Investment Analyst @ SenseTime. Founder of Worthyt. MIT Sloan 2020.
Today, I had the privilege of attending The Business, Regulation and Technology of Blockchain, a conference hosted by Harvard Business School. It was a day-long event that invited guests from around the country to speak on behalf of innovation in the blockchain industry — from the technology to the regulation.
During one of the panels on the next “hot” app in blockchain, the panelists debated the qualities of what would make a popular app. One of them, Patrick Murck, Special Counsel at Cooley LLP., made a particularly strong statement, in my opinion. He said that (paraphrasing) while innovation on the blockchain protocol needed to continue, equally important was building the adoption of cryptocurrency. Unfortunately, the adoption of cryptocurrency is not as simple as climbing to the top of a tower and screaming about Bitcoin at the top of your lungs. Adoption is an intricate dance of education and ease-of-use.
When I started my first company in the cloud computing space in 2011, much of it was similar to what I see in cryptocurrency today. It’s a seemingly complicated subject that has terms and acronyms that the average person can’t wrap his or her head around, which leads to confusion and misrepresentation. As a result, manipulation and deception thrive on both ends of the spectrum, creating both fear and admiration for this enigmatic topic; at the end of the day, misinformation wins.
Attempt to explain cloud computing or blockchain, and many will realize it’s about as complicated as explaining how the processors in their iPhone generate the display on the screen — but therein lies the trick to understanding. With the iPhone, you don’t need to learn the intricacies of semiconductors, ALUs, or binary representations of strings to understand that it provides you value (if you’re actually curious, this explainer video is a good place to start, and then read But How Do It Know). You know that you can take or make calls, send or receive photos, and connect to the Internet to use social media, among other things.
The same is said about anything, from aspirin to sleep to Bitcoin; in fact, scientists can’t fully explain why we sleep. But that doesn’t stop you from trying to get eight hours, right? The value you receive from services, objects, or even your own body, can be understood and utilized without needing to fully understanding the underlying mechanisms that enable it. Don’t get me wrong — I’m not saying that you shouldn’t take the plunge and educate yourself on the technical intricacies if you want to — blockchain is a great technology that solves problems that decentralized systems have faced in the past such as trustless consensus.
At the end of the day, though, the value that Bitcoin brings to the table is its potential to replace the current digital currency system with a more efficient and democratized methodology built for a global economy. Yes, replacing. Digital currency already exists.
90% of existing money is only digital — i.e., a digital currency. Only $6 trillion, or approximately 10%, of the world’s current money supply is in the form of cash (Sapiens, 2011). So believe it or not, you’re already using digital currency when you swipe your credit or debit card. Bitcoin has the potential to replace the underlying engine that powers the same transactions you make today by being more efficient and trusted without the need of a central entity— ironically, by being trustless. A mom-and-pop coffee shop wouldn’t have to pay VISA $0.25 for a $10 transaction. Wire transfers in and out of the country could happen in minutes to hours, rather than days. Creating new accounts can happen in seconds with privacy, rather than days filling out paperwork and waiting for approval.
Even the act of obtaining cryptocurrency is an intimidating process. Even buying off of a simple platform like Coinbase may be unnerving for many newcomers.
Users that get comfortable with using the Coinbase dashboard may decide to venture into more complex user interfaces (UI) such as GDAX, an exchange run by Coinbase. While the GDAX UI is much more complicated, it gives the user much more control over the trading prices that he or she decides to buy or sell at.
But it only gets more difficult from here. Journeying into the altcoin world (cryptocurrencies that are not Bitcoin), using BTC pairs and referring to prices in Satoshis, creating your private wallets to store funds more securely… Only by diving into the deep end can a user begin to start understanding how to interact with applications on the blockchain. Even the CryptoKitties phenomenon that got so many users that it slowed the entire Ethereum network down to a near stand-still requires knowledge of using MetaMask to connect to and interact with the CryptoKitties website.
For an average user, the process of setting up MetaMask, depositing Ethereum (and possibly purchasing Ethereum first), and signing transactions is way too much work to purchase a cartoon cat. Despite the success of the adorable felines, the blockchain app’s adoption is still limited due to the complex nature of blockchain in its infancy.
But apps do not need to be fully decentralized in order to take advantage of or introduce users to cryptocurrency. For example, Earn is a website that pays people in Bitcoin. Users sign up for Earn because they want to get paid to answer emails. Earn uses Bitcoin to pay users, which exposes their users to cryptocurrency. If they want to withdraw, they can send it to their own Bitcoin address, or link their Coinbase account. For users that don’t want to mess with wallets, they can just send directly over to their Coinbase account and withdraw in cash from there. But users don’t need to know how to link MetaMask or even anything about cryptocurrency in order to sign up and get started earning Bitcoin.
Apps like Earn are considered hybrid solutions to cryptocurrency adoption. By keeping the app centralized, the company is able to provide a more familiar user experience. It then brings in the blockchain aspect of it by giving users exposure to cryptocurrency, which they must withdraw in order to cash out or keep. Both CryptoKitties and Earn are great apps that positively impact the blockchain space. Ultimately, CryptoKitties is a demonstration of the power of blockchain, and Earn is a tool that helps drive the adoption of cryptocurrency.
Overall, the catalyst for adoption of cryptocurrency, as well as any bleeding-edge technologies, requires a low barrier to entry. By understanding and appreciating the value that cryptocurrency introduces for the future, users will understand that it is not only good for buying drugs or conducting other illegal transactions. Building apps that lower the barrier to entry will also encourage more user adoption, as signups don’t require knowledge of wallets, addresses, or MetaMask.
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