Crossing the chasm: How VeChain could unlock the secrets for mass adoption of Blockchain

Brot KnoblauchHaus
Mar 2 · 11 min read

Part 1 — Introduction:

In 1991, Geoffrey. A. Moore wrote a book called “Crossing the chasm.” The book primarily talked about the adoption of disruptive technology and the challenges that they face for mass adoption. He proposed the following diagram:

The diagram depicts the adoption cycle of new, emerging, disruptive technology. In the early stages of adoption, innovators and techies get on board, which creates the initial hype. But what happens after that?

Moore argues that the biggest challenge disruptive technology faces is going from early adopters to early majority. And in between those two target groups, lies the chasm. So what is the chasm?

Simply put, the chasm is where many promising ideas die if they are not able to convince the early majority.

Let’s look at a few examples. Anyone remember Second Life? This massive virtual reality world was the hottest thing in tech shortly after its release in 2003. Innovators embraced it with open hands, and some companies (Early adopters) rushed in to set up virtual storefronts. It was supposed to be the next big thing in tech, possibly the biggest social media network in the world. But what happened?

The chasm.

As Second Life tried to convince the early majority, it failed on many fronts. The technological infrastructure was not robust enough, there were unaddressed legal & regulatory loopholes, and so on. Simply put, all the things that the innovators and early adopters turned a blind eye to, were show stoppers for the early majority. Second Life’s usage statistics dropped steadily over the years, and while it is still online as of today, it remains as a niche product, with nowhere near the mass adoption it once promised to have.

Let’s look at another example. Smartphones.

Everyone and their grandma have a smartphone these days. When someone says “Smartphone,” our minds automatically conjure up an image of a big touchscreen device with apps for everything. But the history of smartphones goes much further back than that.

Modern smartphones could trace their history back to devices like the Palm Pilot, which was launched in the mid 90s . These devices were called PDAs (Personal Digital Assistants) back then and had organizational features such as a calendar, mail, notes and rudimentary internet connectivity. Competing platforms such as Symbian UIQ, Symbian S60, Windows CE all pushed the envelope bit by bit, offering additional features over the years. But all these platforms had one problem in common. You guessed it.

Crossing the chasm.

While these PDAs and early smartphones were all technological marvels in their day, none of them could convince the early majority to dive in. Nokia probably came closest with their S60 based smartphones, but most people were quite content with a dumbphone and saw no real need to upgrade to a smartphone. Smartphones were relegated to a niche. They had failed to cross the chasm.

But all that changed in 2007.

This is when the Apple iPhone was launched and initiated a series of cascading events that helped smartphones cross the chasm and gain mainstream adoption. So what did Apple do differently with the iPhone that the others couldn’t/ didn’t?

  • For one, they focused on the user experience:
    Steve Jobs realized that almost every smartphone out there had an inferior user experience compared to the dumbphones and required a lot of technical know-how on the user’s end to use them. Their UIs were slow and clunky. He also realized that many of the “Apps” available for these smartphones had dubious quality. His vision was to create a smartphone that was as easy to use as an iPod (An extremely successful product for Apple at that point, developed with the same requirements).
    They developed a user interface for the iPhone that was extremely responsive, looked great and required no technical competence on the user’s end to use it.
  • They found the “Killer app”/ their niche:
    Apple thought long and deep about the “Killer app.” i.e. the one thing that will make people WANT to own and use the device.
    And in 2007, that killer app was the web browser.
    Back then, every smartphone had WAP browsers, which loaded inferior, mobile-only versions of real websites. Apple developed a version of their Safari browser for the iPhone that loaded most websites properly. Combined with the 3.5" capacitive touchscreen, it offered the users a browsing experience no other smartphone could match.
    Additionally, Apple realized that Youtube was gaining traction as a video consumption platform, and worked closely with Google to develop the Youtube app for the iPhone that allowed the users to stream almost any video available on the platform.
  • They adopted to changing realities:
    Apple and Steve Jobs initially wanted to close the iPhone down as a smartphone where only Apple developed the apps. This was because of their concern regarding the quality of the third-party apps. But very soon, they realized that third-party developers were begging to develop apps for the iPhone. This resulted in Apple finally opening the platform up for 3rd party development (Again, with a strong focus on UX with a curated, easy to use Appstore in comparison to the Wild West approach taken by the previous smartphone platforms) and the growth of apps for the iPhone was exponential, not linear. In 2021, the Appstore is a massive success for Apple, generating hundreds of billions of dollars in revenue.

