Building DApps people want
This post seeks to explain the reasons behind the most pervasive question in the space at the moment: Where are the users?
Where is everybody?
It has been nine years since Satoshi Nakamoto unveiled Bitcoin. It has also been almost five years since Vitalik wrote the first draft of Ethereum white paper. Ethereum extended the potential use cases of cryptocurrencies beyond money. Blockchain technology has since received different labels from technologists and media around the world. ‘Groundbreaking,’ ‘Disruptive’ or ‘Bigger than the Internet’ are some of them. Billions were raised through public offerings (ICOs) in the last twelve months and money is continually being poured into private deals in the space.
However, the real usage has been underwhelming. According to DApp Radar, the most adopted decentralized applications — DApps — only have several hundred daily users. If the technology is that disruptive, it is just normal to ask yourself the following.
Where are the applications?
This DApp paradox — similar to Fermi’s paradox — has been explained by different groups of people with several arguments. The most important are:
- It is too early. We need to build the infrastructure — lay the tracks — before making consumer applications — trains.
- SISP (Solution in search of a problem). Blockchain technology applications only have an edge versus centralized applications in some small niches. A simple distributed database suffices in most use cases.
- No Zero to One. Blockchain applications need to either provide some feature remarkable or to improve centralized applications by being 10x faster or cheaper to have an edge.
- UI/UX friction. Users have to bear a heavy burden to interact with these applications. They need to install a browser extension (usually Metamask), buy cryptocurrency in an exchange, transfer the money to their new Metamask wallet and learn how to keep proper custody of their account.
Which one of these is true? All of them and none at the same time. Let’s dive into them.
“History doesn’t repeat itself but it often rhymes.”
Cryptocurrencies and blockchain technology are compared continuously with the dotcom boom according to different narratives. Similes are drawn as to the disruptive potential of both the internet and the blockchain revolution. After all, if the Internet created trillions in value, how much could ‘programmable money’ accrue? During the last year, the ICO market was compared with the dot-com boom and subsequent crash. Webvan, pets.com and other notorious web failed startups are remembered when we mention any of the successful ICOs. The warning words are usually followed by a glimpse of hope in the form of: “There must be some Amazon, Google, and Yahoos inside this asset class.”
So, are we in 1992, 1998 or 2001? Nobody knows. We may be in all of them at the same time. Following the S-shaped curve of technological adoption, we could be in the latter phases -post crash — of some use cases like the store of value. At the same time, we could be in the pre-Netscape era of consumer DApps (games, social networks, messaging and so on).
A golden database
Nouriel and other blockchain detractors argue that using blockchain is an overkill. It is just no more and no less than a glorified database. It is even a slow one at that. Although Nouriel claims are somewhat exaggerated and generalized, there is indeed some truth behind his statements.
Blockchains ledgers are immutable, append-only databases. These features can be easily replicated using any advanced distributed database like Cassandra or Google’s Big Table. A startup can achieve orders of magnitude of efficiency and save tens of thousands of dollars by using these. If your product doesn’t benefit from the unique benefits of the blockchain like trust minimization or incentive alignment, you’d better off build something people want on top of a plain distributed database. It is in fact, likely that you’d be better off using one of these battle-tested databases. By default, assume that you don’t need a blockchain. Here is a simple checklist that can inform your decision:
- Does your product offer digital assets? If so, do your users care about them so much that they would like to own them directly?
Likely, the answer in 95% of the cases is No. Some high-end digital collectibles from notable games; and digital assets — web domains — are some examples where a blockchain makes sense.
- Is there substantial rent-seeking by middle-men?
Gambling, securitization, and financial instruments come to mind. Innovators in these fields can use the blockchain to cut intermediaries, reducing both user’s information exposure and fees.
- Does your use case demand censorship resistance and decentralization?
Again, the answer is likely No. A decentralized blogging platform that could offer support to small minorities like Wikileaks is a counterexample. Sending remittances through Bitcoin in countries with hyperinflation is another one.
- Does your product benefit from an incentivized economy? Can you design one?
Many projects that growth based on its users could potentially align the incentives of all the participants to increase the value of the network. However, this is easier said than done and no project has pulled this off at scale yet. STEEMit is one of the veteran experiments in this area.
Starting with Why
Simon Sinek has a great TED talk about finding the meaning that motivates your enterprise. The specifics as to how to get there will follow. Y Combinator slogan alludes to focusing on making something people want, focusing on the What. They interview founders rigorously to make sure they care deeply about the problem they are solving. Their passion is the key motivator to stick with the company through down periods that can last for several years. For most of the companies, the specific details of the technology behind the company are secondary.
In the blockchain space, many people start with the How. A group of entrepreneurs develop a solution — blockchain hammer — and then search for any problem that can be slammed with it. The technology is overhyped to the point that is difficult even for people inside the space to see this. More often than not, we can’t see the forest for the trees.
Thousands of new products are released daily. Building something slightly better is not enough. That’s if you ever got discovered amongst the massive flood of new products. Peter Thiel on Zero to One explains path towards building sustainable products on the shoulder of technological breakthroughs. We need to think about the unique capabilities that the new technology unlocks. Then, we need to consider how to leverage these functionalities to build something that is 10x better. It can be ten times faster, cheaper or introducing people to a new product that improves their lives substantially. Paypal is a perfect example of this; it leveraged the ubiquity of the web to let people pay electronically for goods and services, starting with eBay products.
Waiting for Netscape
As we mentioned before, technology cycles usually follow the S-shaped curve. As the previous wave of technology reaches maturity, a new one develops — often unnoticed — and gains momentum. Although these cycles tended to take decades, the adoption rate of new technology is accelerating.
