Like the California Gold Rush of 1848, the rise of cryptocurrency has captured the public imagination and inspired a legion of devoted followers to risk it all in hopes of gaining extraordinary wealth and personal freedom. But, of course, like all historical events, cryptocurrency’s ascent has also inspired heated debate and criticism. So while the crypto industry works to clean up its reputation from its dark web roots to go mainstream, individual companies in the cryptocurrency space are turning to phone-centric technology already embraced by banks to become leaders in this fast-evolving industry.
In many circles, mentioning cryptocurrency at a party is the conversational equivalent of lighting a fuse of dynamite and tossing it in a mine shaft because it’s bound to ignite a heated debate. While proponents of cryptocurrency will wax poetic about the latest overnight crypto millionaires and argue about the strengths of Ethereum vis a vis Bitcoin, critics of crypto will point to its negative impact on the environment (according to the BBC, running Bitcoin alone expends more energy than the entire country of Argentina) and volatility (a single disparaging tweet from a charismatic billionaire has the potential to give hundreds of thousands of crypto investors a painful haircut). As the debate over the costs and benefits of crypto continues to rage, however, the skeptics are steadily losing ground as cryptocurrencies continue to grow more popular in the court of public opinion. This year, for example, El Salvador made history when it became the first nation to accept bitcoins as legal tender; major news organizations regularly publish profiles of college students who invested early in crypto and are now multi-millionaires, and even Wall Street firms and other major financial players are clamoring to get in on the booming market. Now that the mainstream is finally embracing cryptocurrencies, the next challenge for individual crypto companies is to differentiate themselves in a crowded marketplace by cutting down on fraud to build consumer trust and accelerate onboarding procedures.
As Bitcoin, Ethereum, Dogecoin, and 4,000 other forms of cryptocurrency compete for market share, an irony emerges. As these major players gain prominence, they must tackle the same bread-and-butter issues currently vexing banks, the very institutions some pundits believe they will ultimately replace. Today, both banks and cryptocurrencies are plagued by high fraud rates, especially Account Takeover fraud (ATO). ATOs are when a fraudster gains access to a victim’s online account, either by stealing or resetting the password. Although fraudsters steal money from more traditional payment services and crypto accounts using the same playbook, it’s worth noting that its impact on consumers is wildly different. The FTC explains: “Cryptocurrency payments do not come with legal protections. Credit cards and debit cards have legal protections if something goes wrong. For example, if you need to dispute a purchase, your credit card company has a process to help you get your money back. Cryptocurrencies typically do not.” While traditional payment services are required by law to make victims of ATOs whole again, cryptocurrency exchanges are not. For this reason, it’s absolutely critical for cryptocurrency exchanges eager to protect their reputation to prevent account takeovers from occurring in the first place. In addition to cutting down on fraud, cryptocurrency leaders are leveling up their onboarding game to improve consumer experience and prepare for wild growth.
Today, cryptocurrency companies are following in the footsteps of many banks by having a renewed focus on the customer onboarding experience. While maintaining absolute privacy for users was paramount in its early days, most crypto exchanges, due in large part to pressure from regulators, now recognize that incorporating some KYC (Know Your Customer) measures into onboarding is necessary and helpful. Konstantin Anissimov of CEX.IO explains: “...when a user for some reason can’t access their account on a crypto platform, following proper verification allows the platform to restore log-in access. Without any customer data, available service providers would not be able to assist their clients efficiently.” Efficiency is key when designing new onboarding flows because, unlike banks, cryptocurrency exchanges often experience periods of rapid growth following the jump in crypto prices. With phone-centric technology like Prove Pre-Fill™, cryptocurrencies can simultaneously cut down on fraud while accelerating onboarding times.
Already popular in other financial industry sectors, Prove Pre-Fill cuts down on fraud and accelerates onboarding by turning it on its head. Without Prove Pre-Fill, the average time it takes to onboard a crypto customer is 10–15 minutes. With Prove Pre-Fill, an application can be completed in a fraction of the time. In a typical onboarding flow, the consumer fills out forms, and then the onboarding system verifies the information using an authoritative source. Prove Pre-Fill harnesses the power of Phone-Centric Identity™ to autofill forms using an authoritative source and then asks the consumer to simply confirm the answers. This new and improved flow drastically reduces ATO rates by fraudsters and user errors caused by typing fatigue. The end result? A safer and more enjoyable cryptocurrency experience for all.
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