The future of Blockchain usage depends on applications, not protocols

At the Ethereum Denver Hackathon where I participated with over 2,000 people, the overriding theme in the building was “Blockchains need more ways to scale, interact with users in a friendly way, and overall add layers to gain functionality”. At this event I was brought back to my early career, where I saw the way the Internet using the Web evolved. At first everyone thought the protocol (http & html) was the way to make money. We sold the my company, Resnova, to Microsoft in 1996 as we were a protocol layer — http. The Web had moved on. In 1997 at IBM I envisioned and started the WebSphere product line as the original senior product manager. IBM Websphere’s software line had its day as series of applications to build your Web app upon. But all the entrepreneurial companies in this space were bought by the industry giants and these products became the foundation of the application layer. Who made it big? In the mid 2000’s Facebook, Google, Amazon and scores of others began expanding and taking over the value creation on the Web. Many started in the late 90’s, but it was in 2004 and beyond that the real value creation began in earnest.

I see the same progression happening today in Blockchain. At the exhibitor area at Ethereum Denver Hackathon, that meant in Blockchain terms — “Layer 2”, or add-on applications that perform blockchain functionality “off chain” and add data back into the core blockchain with the changes made. Whether you were talking about Chainlink, Mainframe, Celer, Clearmatics etc., they were all being “chain agnostic” and helping “accelerate” your development and adoption, no matter what blockchain you were built on. The platform layer is already losing its value. The midtier (layer 2 is the blockchain vernacular) is rising. I feel like its the golden age of the application server layer all over again. Today your biggest DAPPs (Distributed Applications built on Blockchain) have 8,000 daily users at most( as reported by DappRadar). Once the midtier (Layer2) application take over, expect that number to rise. Soon after the accession of Layer2 though, the applications will take over. The core blockchain will fade into the infrastructure, and users will being using DAPP’s like crazy and the real value of the Blockchain will begin. Remember it’s not how cool your technology is, it’s how many people will actually use it. Think of Facebook and Google!

I was in the process of this post, when I ran into two older articles that really sum up a deeper version of what I began to write. I don’t think I could sum it up any better than Jonhnson Nakano did here and here . Read these articles for a deeper look at where the blockchain value is heading.

Happy application building on a blockchain and creating the new value for the next decade.