Without a shadow of a doubt, the iPhone helped smartphones cross the chasm and convince the early majority. As with all technologies that manage to cross the chasm, it set the standards and also drove the competition to up their game. Some failed (Palm WebOS, Microsoft Windows Phone), and some succeeded (Google Android). But they all owe gratitude to Apple and the iPhone for taking something niche and turning it into a product the average person wants to own and use.

Part 2 — Blockchain:

In the past decade, Blockchain has emerged as the “Next big thing,” attempting to cross the chasm any day now. The Innovators have been on board for a long time, mining the early PoW coins, contributing to the source code, developing dApps, etc. In the past few years, the early adopters have also come on board, with various projects seeing the first signs of real-world usage. But let’s face it, Blockchain is still a niche, and the average person on the street doesn’t even know what it is, let alone know how to interact with one.

So what needs to be done so that Blockchain successfully crosses the chasm like the iPhone and not end up like Second Life? And Why do I think VeChain is strongly poised to do exactly this?

Let’s start with the elephant in the room.

The single most important KPI for mainstream acceptance of Blockchain is USAGE. Especially by people who do not know what a Blockchain is.

Tesla or Microstrategy investing billions of dollars in Bitcoin isn’t it.
While this generates short-term investor interest, it is driving neither adoption nor usage.

DeFi, or the currently popular version of it, isn’t it.

Trading a bunch of tokens back and forth on a decentralized exchange and “Farming yield,” while extremely profitable(Currently) for some, isn’t mainstream adoption. The userbase of these platforms still consists of crypto enthusiasts who know their way around wallets, private keys, gas fees, etc.

No, to cross the chasm, Blockchain must offer something unique that convinces the early majority to embrace it. And VeChain already has many of the pieces of the puzzle in place.

1. Find your niche

Blockchain is full of projects that claim to do everything under the sun. This, however, is a bad approach. There will be no single blockchain to rule them all, just like there’s no single car company that has 100% of the market share. The key to success is to find your niche and do everything to succeed in it.

VeChain focuses exclusively on enterprise users as their target audience. This is the niche they have been building for, right from the beginning.

Enterprise users are some of the hardest to convince in terms of making changes. They tend to only embrace change if they absolutely have to or if it offers substantial value. In contrast, retail users, in comparison, tend to “Follow the herd” and use whatever that’s popular. “Build, and they will come” does not quite work in the enterprise sector.

Many critics of Blockchain say it’s a solution looking for a problem. VeChain took the exact opposite approach. They, together with partners PwC and Deloitte, surveyed industry participants several times to understand the pain points they currently face, which could potentially be fixed with Blockchain. These surveys and industry feedback also helped the team gather valuable insights on why the PoCs built on Ethereum, etc. were not scalable to a production environment.

The lessons learned from these insights equipped the team to develop a Blockchain (VeChainThor) with a transactional model and scalability that addressed the shortcomings of Gen2 blockchains such as Ethereum.

You can read more about this in the following articles:

VeChainThor Primer: Keeping transaction costs stable | by Brot KnoblauchHaus | Jan, 2021 | Medium

VeChainThor Primer: A transaction model built for the real world | by Brot KnoblauchHaus | Feb, 2021 | Medium

They also developed ToolChain, an innovative tool that helps enterprises use Blockchain without having in house coding experience and/ or exposure to crypto tokens and volatility, both of which are showstoppers for enterprise adoption:

You can read more about ToolChain here:
VeChainThor Primer: What is ToolChain? | by Brot KnoblauchHaus | Jan, 2021 | Medium

In summary, VeChain has found its niche and stuck to it while addressing the pain points that are currently preventing the early majority in that niche from taking a plunge.

2. Lower the barrier of entry.

To cross the chasm, you need to not just think of your customers, but their customers as well. Even enterprise tech customers have non-technical end-users for their products.

The single most important factor preventing the early majority of these end customers from interacting with a Blockchain is the high barrier of entry. As said earlier, today, if you want to interact with a public Blockchain, you need to understand what wallets are, what public and private keys are, and so on.

This creates a very high barrier of entry. Imagine having to know how SMTP works before you can send an email. Or how TCP/IP and DNS work before accessing a website. We wouldn’t see much adoption for Email and the Internet if that were the case, right?

What drives adoption are layers that hide the technical underpinnings of the product and provide a UI and UX that is dead simple to use (Remember the iPhone example).

