The Elusive Crypto’s “Killer App”
There are countless theories about what could be the first crypto’s first killer app — i.e. the breakthrough needed to achieve mass adoption. This could range from digital collectables, tokenized securities and DApps, to smart contracts and major protocol implementations that could bring true shared global liquidity and frictionless trading. In our current landscape, anyone could envision how efficient prediction markets could put “fake news” to rest for example, and it would become very expensive to disseminate. However, truth be told, such a reality still resides in a (not so) distant and almost dystopian future. The current situation is that cryptocurrencies and blockchains have not yet achieved true mainstream adoption as the average consumer doesn’t use them in their everyday life.
This doesn’t mean that the technology has failed in every area so far. Blockchains have already achieved moderate success at an albeit smaller, more niche type level. So let’s dig in and explore which current implementations could potentially be considered as the ones making the final leap.
Store of Value (aka Digital Gold)
One could argue that Bitcoin has already humbly established itself as “digital gold” for this generation, as it shares similar features and improve on gold’s alleged shortcomings (problematic custody and transportation for example). Of course due to certain concerns like Bitcoin’s volatility or lack of true intrinsic value, some critics would argue or laugh off at the mere idea of gold having a new competitor. This results in lack of adoption from similar-minded investors. Furthermore, while digital gold, silver and other assets have big market-caps and fully developed industries behind them, it doesn’t seem overly ambitious if that’s all there is. After all, they won’t ever be physical replacements for precious metals. Not only cryptocurrencies need to achieve bigger global institutional adoption as a new kind of asset, they will also need to improve into better units of account for true global adoption to happen.
Tokenize The World
Crypto Kitties eruption led the way earlier on and set the stage. It also caught the underlying technology off guard, bringing Ethereum blockchain almost to a halt due to scalability issues. It’s no coincidence that giants like Google and Samsung recently invested in the project. In a similar fashion, other examples paint a positive picture moving forward such as cryptographically signed digital cards MLB Crypto Baseball.
After all, it is only logical — considering crypto’s own gamification like features — that a game or a similar application will be the first to conquer the masses. Digital video-game assets like custom skins, weapons and similar features can’t be tradeable or directly owned by the user. It’s easy to imagine a world where players from even different platforms and games could trade their own unique tokenized assets against each other. Tokenized assets of all types (including shares, real estate, licensing rights, fine art and others) are definitely one of the strongest candidates.
Keep it Stable
As previously mentioned, smart contracts bring the possibility to issue tokens for many use cases. As big as security tokens can become (tokenizing Tesla or Amazon shares without intermediaries is mind-blowing enough), perhaps there’s something that has been overlooked already. In 2018 we’ve seen the rise of the Stable Coins, initially created to provide stability, improved day-to-day payments and shelter from a volatile market. Many options now exist in this space including Circle’s USDC, Gemini’s GUSD, TrustToken’s TUSD to name a few. What’s interesting about them is not only the initial problem they are trying to solve but also what they could start. We can already imagine how bigger companies, banks and even governments could follow the same path soon.
Moving thousands or millions globally, in a fast, securely and transparent manner (while costing pennies per transaction) compared to the traditional, slow and expensive wire system seems like an obviously overlooked feature. These institutions won’t even need to expose themselves to the fluctuations and lack of liquidity of the underlying assets (ETH for example as most stable coins are built on top of Ethereums’ blockchain). This was a previous criticism of using BTC for global settlement and transfers, as its volatility and lack of liquidity still makes a bank wire or any centralized fintech company both less expensive and risky. We all handle different types of digital fiat money daily on our Paypal, Chase, Fidelity or Barclays accounts. However, they can’t interact with one another and huge friction, delays and exorbitant fees ensues while moving money around. Now your AirBnB, Paypal, and Amazon credit could co-exist seamlessly with your regular salary and card or bank account balances.
The Blockchain
The Internet itself had many breakthroughs; some say Google was the first killer app while the older amongst us might say Netscape or Yahoo before it. Perhaps the rise of social media giants (first MySpace then Facebook, Twitter) and the invention of the smartphone were the breakthroughs that truly democratized the web. However, it’s fair to say that while these were important milestones, in hindsight there was not a single moment when we said “this is it”. It all just…came to be.
So, perhaps the answer we are looking for is much simpler: all of the above, at once.
