I spent the last couple of weeks examining the crypto space closely. This involved countless discussions with founders; scouring information online; formulating and reformulating my thesis around NFTs, DAOs and DeFi; even living in a house of web3 founders for a month. Everything I have gathered so far can be categorized in some buckets — a list that I’m about to share. These are broad-ranging problems with the attempt to cover extensive areas as opposed to going deep into either one of those. All projects in the crypto space are attempting to solve one or multiple of the undermentioned problems. If you are looking to start a new project, you can use this framework to ask yourself: what problem you are looking to solve? Likely it falls in one of the following buckets.
Table of Contents
Problem 1. abstracting the blockchain away and hiding it under covers
Today blockchain is very much in your face. If you ever transferred Bitcoins, you might have come across half an hour wait times before you witnessed confirmations on your device. If you have used dapps, you might have seen the outrageous fees that at times exceed the amount being transferred. The gas fees are super high because there are too many transactions in the pipeline waiting to be put on chain. As various forms of applications come online and new use-cases arise, there is a constant need to evolve the blockchain to make it faster and more reliable. That’s not all though. Far too many variations of blockchains exist today. A newcomer is not able to differentiate between them. Ideally the technology should be tucked away completely from the user so that they have no idea what is being used under the hood.
Problem 2. delivering value as an alternative financial system
Bitcoin started as a promise for an alternative currency. The consensus mechanism was called “proof of work” which was the underlying breakthrough technology that made it impossible for any centralized party to have control over the ledger. Bitcoin was successful in the sense that people entrusted it with their hard-earned cash. While it failed to get adoption as a payment mechanism, it did succeed in being a storehold of wealth. Ethereum allowed for more sophisticated token models and coordination systems to be created atop the blockchain. Stablecoins were issued on-chain that removed volatility. With the arrival of decentralized finance (defi) to the scene, it was possible to create yield-bearing assets via borrowing and lending. While the alternative financial system pledges fairness and transparency, in practice it doesn’t bear any significant impact on the economy. It is not connected to real world assets and is strongly correlated with the broader macro environment. Today at best, it is a precarious investment worth 1–5% of your portfolio.
Problem 3. the awkward UX of crypto applications
In the early days of Bitcoin, die-hard fans of decentralization advocated users to download node on their computers and store funds there. Today no one I know runs a node themselves. It was far easier to open an account on an online exchange such as Coinbase than to download and manage it yourself. This allowed a lot more users to be onboarded onto crypto. The hard truth was learnt: if you want adoption, you need to make the product simple. Unfortunately, we still face similar problems today. Take wallet extension as an example. It is a necessary piece of software that is required to be installed in order to access any of the decentralized applications (dapps). But downloading an extension software is not something people commonly do. It is unfamiliar and requires learning from the user. That’s not the end of it. Furthermore, the expectation is that the user securely stores their seed phrase and make careful assessments when approving actions on dapps. There is no surprise that far too many people end up losing funds. While some others can’t even get it to work. Crypto applications must feel natural.
You can also read : Tokenize your Property — Make it for Sale
Problem 4. regaining control over the web
For major part of the history, there hadn’t been a native currency for the web — only gateways to national currency systems. That changed with cryptocurrency. Now that currency needs to be integrated on the web. That’s not just it. Crypto brought with itself a much more powerful toolkit — decentralized data storage and digital identity. Internet, on the other hand, gave us some of the richest social experiences that were inconceivable in the past. As that evolved, cracks began to show. Twitter, for instance, has an ongoing spam problem. On Facebook: you are not the customer, you are the product. People are arguing whether these platforms have too much power. The big question right now is whether we can merge Internet and blockchain. What does web3.0 look like?
Credit : Medium