I have spent all week thinking about why there are no killer apps written on the blockchain. Right now, we have a ton of vaporware and an endless myriad of shitcoins. Almost all of these coins/tokens were built to take advantage of the cryptocurrency hype, and nothing more. The few dapps — decentralized applications — we do have, such as Cryptokitties, Rare Pepes, and some “decent” blockchain games, have not much to show for themselves. They have a decent user base but the games are clunky and don’t have much that would appeal to someone outside of the cryptosphere. There’s nothing to those applications that make them worth making the switch over to blockchain for.
What Is Keeping Us From Moving Forward?
When I first heard about the ability to build on top of the Ethereum blockchain, ERC20 tokens, and dapps, I was filled with excitement. Like many of you, I could feel the “revolution” coming. Yet, in practice, Cryptokitties — a trading card game — single-handedly flooded the Ethereum blockchain and made gas prices skyrocket. How can we expect to see the next wave of decentralized applications, with billions of users when a silly trading card game can make the blockchain unusable for the casual consumer? Imagine something like a social network; Ethereum would have been bricked.
This was not in isolation. Anecdotally, I paid the equivalent of $35 to transfer my ETH from one exchange to another during that time. Later, I learned the benefit of converting to Litecoin first before any transfer, but the point stands.
Fundamentally, if ONE silly trading card game can congest the Ethereum blockchain, then we’re in for a tough time. Now, I am aware that there have been massive scaling efforts in development over at Ethereum. I don’t follow their updates that regularly, so if you know specifically how they’ve chosen to address this, then please leave a comment and shine a light on my ignorance.
Trading card games aside, we have nothing. The CLOSEST we have come to a competent blockchain app is Steemit — a decentralized blogging platform akin to Medium, but you’re paid for your contributions to the network. I love Steemit, but it’s not taking off as much as I would have expected. I have spoken to writers and casual people, all of whom know of it, and while they like the idea of being paid for their writing, they don’t seem that excited about it. I think Steemit’s blessing and its curse is the direct monetization of its token. It is hard to maintain the network incentive if your coin crashes due to fluctuations in the crypto market. If you check in to Steemit, the prolific authors are still seeming to make money, but far less than a year or two ago, and everyone else has pretty much evacuated.
The exhaustive list of all marginally competent blockchain dapps.
That’s quite the dearth considering all of the excitement. Vers, what about the DEXs? Yeah, those aren’t going to be a thing. Sorry. I’ll make sure to write about why in a future post.
What do we do? Why do we have all of these companies who’ve failed to deliver on their promises? On the one hand, I have covered their failure to understand the nature of crypto in my last post. However, there has to be more to it than that. Right?
What all of these projects are trying to harness is the power of the Network Effect. Briefly, that’s the idea that the addition of more users adds more value to the network in question. This was codified in Metcalfe’s Law.
Great, this should be easy since it is a product designed in a decentralized network, so ideally, it just needs to work for this to pay off. For many of these projects that’s an issue in itself. They don’t work; they’re vaporware. Ignoring the duds, the rest of the projects seem to be failing on the grounds that they’re missing a fundamental quality and that’s utility. More specifically, they’re not useful prior to the tipping point of users that creates the non-linear increase in value noted by Metcalfe.
Metcalfe’s law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2).
I read an article recently by Eugene Wei that is endless, but it touches on a brilliant point. There needs to be a single-player use to your network before there’s a multiplayer use. The best example of this is found in video games. Prior to the ease of online access, games that lacked a single player mode flopped. Halo 2 was probably one of the first console games that were a massive hit online, and its single-player mode was amazing. Still, 15 years later, I have had conversations about the Flood in the first game vs. the second game, or how my mother let me skip school that day because so that I could get the game at the midnight release and play it all day (I never wanted to skip school, so I guess they figured it was fine). All of this was before I had Xbox Live. These are conversations about how engaging the single-player mode was. Let alone the online mode that was met with tears after a 9-year run. Halo 2 outlived the life of its console and the follow-up console — the Xbox 360. Microsoft had to stop its online run in order to make way for it’s Xbox One console that released later that year.
Even hardware has single-player hooks. The original utility of the VCR was people using it to record shows onto blank tapes when they had to miss the original airing. It wasn’t until the VCR had enough people using it that movie studios starting putting their movies onto it en masse.
Blockchain dapps need to consider single-player vs. multiplayer modes in their design.
95% or more of blockchain dapps are just tokens. They’re either ICO tokens, some utility token, or whatever. 4.99% are lacking that single-player utility, and then there are projects like Golem. Be like Golem. Create a utility first. Golem went out and got business partners and had a basic network first, Every additional computer adds non-linear improvement to the decentralized supercomputer, from user 0. This is how you need to think. Do you know the adage, think globally, act locally? There is no space that needs that more than the blockchain community.
Where Are All Of The Killer dApps? was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.