We have experienced these cycles several times in the last decades. During the microprocessors era (60’s-70’s), hardware was king. In the 80’s, Microsoft and Apple came along, commoditized the equipment and started the software age. During the 90’s, the web and Linux pushed us towards the Google age where the open internet, data, and interconnectivity trumped everything else.
Right now, we are in the installation stage of a new age — named Crypto Era by Placeholder Capital — marked by a lack of trust in traditional institutions, a desire for strong privacy, and innovation in governance models.
The S-shaped curve is significant because the adoption of a new technology is not linear. During the installation phase, the new disruptive paradigm goes through a series of booms and busts. New financial capital supports these cycles and retail frenzy and media coverage exacerbates them. The dotcom boom of the 2000s is an example of a local bubble that signaled that the end of the Internet installation phase was near.
The technology then goes through a sobering process that leads to maturity. It transitions into real value creation in the deployment stage. After the dot-com boom, new companies like Facebook or Twitter leveraged this new technology to create value in a way that was not possible before. A few boats that left port during the installation phase like Amazon or Google were able to weather the local storms of the frenzy stage and reach maturity a few years later.
Several boom moments pushed the internet forward during the installation phase. One of the biggest sparks was the release of Netscape, the first web browser. It both increased the possibilities of the nascent world wide web and allowed regular users to participate in this new world without having to flash a Ph.D. degree at the gate to access it.
The Bitcoin whitepaper was the big bang of the crypto wave. Now, we still are in a period of ebbs and flows where exaggerated claims by both media and teams are commonplace. The lack of real adoption by end consumers make these market cycles more and more pronounced. It is challenging to discern charlatans from builders. Some products like Cryptokitties have tried to reach a wider audience, evangelize users about the benefits of the new paradigm and bring them on board. It is a tall order. It’s no surprise that they fell short, but we should applaud their efforts and keep trying. We are still missing our Netscape moment.
There are many barriers to overcome to create this Netscape. The truth is that people can’t use DApps. We ask too much from them. Let me illustrate how the user experience goes in a normal DApp with the following dialogue.
DApp: Welcome to this magic DApp game! Fair, trust-less and decentralized!
Mike (User): Ok, no idea what it means but sounds cool. How do I get started?
DApp: First, install this browser extension or a dedicated browser. It will be worth it.
Mike: Alright, I am installing it.
— Five mins later
Mike: I am back. Can I start playing now?
DApp: No. First, you need to purchase some cryptocurrency. Please, visit one of these exchanges to buy it. Don’t forget to come back.
Mike: Can I use USD?
DApp: No, this is so much better because you control your money and not your bank. Nobody can move your coins without you.
Mike: But I only want to spend $1, I trust my bank.
DApp: Are you insane? Do you remember 2008? Do you want them to keep printing money on your behalf?
Mike: Jesus, ok. I want to play this game.
— Ten mins later
Mike: Now, I have some crypto coins. Can I play now?
DApp: Yes, create an account clicking on start and send a transaction to create an account.
Mike: Ok, clicking. This extension is pretty weird but ok.
— A minute later
Mike: Nothing is happening.
DApp: Wait, the miners, are achieving consensus about your transaction. Please wait a few minutes.
Mike: F*** this!
The pain users are willing to withstand is directly proportional to the amount of value we offer in the application. The truth is, we offer little. We force them to install browser extensions or dedicated browsers. Then, we instruct them to expend some of their hard-earned dollars to purchase some obscure currency. Finally, we ask them to suffer unintelligible copy, unresponsive interfaces and long loading times.
Dropbox succeeded not because it used the ‘magic cloud.’ It worked because people understood the need to both back-ups their files and accessed them across different computers. Users did not need to know anything about “The Cloud,” and they did not need to install any new tools or use the product in any different way to other applications at the time. Dropbox was ten times better than the alternatives at the time, and the users followed.
Crypto applications need to be transparent. The user doesn’t need to know about the blockchain more than they know about the cloud. The applications need to be indistinguishable from centralized applications regarding user interface, user experience, and responsiveness. On top of that, they should capitalize on the unique benefits that blockchains offer like digital scarcity, fractional ownership, trust minimization or censorship resistance.
Luckily, the crypto space is maturing and is actively working towards solving this problem. The work on Meta transactions and Universal Logins points towards a brighter future where users don’t need to know about how the blockchain works. They will discover the benefits that these new applications offer.
Building DApps People want
As we have seen, all these reasons help us paint a complete picture of the actual DApp landscape and what is more important, help us move in the right direction. Let’s use these concerns as a compass, as a north star to guide our development efforts.
We can’t hide behind the excuse that protocols are incomplete or that the base layer doesn’t scale. We need to help define, push and stress those boundaries with new applications.
We can’t just offer decentralization for the sake of it. Why blockchain? Decentralization is not a magic wand that you can wave — ala Harry Potter — at common applications and instantaneously turn them into billion dollar companies.
We can’t expect that Blockchain is going to solve and displace incumbents in every single market. Offer something 10x faster, 10x cheaper or let users do something they couldn’t do before and they will adopt it.
We can’t get away with shitty user experiences. The more value we offer, the more pain the users will put up with. Right now, we offer little and demand a lot.
“Give me something remarkable and I may consider using Metamask but… better yet don’t force me to do it, please oh please.”
The industry is looking for its Netscape moment. It’s not going to happen by itself. I believe it’s within our reach. Let’s BUIDL!
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The purpose of ALTCOIN MAGAZINE is to educate the world on crypto and to bring it to the hands and the minds of the masses. This article was written and composed by Ramon Recuero on ALTCOIN MAGAZINE.