It’s Deja Vu All Over Again: Three challenges on the way to a decentralized world
One of the most interesting questions in technology right now is about centralization vs decentralization. A lot of us got into technology because we believe it can be a decentralizing force that puts more power in people’s hands. (The first four words of Facebook’s mission have always been “give people the power”.) Back in the 1990s and 2000s, most people believed technology would be a decentralizing force. — Mark Zuckerberg, 2018 Resolution
With the rapid rise of blockchain technology we are now closer than ever to realizing the vision of a truly decentralized world. There’s an opportunity to imagine how different the world would be if companies were built on the blockchain. And this is really, really cool!
I am concerned we are not going to fulfill the entire dream. Some companies are too focused on the novelty of the technology. Others are caught up in the investment mania. We’ve come a long way in terms of solving some real technical feats to make this dream possible. And many more technical challenges will need to be solved before we can reach mass adoption. But beyond these technical challenges, we need to have a point of view on what a decentralized world looks like. What does this world feel like? How will people behave in this new world?
As creative technologists — especially those who are fascinated by and involved with the blockchain — this new world is mindbogglingly exciting. But guess what? Most people do not care that things are decentralized. They don’t even know what decentralized means!!! What benefit does it bring to them individually?
And while there are many parallels to the issues that were faced in the early days of the internet, the blockchain revolution will inherently be different (and more challenging) because consumers have significantly higher aesthetic and experience taste than they did back in 1998.
I believe that there are three clear challenges facing the industry today:
- Focusing on the tech and not the user
- Handling of identity and trust
- Unrealistic expectations of consumer benefits
Challenge 1: Focusing on the tech and not the user
One of the biggest problems today is that we expose the underlying tech to the end user. This may be a result of the hype-cycle (ooh I want to use a blockchain or crypto project!) or because the people building the software being so obsessed with the underlying technology.
Let’s be honest- the average Joe does not care that your product is built on the blockchain. Facebook doesn’t tell their users that they use Machine Learning to make their recommendations. Instead Facebook tells you that they surface content that they believe you will love the most because they know you are too busy to wade through content that doesn’t engage you.
We need to build products that solve real human problems. Blockchain can and will fit into that behind the scenes, but doesn’t need to be explicit to our users. No one tells you their website was built on the internet or their email is running on POP3.
We should showcase how the most powerful elements of blockchain technology makes our product or service better.
Instead of publicizing that we use
smart contracts for our art provenance app, we tell our users that our system accurately tracks who owns a specific piece of art.
Instead of bragging that we use
tokens for our media tipping Chrome extension, we tell our users that we let you tip your favorite authors pennies and this has previously not been possible!
We need to stop talking about the blockchain. No more babbling that we are decentralized. Quit dropping buzzwords. Instead we need to focus on what and why our features matter to the people who will be using our products on a day to day basis.
The good news is this is literally what any good digital product produced today does!
Beginner Blockchain — Understanding the What and Why so we can build better blockchain products
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Challenge 2: Handling of identity and trust
Along with avoiding the words, we need to stop exposing the tech. The fact that so many interactions are based on taking a photo of a QR code or copying and pasting a 32 digit hash is bonkers.
No one will memorize a 32 digit random number. No one wants to retain a mnemonic for a sixteen word seed phrase to keep their money secure. No one wants to carry a fucking USB stick with all of their money on it (and yes, I know 1,000,000 ledgers have been sold, that’s amazing).
We need to make this process easier for the average Joe. This is why Coinbase — despite all their flaws — is a dominant player. As a user I understand the process —sign up with my email; enter my credit card number; buy some coins (or portion of them); and coins are in my account. And I see beautiful charts depicting clearly how much money I have made (or lost in this week’s case).
Likewise there is a reason why people store their money with banks. These companies are not only government insured, but also have spent hundreds of millions of dollars to build and earn the public’s trust. People don’t store gold bricks at home in a safe.
And people hate banks. We hate their fees. We hate their guts, but we need them. We want to have someone to blame if something goes wrong. We don’t want that finger to be pointed at us.
There are plenty of security issues with banks today — it is a single potential point of failure vs spreading that risk across an entire network. There are problems with biometrics — you can’t get a new fingerprint.
How we redefine people’s decentralized identity is paramount for blockchain’s longterm mass appeal. It is also critical for security. The current interfaces are even complicated for me — a digitally native 30 year old who runs a tech consultancy and has followed the blockchain space for the past 5 years! That’s not a good sign!
Interface patterns exist that people can relate to. People spend an incredible amount of time on their mobile device and on the internet. If we are going to be successful we need to make sending money via the blockchain as easy as using Apple Pay or your credit card.
There are a lot of interesting companies that are tackling this problem. I’m especially eager to see how uPort evolves as leaders in identity for Ethereum.
Challenge 3: Unrealistic expectations of consumer benefits
One of the main hype points of the decentralized world is the potential for cost savings. It is clear that this could be game changing for businesses, but it is not clear if this benefit will translate to consumers.
Imagine if we created a decentralized Airbnb. This model reduced guest service fees from 10% to 2.5%. Would a potential guest use the new system because they saved $7.50 a night (assuming a $100/night room)? That is not a significant saving when you factor in the brand awareness and trust that Airbnb has earned over the last few years.
However, imagine if a company like Netflix was able to use a decentralized file system like IPFS to stream their movies. Today Netflix uses hundreds of thousands of EC2 instances (servers) through Amazon Web Services. Hosting is one of their biggest costs (and moving from Rackspace to the cloud with AWS saved them over 50% in server costs). Using a peer to peer system like IPFS, they could save another 50–90% in server costs. While this might not result in much saving to the end user, this could save Netflix hundreds of millions of dollars.
Similarly, imagine if a shipping company switched their supply chain management to the blockchain. Instead of today’s infrastructure requiring them to tap into many different legacy systems, this company could track packages perfectly, with a clear history on the blockchain. This would allow for massive savings and let them build better customer experiences because they would have much more direct access to their package status.
I am not convinced that B2C applications will spawn the most growth in the next 3 years. I predict we will see the most traction in B2B applications and enterprise adoption will far outpace consumer. Perhaps in the 5–10 year period we will start to see more consumer tech adoption.
Let’s peel back the onion on why we are building a product on the blockchain. Let’s not force ourselves into building for the sake of building or exposing the blockchain for the hype.
If we focus on the why we are going to see more mainstream understanding and adoption. That in turn will lead to a fundamental shift in the world that is going to be so damn cool.
On the other hand, if we can’t get away from ourselves as nerdy tech guys, we are are going to botch this. We are not going to realize one of the biggest technological breakthroughs of all time. Based on the current trajectory of the industry, we are headed for failure. Too much interest in money. Too much interest in nerdy tech things. Not enough interest in solving real, human problems and bringing them along for the ride. BTW — this is a key reason why we need more diverse teams building on the blockchain. More people advocating for different backgrounds and walks of life will result in better products!
BTW — my firm, Philosophie, can help you solve these problems. We’re passionate about inventing technology that works for us. Don’t hesitate to reach out.
I’m excited to see what the world has in store. What do you guys think are the biggest threats or opportunities in the decentralized world?