The Cryptocurrency Industry Needs Utility to Survivebr>
Cryptocurrency market caps may be plunging, but as an industry, we are still growing and getting stronger. It looks like 2018 will mark the end of the speculation and hype phase for the cryptocurrency and blockchain industry, but it will also mark the beginning of the flight to quality. Legitimate blockchain projects are now launching their “mainnet” versions and real usage is starting to trickle in. As an industry, this critical “utility phase” is just beginning. However, much like the early days of the Internet, we are going to need some killer apps.
If anything good comes from this rapid decline in crypto prices, it’s that people are now finally more focused on projects and companies that are working towards actual blockchain adoption, instead of just those with the most hype and largest social media communities. For every 10 hyped projects that aren’t delivering on the promise of real blockchain usage, we are seeing one or two projects that show real potential to be the first killer blockchain app. In the regular startup world, only about 10 percent of companies will survive, and a similar story will surely play out for blockchain projects.
So what will be the first true killer app (or dApp) for blockchain technology? Here is a list of applications that are seeing major development and live deployments already.
Store of Value
Interestingly, one of the simplest killer apps may be right in front of our eyes. Bitcoin is often referred to as a store of value, a decentralized savings account, or even digital gold. This means that simply owning bitcoin is enough for you to get real world utility and value out of the cryptocurrency. It doesn’t necessarily need any additional application in order to gain mainstream adoption and relevance, although that would certainly help its case. Due to the network effects of being the first and most widely known cryptocurrency, bitcoin will likely dominate this position for some time and therefore has a real use case just by existing. It isn’t quite a killer app yet, since not everyone believes it can function well as a store of value, but it has a lot of potential.
Self sovereign identity is one of the big applications that many projects are working on. Notable ones include uPort, Civic, and SelfKey, but there are also many others. If done properly, decentralized identity allows users to get all the benefits of current centralized identity providers, such as Google and Facebook, without the need to share all that personal data directly. Decentralized identity can help prevent the huge data breaches that are becoming more common and also allow users to decide exactly how their data is distributed and monetized. It will almost certainly become a killer app, but only because other decentralized applications will all need some form of user identity to make them usable. However, we still need a better reason to use self sovereign identity in the first place, because it is much harder to use than current centralized solutions.
Self sovereign reputation is the idea that an individual or entity can maintain full authority over its own reputation. Specifically, we are talking about reputation that is decentralized via blockchain technology. For example, at Ink Protocol, we built a reputation system that allows sellers to build up reputation on any marketplace platform. The system continues to incentivize sellers to work hard on customer service, fulfillment, and quality… but it allows the seller to be the main beneficiary of all this hard work. Self sovereign reputation frees sellers from the confines of any specific centralized or decentralized marketplace, and allows them to sell on any platform they want and putting more of their hard earned money into their own pocket. It is one of the only live and functioning implementations of blockchain tech and is already deployed on the Listia marketplace, with over 3 million real listings using Ink Protocol so far.
Cryptokitties was one of the first widely played blockchain games, but it will definitely not be the last. We are seeing a huge amount of interest in both full-fledged games on the blockchain, as well as simple digital collectibles and tokenized gaming currencies. Gaming is typically one of the easiest ways to gain mass adoption, so if the industry can create just a single popular game that uses something like a blockchain based collectible or cryptocurrency, then we will immediately have a massive amount of adoption. We believe that even existing games like Fortnite have the power to distribute blockchain technology to the masses. We would love to see a game like this use cryptocurrencies instead of in game currency or blockchain based skins that you can own forever, use in other games, and trade with your friends.
Fully decentralized marketplaces aren’t quite here yet, but they are coming soon! One of the best examples of a decentralized marketplace is Open Bazaar, which is a distributed marketplace that uses Bitcoin for payments. As more of these marketplaces pop up, we will start to see more and more liquidity flow through them. It takes a lot of time for marketplaces to get big enough to grow on their own, but once they do, they are unstoppable. At Ink Protocol, we are creating the building blocks that will help power these marketplaces of the future, starting with decentralized escrow, dispute resolution, and reputation. Our vision is to make it easy for new marketplaces to build on top of this framework. Our existing Listia marketplace is already a huge step in gaining mass adoption of blockchain-based marketplace technology with thousands of new listings per day.
We are extremely excited about the future of cryptocurrency and blockchain technology, but also realize that it is still very early. Existing apps and dApps are very hard to use unless you have a deep understanding of blockchain tech, and most people still don’t own or accept cryptocurrencies in their businesses. The Internet didn’t hit mass adoption until killer apps such as Email and the Web were invented, and the same is true for blockchain technology. It’s great that there was so much euphoria and speculation over the last couple years, but now that the hype has died down, it is time to get to work building the killer apps that will usher in the utility phase for crypto.