Crypto’s quest for a killer app (Part 1)
The development of the global crypto economy has reached a critical stage. The initial exuberance generated a lot of interest but also several unscrupulous players and led to 2018’s well documented and frankly spectacular crash. Surveying the wreckage, some commentators wrote the sector off as a dangerously unpredictable financial frontier, lacking regulation, sophistication, and stability.
Interestingly though, the sector is recovering. New ideas and business models are being announced all the time and it is increasingly being suggested to be a credible place for small businesses and good ideas to come and generate funding.
Simultaneously, the price of Bitcoin, the first and on one of the most prominent cryptocurrencies, has soared over the last few months, starting 2019 at USD3,717 per Bitcoin and flirting with USD10,000 between June and September.
What this means is that despite the challenges of the last couple of years, there are still plenty of people willing to entrust the future health of their projects to the crypto sector.
The challenge is that at this stage, the benefit is not being spread widely across the financial services in the way that the inventors are said to have originally envisioned. Its benefits are being confined to technologists and financial markets experts that have the knowhow to make the most of the complex systems that make crypto work.
Spreading the benefits
At this point in the development of a sector, there is naturally a large element of risk involved but if we make two assumptions about the crypto, then it would seem like this is the perfect time to start moving the sector forward.
The first assumption is that crypto has the potential to be a useful tool for the financial markets, the innovation sector and potentially the wider global population as a whole. This appears to be supported by two factors. Firstly, there is the continued number of innovative projects that are turning to the crypto sector for support as they move through the phases of their development. Many of these projects are genuinely fascinating and could exist without crypto but are using it as a relatively simple way to raise capital and support. The second factor is the recovery of the price of Bitcoin, which suggests that there is still plenty of demand for the currency even after its catastrophic collapse at the start of 2018.
The second assumption is that the sector needs a wider user-base if it is going to make a positive contribution to the global economy. Given that cryptocurrencies were initially developed as a universal unit of exchange, it seems safe to suggest that it has the potential to have a wider impact than it is currently having in the worlds of specialist technology and financial markets trading.
Looking for the killer app
So what could take the sector from its current position of a fascinating left-field niche product that many people are talking about but relatively few people are using, and turn it into a universal tool for spreading innovation?
To be honest the title of the article is a give-away: the sector needs a way of making it simple for many people to work with it and it needs to become indispensable for all potential users around the world. In short, it needs a killer app.
In the second part of this pair of articles, we will discuss how the sector is changing and what form the killer app could take.
