It’s no secret that the crypto market has taken a significant and very public blow in recent months, prompting many to launch their public calls for crypto’s death long before the patient has even caught a fever.
Certainly too many people have spent too much money buying too many new cryptocurrencies that should never have existed, ultimately creating a massively artificial demand that has propelled even the most speculative cryptocurrencies.
While the crypto desperate shares confidently, widely and often that this new technology is doomed, I am more optimistic. Rarely is a technology with widespread adoption and media attention like crypto pregnant with its demise. We have often not seen the valuable applications that are catching the attention of the mass market and the steps necessary to create future mass crypto adoption.
To bring crypto’s promise closer to reality, five key things need to happen:
We need real interfaces that are simple and secure.
Using crypto is still a science project now. To get people using the Internet, AOL mailed a billion CDs to consumers. That obviously wasn’t good for the environment or anything other than supporting the United States Postal Service and getting people to AOL. But that was the start of the Internet, and it worked. One could argue that Coinbase does it Easier, but it’s still not easy for the mainstream. The barrier to entry is still too high and the risks are also high. Every day people get their belongings stolen.
We need more professional, responsibly funded, reputable companies operating in space.
Most of what we’ve seen so far has been short-term investments that aren’t sustainable. Get-rich-quick programs masquerading as corporations, DAOs, and projects. Amorphous use cases that hide behind inscrutable interfaces. It still needs venture capital, people who back the crazy ones. It’s still going to take great execution and great engineers and great content and people who know customer journeys and ecommerce and do what we’ve done with the community in the past.
So build with the community, market with the community, strengthen the community. Now is the time to take full advantage of web3, which is about Web 1.0, Web 2.0, Commerce, Social Networking, Mobile Apps, Cloud Computing and a fairer and frankly exciting business or startup ecosystem.
We need regulation and standardization (and it’s already rushing towards us).
The EU just created a regulatory framework for digital assets that it promises will tame the crypto wild west, and the US has a patchwork of state-by-state regulations. But these are not well understood and difficult to navigate, and for the most part, investments in digital tokens are not protected or regulated by any type of government. What we need is something that inspires confidence in consumers, similar to what they have for real money.
We need real interoperability.
If you’ve ever tried to switch from Polygon to Ethereum, or really tried to convert bitcoin to cash, it takes hours. It’s way too hard to get something done. Your identity and assets must be able to live anywhere. You are not renting items from Apple or Fortnite. You actually own your digital items. This means you need to be able to move them easily, freely and safely.
We need an old school utility that is 10x better than existing solutions.
Unless we have real use cases that really add value to the crowd, the four points above don’t matter. Interfaces, legitimate organizations, regulation and interoperability are means to an end. That purpose is utility in the most human sense—something USEFUL that people recognize and value as useful.
The crypto pessimists I respect the most are my fellow contractors and builders. We often agree on my first four pillars, but we strongly disagree on the fifth, utility.
The unofficial spokesman for this group is NYC founder Zach Weinberg. Zach and I agree on many things, including his beliefs shared in a recent tweet that “the hardest thing to understand about crypto/web3 is the main reasons why it makes money in the short-term (massive incentive to make quick bucks on early token speculation versus actual long-term sustainable use cases).”
Zach thinks those are “the same reasons why [crypto] won’t work in the long run.” He’s wrong here.
If you look closely, the applications are alive and well. Just ask artists who make a living selling digital art today. Blockchain technologies make it possible for digital content to spread widely and be owned by one person for the first time. Smart contracts ensure that the artist receives a royalty from the sale each time the work is sold to a new buyer. Ask any artist or collector active in the $1.6 billion crypto art market if technology makes their life better.
Artists can tap into a global market of buyers and trade with minimal friction and earn lifetime royalties. Collectors can support and collect artists they love and would never have met before blockchain technologies made the market possible. The majority of sales take place on a marketplace, which is itself organized in a decentralized manner and run by a dedicated community of artists and collectors. This is a much fairer model than the current market controlled by an impregnable duopoly.
Most technology use cases start below the surface. Crafting, playing, pushing and experimenting subcultures. Some of these subcultures are becoming a culture again and again, and with it, technology is being embraced by the masses. Without the porn industry, the VCR might not have seen the light of day. Without Napster and the early music piracy communities, the streaming industry and Spotify might never have come into being. Without college students tagging each other to create the early social graph, Facebook would never have existed.
Look closely and you will see how many different subcultures are crafting. I expect similar useful breakthroughs over the next few years as the art in:
- Gaming – real ownership of in-game items,
- Media – viewers as co-creators and owners,
- Fashion – access to limited edition physical items and digital twins,
- real estate – virtual land development,
- Supply chain – genuine trust and transparency, and
- Membership – Formation of new types of membership groups and clubs.
So, yes, Zach and friends, I agree that financial speculation is not a long-term use case. But if you make an effort to look deeper, it’s pretty easy to see that the future of crypto is uncertain. The future of an indeterminate technology with widespread interest, early use cases, and breakthrough potential is exactly the type of technology I want to focus on as a builder and investor.
About the author: Michael Lazerow is the CEO and co-founder of Velvet Sea Ventures. Michael is a serial entrepreneur, author, and investor whose last business, social software company Buddy Media, was sold to Salesforce.com (NYSE: CRM) for $745 million, where he served as chief strategy officer and chief marketing officer worked at Marketing Cloud.
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Edited by Erik Linask