trends is simply not enough to attain a more significant market share and industry leadership. Organizations need to possess a competitive advantage to distinguish themselves from the competition.
LoginID’s FIDO2 biometric authentication solution for crypto exchanges and digital wallets can create an edge for these services. Organizations can reinforce their security and positive user experience with passwordless identity verification and market these characteristics as a differentiator.