By Bobby Zagotta, U.S. CEO and Global Commercial Officer at Bitstamp
The markets may be down, but it’s important to remember that some of crypto’s most exciting innovations took hold during bear markets, from Bitcoin itself in the wake of the financial crisis to Ethereum to DeFi and NFTs.
At Bitstamp, we’ve been in business for more than a decade and have been providing crypto solutions to the leading fintech companies for more than five years. That’s given us insight into how leaders can best position themselves for the future.
Market volatility should not distract from the macro shift happening right before our eyes: interest in crypto is growing, and companies that don’t prepare for the next growth cycle risk not being able to meet future demand.
Crypto remains the best performing asset class of the past decade, and the pace of innovation within the Web3 sector continues to accelerate. NFTs, the metaverse, and crypto products have captured the attention of millions of people. As new use cases emerge each day and services become easier to use, adoption will soon take off yet again.
There’s another factor at play here: Trust in crypto continues to grow. A recent Bitstamp Crypto Pulse survey found that three quarters of all respondents said they believe crypto will be mainstream in less than 10 years. More than 60 percent said they’d buy groceries or shop online with crypto. On the institutional side, seven in 10 investors said they believe crypto will overtake traditional investments in under 10 years, and that they’re actively recommending crypto to their clients.
There’s no vertical that blockchain technology won’t permeate in one way or another, from gaming to entertainment, health, and finance. Now’s the time to prepare for crypto’s next growth cycle. If you are a business leader, here are a few ways you can start.
Begin by understanding your customers’ interests and needs when it comes to crypto. Does your company operate in the sports, gaming, or entertainment space? If so, there’s a good chance your users already own NFTs or have at least heard of them. Do you run a fintech or payments startup? Then many of your users may have already dabbled in crypto. Once you get an understanding of where your customers are at, you can meet them there.
As you further understand your customer’s needs, it’s time to start building out your crypto capabilities. There are three main ways to do this: The first is by building your crypto stack internally, the second is by acquiring a crypto-native platform, and third is by partnering with an existing crypto platform.
The first option works if you have the knowledge, talent, and time to build, but it may be a long road. The second option is quicker, but requires capital and a commitment to integrating two business models smoothly. The third way, to partner with an existing firm, may be most prudent. Companies that do this save themselves the headache of building something from scratch, and can easily bridge the gap between their operations and Web3.
There are firms that provide customizable “plug and play” options that help companies provide access to crypto products for their users, while allowing them to own the relationship with their users. Companies can opt for a hands-on, omnibus model where they can bring their own licenses and KYC processes to bear and simply take advantage of a wide range of APIs offered by crypto firms. Or they can opt for more hands-off, full-scale white label solutions that include KYC and the necessary licenses.
When looking for a crypto partner, it’s important to identify one with a proven track record, strong history of compliance, and a customer-centric approach. With the right partner, companies can continue to evolve their capabilities while owning the customer relationship throughout.
The final and perhaps most important step is educating your teams and your customers about the crypto products and services you provide. One of the biggest challenges to crypto’s trust and adoption has historically been a lack of education, so whether it be an NFT collection, bitcoin payment integration, or metaverse activation, you’ll need to get your customers up to speed. Fit this into what you’ve learned about your users, and find ways to educate them that feel organic within your existing strategy.
There’s a big opportunity for leaders to educate their customers and help onboard them to the new Web3 economy. One study found that 41 percent of Americans who haven’t bought crypto plan to do so in the next year, 52% of Americans would put crypto in their retirement accounts, and 62% would buy more crypto if they could store it in a bank account. The number of U.S. crypto owners and investors reached 23 percent in 2021, up from 16 percent in 2020. Nearly one-third of them have used crypto to make payments.
If your business waits until the next growth cycle to start building your crypto offering, it’ll be far too late. Don’t underestimate the time and effort it will take to create products and services that are safe, secure, and user-friendly.
Those of us who’ve been working in crypto for many years understand that this market, like any other, is cyclical. That means that when the markets are down, it’s time to build. This doesn’t just go for crypto companies any more: all business leaders should be preparing to meet the demand for Web3’s next boom. By understanding your audience’s needs, building out your capabilities, and educating your customers, you’ll be well positioned to capture value in the months and years ahead.
About the Author
Bobby Zagotta is the U.S. CEO and Global Commercial Officer at Bitstamp, the world’s longest-running cryptocurrency exchange. He previously held leadership roles at Kraken and CME Group. You can follow him on Twitter at @bobbyzagotta. He is based in Chicago.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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