The complexity of cryptocurrencies creates an extra hurdle that impedes efforts to increase usage of the technology by ordinary users. So while crypto enthusiasts like to tout the transparency or the immutability Bitcoin for instance; its more difficult to convince
non-enthusiasts to buy into this when they have to deal with complex terms or
processes associated with cryptocurrencies.
To begin with, non-enthusiasts have to contend with intermediaries like crypto exchanges to help them get off the mark yet these are known to be susceptible to hacking attacks.
To illustrate, according to a UK financial services watchdog the Financial Conduct Authority (FCA) consultation paper, in the first half of 2018 alone, $731 million worth of cryptos were
stolen from exchanges. This included $500 million from a hack on the Coincheck exchange and $40 million from a hack on the Coinrail exchange. By October 2018, hacking of exchanges increased to $927 million. The problem is quite significant relative to the size of this fledging market.
So while it might be appealing to store life savings in Bitcoin form —which is inflation proof and censorship resistant—this may not be a practical option at all if the risk of losing everything is very high.
Of course, this risk can be eliminated if a new cryptocurrency user decides to use a more secure crypto wallet as opposed to exchange based wallets. However, that also means they will have to take some time to learn some of the basics about private keys and their storage or how to regain access to a wallet if private keys are lost for instance. Most crypto wallets
are generally not user friendly so going through this process requires extreme
Perhaps the most complex and very confusing aspect of this (learning) has to be the understanding of the importance as well as use of alphanumeric addresses or a string of characters composed of letters and words as the means of identifying a crypto wallet owner.
Complex wallet names or addresses
Such unconventional addresses—which must be memorized or copied by users—are necessary for decentralized networks like that of Bitcoin but are not user friendly. A small mistake in the address can lead to senders remitting funds to the wrong recipient causing a permanent loss of funds. There is no third party that acts as a central point where lost funds are stored.
Of course, there has been a number of attempts to simplify and remedy this but with little success thus far.
In is within this context, that asking potential users to become an expert in this complex field before adopting the technology will naturally lead to a sizeable number opting out. Instead, it
would seem better to preserve value by investing in physical items such as gold than Bitcoin during times of economic recession.
Cryptocurrencies become a less appealing store of value simply because potential users are not comfortable with the storage process.
Call to action
It is against this background that the crypto community needs to device ways of simplifying use or storage of funds without comprising on security and privacy; the very elements that made these gain prominence in the first place. Only when this has been done will cryptocurrency become part of everyday life.
And now the Foundation for Interwallet Operability (FIO), a consortium of leading wallets, exchanges, and crypto payment processors that supports a proposal that attempts to solve this long standing challenge.
Through the appropriately named Interwallet Operability Protocol (IOP), FIO is proposing a decentralized public blockchain, which acts as a service layer to native blockchains and aims to improve wallet usability.
According to the IOP whitepaper, this blockchain is not an intermediary to transactions on the underlying blockchains, rather it’s an attempt to improve interaction between blockchains and users. The protocol promises users an ease of use with privacy and security aspects of cryptos remaining uncompromised.
Key elements of IOP
One of the important elements of this protocol
has to be the nature of the wallet addresses. According the whitepaper, the IOP addresses are human-meaningful identifiers, which can be used for sending or requesting funds without publicly mapping to a user’s public address on other blockchains.
When interacting with other blockchains, a public address is typically required as the identifier of the recipient of funds. On most blockchains it is a hashed representation of the public key resulting in a long alpha-numeric string. This virtually guarantees that it will not be human-meaningful. It is also not practical to neither type nor recognize one.
In IOP, a user can create a human-meaningful name and let that name act as their identifier on the network. The name is controlled via the user’s IOP private key which resides securely in
their wallet and signs all transactions on the IOP blockchain. The wallet address ledger itself lives on the IOP blockchain ensuring no single central authority has control over it.
Furthermore, IOP obfuscates the connection between wallet addresses, which would have otherwise been established if one party sends a request to another on the IOP blockchain. Achieving this is critical for the FIO consortium because without privacy then the whole concept
To send or to request
Another key element of FIO proposal has to be the way a request for payment is consummated. Most transactions of value in the world today begin with a request for payment, an invoice, a bill, an order cart, etc. Yet today blockchain transactions begin with “send” and users are typically forced to initiate it using information (amount, destination public
address, metadata, etc.) obtained from emails, websites or by scanning QR
This significantly increases the chances that transactions will be sent to the wrong address, include the wrong amount or will not be properly reconciled due to lack of associated metadata. As noted earlier, being immutable and without a centralized third party that could
correct issues, this approach leads to greatly increased risk of errors and, on some blockchains, errors can result in a complete loss of funds.
Combined with the unique wallet address system, the IOP enables easy, error-free and secure way to transact. This gives a measure of control and peace of mind for cryptocurrency users.
Support for the protocol
The IOP seems to be a noble attempt to make cryptocurrencies work for the less sophisticated user while allowing the currency issuers to focus on perfecting their product. IOP attempts to act in the same way as Google has done with the internet. Today not many users know
how to type in a simple web address, all they have to do is finding the keywords, Google them and they are in!
Google took on the task of simplifying the internet and this helped to make it easier for ordinary folks to use. Similarly social media giants like Facebook and Twitter have been credited for improving internet usage across the globe.
Similarly, the IOP will achieve success in the blockchain space if the relevant players remain supportive of the proposal. So far the project has about 28 members (including affiliates) while a call for crypto users to join in as members