VeChain has already been a trendsetter in this regard, with its Fee Delegation protocol, which removes the need for the end-user to hold crypto tokens in order to interact with a Blockchain-based dApp. With the upcoming Fee Delegation as a Service (DaaS), Sync2, and Connex2 updates, VeChain opens up the ability for the end-user to interact with a Blockchain-based dApp, just as it were a normal website, without ever holding a crypto wallet and managing keys.

Blockchain may have found its early majority of a few million users, but the first and subsequent billions of users can only be reached by making the tech easily accessible and usable.

More details on DaaS can be found here:
VeChainThor Primer: Why Fee Delegation as a Service (DaaS) is a game changer | by Brot KnoblauchHaus | Jan, 2021 | Medium

3. Communicate in the right way to the right audience.

Recently, there has been some criticism aimed at VeChain that they are not communicating enough through social media channels, and this hurts adoption. However, I find this to be an untrue statement.

Blockchain and crypto are not, nor ever should be customer-facing applications. Rather, it should serve as the infrastructural layer upon which next-generation platforms can be built. To drive adoption on this front, communicating to the right audience in the right way is very important.

Projects quite early in their development cycle (And have the token price as a high priority) incessantly communicate through their social media channels to stay on top of the hype cycle. However, this plays no role in helping the project cross the chasm and convincing the early majority. All it does is to drive speculator enthusiasm.

This is not adoption.

As a project aiming at the enterprise niche, VeChain does a very different form of communication to a very different audience.

Rather than approach their potential enterprise customers one by one and try to convince them, VeChain works hand in hand with channel partners such as PwC, Deloitte, and perhaps most importanly, DNV (Formerly DNV GL).

DNV’s “Tag. Trace. Trust” product is built on top of VeChain ToolChain and enables enterprises to enjoy the benefits of Blockchain with minimal overheads. And as a trusted name in assurance for over 150 years, DNV opens more doors than a Blockchain startup could ever do on its own, as can be seen by the recent announcement of the second largest company in Norway initiating a pilot of Tag. Trace. Trust.

4. Be agile, and change according to the needs of the target audience.

As described above, innovators and early adopters are more “Forgiving” to the limitations of a new technological development, as the enthusiasm to explore something new is their primary driver. However, the priorities of the early majority tend to be very different and any technological development that fails to address this runs the risk of failing to cross the chasm.

For example, innovators and early adopters embraced Ethereum for the ability to develop smart contracts on that platform. However, it runs into serious limitations when used in mission-critical use cases by the early majority.

The VeChainThor blockchain, in its current form, has already addressed several of these concerns and was embraced by early adopters as well, many of whom started PoCs on Ethereum and migrated to VeChain. However, as they attempt to cross the chasm, they are faced with new requirements, one of which is the need for finality in blocks (As Sunny Lu said, requested by a client who wants to run mission-critical applications on the chain). To remain complacent and not innovate further means failing to capture the early majority and failing to cross the chasm.

This is the reason why VeChain started work on the next generation consensus model (PoA 2.0) in September 2020 and is very close to completion at the time of writing. Compare this to Ethereum 2.0, which is designed to address some of the shortcomings of Ethereum 1.0; and has been in development for years; is still years away from completion. This is not agile, and in a fast-paced arena like technology, you run the risk of getting left behind.

To learn more about PoA 2.0 and how it compares to other consensus mechanisms, read this:

Consensus mechanisms in Blockchains for the lay person | by Brot KnoblauchHaus | Jan, 2021 | Medium

Part 3 — Conclusion

I would like to refer at this time to ARK investments, an investment fund that exclusively focuses on companies that are on the cutting edge of innovation and aim to cross the chasm in their respective fields.

ARK investments have had their fair share of criticism over the years, but the fact remains, they have consistently outperformed the market. Part of this success is the high conviction they have in their picks, even if some of those picks underperform in the short term.

ARK reckons that there is often a long, flat adoption curve between the early adopters and early majority, and their picks often see a decline during this period (aka when crossing the chasm) when the prices often are more representative of the market volatility than that of the underlying value of the asset itself.

However, the picks that do successfully cross the chasm tend to outperform the market and set new standards in their respective fields and continue to be leaders, as long as they don’t become complacent and stop innovating.

These are exactly the same qualities I see in VeChain, as outlined above; which is why I consider them one of the most likely candidates to cross the Blockchain chasm and drive it towards mass adoption.

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Brot KnoblauchHaus

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Ich bin kein Berliner, ich bin Knoblauchbrot. I like utility tokens.

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