From Speculation to Utility
A blueprint for mass market adoption of decentralized apps
The following is adapted from a presentation by Chris Tse at the Blockchain Futurist Conference in Toronto on August 15, 2018.
Here’s a life-or-death question for crypto: what happens after the speculation has subsided and we want to get some real utility? And I don’t just mean utility of tokens, but apps that your mom, your aunt, your second cousin will actually use.
This is what we’re obsessed with at Cardstack: figuring out what’s really necessary for this blockchain-cryptocurrency-token world to actually reach the same type of growth we see in iOS and Android apps, and all the great things we use on the cloud every day.
Let’s drive this home using two graphs that basically determine the fate of our industry:
You may recognize the chart on the left as the Ether price over the last year. It’s not a pretty sight.
The other one is a timeline — let’s call it the utility of the network. Which is: how useful are the decentralized applications we’re building? I believe we’re still in a very early stage. If we compare this tech to an airplane, we’re still roughly in the first part of the runway. It feels really fast, really exciting, but we’re still on the ground.
If we overlay these two graphs, we might come up with two scenarios for what happens next.
Scenario number one: we’re about to take off. In this optimistic story, the speculative bubble is going to catch right at the beginning of the utility curve and then we’re going to see the movement we’re waiting for — whether it’s for price, or users, or transaction volume — and it’s all going to be okay. In other words, this is going to happen and it’s around the corner. User adoption by the masses, coming in the next couple of months.
The other scenario is a little more sobering. Which is: this is probably going to take a while. Because there is a real adoption gap between what we think cryptocurrency and blockchains can do and how we are actually using it.
The Adoption Gap
What is the adoption gap? Is it just about waiting an amount of time — 6 months, 12 months, maybe another few years — until this all becomes amazing and everybody wants in? Or is it something deeper than that?
Imagine you’re trying to tell your friend about a decentralized app you like, or something that you’ve invested in, and you say, “Hey, check out this dApp token. Go use it.”
You better hope your friend really likes you, because here’s what they’d have to do to get from “interested in a dApp” to “using a dApp”: go to Coinbase, get some Ether, fund it, put it in a wallet, go to Binance, get an account, trade for a token, transfer it to their own wallet, install a plugin, and then, after two or three more steps — including learning the difference between gas price and gas limit — then maybe they would be able to use the dApp.
The Conversion Funnel
This absurd journey is the reason why mass market adoption of blockchain applications hasn’t happened yet. If you’re in marketing, you might recognize this as a conversion funnel: how many people you lose between the time they heard about you, to the time they buy or use something.
We in crypto have the worst conversion in the world, ever. A hundred million dollars of value has been created many, many times on CoinMarketCap for various types of cryptocurrencies or other decentralized apps. But because you have to buy Ether, write down your recovery phrase, get a Trezor wallet — you get the picture — there are literally only tens of active daily users for some of the top decentralized apps in the world.
This is a reduction of 99.999% of the potential user base, and it’s a disgrace.
As long as we have the worst conversion in the world, this adoption gap will be our reality. It’s going to take a long time. But now we can clearly see the roadblocks. So what can we do to solve the actual underlying problems?
Toward dApps 2.0
Right now we’re still in a dApps 1.0 world — which is essentially taking a blockchain such as Ethereum or Bitcoin and beautifying the cryptography.
The bar has to be a lot higher for dApps 2.0. It can’t just be about one blockchain, we need multiple blockchains. Tokens need to be available to use, and easy to get, when you need them. And the dApps should be flexible in how they’re hosted, and how they’re accessed.
Let’s talk about how to get there.
Right now, because Bitcoin is a coin, we think we need to pay for the usage of decentralized apps by essentially having a pocket full of coins. I need one coin for this, another coin for that, and so on.
But if you travel as much as I have, you know you don’t want all these different coins jangling around as you go from place to place. You just want a credit card or two. We have to move from a coin metaphor to a card metaphor: your credit card sorts out what kind of currency a transaction is, after you swipe it. So why can’t we do that to reduce the initial friction of coin acquisition?
Blockchains and Protocols
The second thing is that a lot of these decentralized apps are silos. They’re their own app, their own download, their own plugin, and so on. In dApps 2.0, we need to see all of these things as part of one cohesive stack. It’s a bunch of layers that allow one application to tap into decentralized insurance, decentralized payments, decentralized dispute resolution. Because that’s what, say, eBay is — it does those three things together without you knowing it.
What we need is a user experience that can orchestrate across many of these decentralized apps, backed by many tokens. And if you don’t have to worry about keeping track of all the tokens, then you can start mixing and matching your frontend experience.
Finally, it’s very difficult to ask someone to install some software on their own machine, configure it, make sure you’re connected to the mainnet, then wait six hours before you can make a prediction market bet. Wouldn’t it be great if all of this could be hosted? But then, how would it be decentralized?
The truth is, with something like WordPress, you can deploy it and it’s not centralized. So there’s no reason decentralized apps can’t borrow that model, where anybody can take from the open-source codebase, join the network and host it themselves, or pay someone to do it for them.
The Cardstack Framework
These are the key ingredients of what I believe will bridge the adoption gap. But if I tell every dApp team out there that you have to solve each of these major issues before you can begin solving, say, your decentralized licensing problem, that would be unreasonable.
The good news is we already know how to do this; we’ve done this in the past. We use frameworks. And that’s precisely what Cardstack is building: an open-source framework that solves a lot of these problems at once, in an open-source community with an MIT license. So people can tap into these toolkits and be able to build dApps that don’t require users to exit their dApp, do 17 things, and then come back to use it for the first time. Instead, these things are just part of the orchestration experience.
I could go on about all the things that have gone into our development already and what’s coming up next — but I’ll leave that for another day. For now, you can examine our technical roadmap. It shows how we’ve already shipped a minimum viable product using our own open-source framework. It also shows everything that we believe still needs to be done to bring this framework to the rest of the world.
But if we do it right—using what we’ve learned over many years about the full decentralized stack: from user experience to orchestration, integration, smart contracts, and consensus protocols—then Cardstack will allow developers to work much more efficiently and much more quickly, the same way Wordpress makes it much faster to launch your website than to code it from scratch using C.
Then users, at the end of the day, will be able to get the user experience they aren’t able to get from decentralized or even centralized apps today. If software can be focused just on the components that matter, orchestrated by an underlying framework, and plugged into the blockchain, then we won’t all need to be controlled by a single Silicon Valley company that gets to decide what we can or can’t do.
Using this framework as a common substrate, we can build a community — so that the next million makers can work together to build the tools for the next billion users.
- Growing a Healthy Software Ecosystem by Lead Developer Ed Faulkner
- How to Get One Billion Users on Blockchain by Chris Tse
- How the Cardstack Framework Powers Decentralized Applications
- The Cardstack White Paper
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To learn more about Cardstack, visit https://cardstack.com.
Join the Cardstack community channel on Telegram at https://t.me/cardstack
Chris Tse (@christse) is a technologist and designer who has been working to humanize blockchain technology since its early days. In 2014 he founded Cardstack, where he leads a team of blockchain architects and open-source contributors to build the experience layer of the decentralized Internet. He is also a co-founder of blockchain companies Monegraph and Dot Blockchain Media, and has more than a decade of experience leading R&D and innovation teams for Fortune 500 companies.