Popularizing Blockchain with These Three Key Components of the Industry
I recently published this post on Medium as a follow up to my “Stop Writing About Cryptocurrencies” piece:
I explain that blockchain is viewed as an “under-the-hood” type of technology. Meaning, no one quite cares how a blockchain works as long as it functions the way it should. Blockchain isn’t an upfront technology. It has no pretty face to market due to the fact it’s completely digital.
Turning things into a small series about the proper way to market and popularize blockchain, this post is another follow up.
There are multiple key components of the blockchain industry which could add face value to it. Making blockchain more marketable and therefore leading to greater adoption.
Decentralized Applications
Decentralized applications (dApps) have the greatest advantage when it comes to popularizing blockchain tech. Put simply, a dApp is an entity that utilizes blockchain technology at its core to produce solutions and/or improve industries. Bitcoin and all other cryptocurrencies are essentially dApps. So too are the numerous decentralized exchanges and software wallets. Steemit, Civic, Ujo Music, Augur, and other popular dApps exist and are used like regular software applications we run on our phones and computers. In some situations, there may be a company or small start-up team behind these dApps which aren’t decentralized themselves. The application they produce, however, IS decentralized as it’s built off a blockchain.
The problem
It seems dApps gain their popularity through the tokens that are sometimes necessarily associated with them. Unfortunately, this bolsters the notion that the blockchain and cryptocurrency industry revolves around trading coins and tokens for profit. Additionally; that there isn’t much application of this tech outside of trading. To those unfamiliar with blockchain’s capabilities and its benefits, they won’t understand the possibilities that lay outside the realm of speculatory trading.
Everyone has now heard of bitcoin, but blockchain and its abundant amount of side-kick dApps haven’t yet been introduced to the mainstream spotlight. There are many dApps well deserving of receiving endless news coverage. Such dApps have intelligent and experienced teams, are solving a pressing problem facing many people (or at least working towards improving the situation), and have their technology and game plan developed and ready to roll out.
The problem isn’t with funding, poor leadership, or government interference. The problem that has been holding back these dApps is low adoption and user consumption.
Steemit is an amazing blogging platform similar to Reddit where users can generate money through the upvotes they receive on posts. Augur is a revolutionary prediction platform that not only produces reliable future outcomes, but users can also make money through correct predictions. DApps such as Civil and Ujo Music are employing blockchain to restructure industries like journalism and music respectively.
They all share the same hindrance: not enough users. Steemit needs more bloggers, Augur needs more predictors, Civil needs more journalists and newsrooms, Ujo needs more musicians, and the list goes on.
The solution
Above standard marketing should be pursued in order for an application to increase its user and clientele base. Such an operation would take time and money. An immediate increase in popularity would demand inflicting situations where the only remedy requires a blockchain based solution. In comes a dApp to save the day, massive media coverage ensues, and popularity spikes.
The popularity of a dApp is largely reliant on its founding team’s ability to market their application and showcase its real world use. Time too is needed, as these problems dApps are trying to resolve cannot be accomplished over night.
Stablecoins
Regarding cryptocurrencies, user adoption will substantially rise when reliable stablecoins are developed. These coins are pegged 1:1 to a fiat currency like the U.S. or another stable asset. Stablecoins are meant to be the solution to crypto’s volatile market. Bitcoin’s price swings doesn’t make it a dependable option for remittances or other payment options. At the start of the cryptocurrency revolution, bitcoin was the primary way to buy and sell other cryptocurrencies. We’re seeing that change with the introduction of stablecoins like USD Coin (USDC), Tether (USDT), Gemini Dollar (GUSD), and Dai (DAI).
The problem
The possible effectiveness of stablecoins and what it takes to develop and implement one is in question. It’s a more complicated process, Haseeb Qureshi best summarizes:
“Stablecoins are just currency pegs, and currency pegs are certainly not impossible — there are many currency pegs still being maintained. However, almost all large central banks have moved away from currency pegs. This is in part because they’ve realized pegs tend to be inflexible and difficult to maintain… If market participants cannot identify when a peg is objectively weak, it becomes easy to spread false news or incite a market panic, which can trigger further selling — basically, a death spiral.”
And his solution
“…an ideal stablecoin should be able to withstand a great deal of market volatility, should not be extremely costly to maintain, should have easy to analyze stability parameters, and should be transparent to traders and arbitrageurs. These features maximize its real-world stability.”
Tokenized Securities
Tokenizing an asset is the process where a stock, bond, commodity, etc. is digitized by converting the asset’s rights into a token. Holding a token will be equivalent to holding a percentage of said asset. Tokenization can be done with real estate, art work, and diamonds as well. By tokenizing an asset, its investment potential increases to a wider market of people because ownership of something that can’t be easily divisible, like real estate, becomes divisible.
Having different individuals invest in the same property is now possible if each square foot of the property is represented as a token. Tokens are issued through a smart contract platform, like the Ethereum blockchain. Through exchanges, the tokens can be bought and sold. Information regarding the ownership of a token is 100% immutable and secure thanks to the blockchain.
The problem
Since owning a token represents ownership of an asset, the token is considered a security. This calls for regulation by the Securities and Exchange Commission (SEC). Because this industry (especially the tokenization of assets) is still young, there are no clear and definitive regulations regarding tokenization. Also, financial institutions that act as middlemen who do a majority of the brunt work are removed from the process:
“Security Token Offerings (STO) will require the issuer to underwrite their own deal via third party audits, prepare marketing materials, generally solicit investor interest, and have high confidence in their security & regulatory compliance. Many traditional investors believe that a large percentage of potential issuers are incapable of successfully executing these functions without traditional financial institutions.” — Anthony Pompliano
The solution
Fortunately, the SEC isn’t avoiding the blockchain industry and is willfully developing clear and concise regulation. Tokenization of assets has already begun, and its the most likely component of blockchain tech to popularize the industry. A $30 million property in Manhattan has been tokenized on the Ethereum blockchain. This investment trend will surely catch on. Especially if security token offerings are fully available to non-accredited investors.
Decentralized applications, stablecoins, and tokenized securities are first-class use cases for blockchain. They not only apply the tech, but can market it as well. Adding face value to blockchain will aid in popularizing it. People need to become more familiar with this technology. These three key components are the best shot for moving the trend of decentralization forward.
