The blockchain industry has been built almost entirely on speculation. This has been a double-edged sword, allowing for rapid growth and expansion of asset value coupled with a contrasting lack of stability and fundamental price support. In short, speculation has allowed for the industry to blossom before it has accomplished any of it’s actual goals.
Speculation leads to crashes:
Speculation allows for assets to enjoy inflated liquidity and valuations. This was certainly the case for cryptocurrencies over the past decade, with total market caps reaching almost $1 Trillion without any widely adopted use cases.
Speculation is not unique to cryptocurrency. Speculation exists in traditional markets as well. In the FX (foreign exchange) market, the most liquid in the world at $5T exchanged daily, over 80% of trading is speculative. Without speculators, markets would be less liquid and would function poorly. Tech stocks experience the same paradigm, especially the FAANG stocks (Facebook, Apple, Amazon, Netflix, Google) which trade based on highly inflated revenue predictions that allow total valuations for these companies to soar orders of magnitude above their annual revenues. Speculation over values for these highly coveted tech giants led to a crash of over $1 Trillion dollars this year, worth more than the entire cryptocurrency industry by market capitalization.
Utility protects against crashes
As we’ve seen with steep corrections in both the cryptocurrency markets as well as FAANG stocks this year, rampant speculation has punishingly brutal cycles of boom and bust. However, given the extraordinary utility of established tech sector titans, the crashes are not nearly as brutal. FAANG stocks have lost about 34% in value from their peaks, whereas cryptocurrency markets are down close to 90% from their highs. The key difference lies in the former’s utility, or the latter’s lack thereof.
By increasing the utility of blockchain products and cryptocurrencies the markets can more adequately defend against the boom-bust cycles that have shaken so many investors out of participation.
So how can we increase blockchain utility to defend against brutal crashes like we experienced this year?
Increasing blockchain utility
There are several things that must be done to increase the utility for blockchain products and the industry as a whole. We have them broken down into three categories: user experience, community building, and playing to the technology’s strengths.
One of the most noticeable aspects of blockchain products (DApps) is the low quality of the user experience. Between the intimidatingly complex management of private keys and the clunky look of DApps, these products are designed poorly enough to scare off even the most techie users.
The mobile web revolution proved that users gravitate towards sleek and simple user experiences, and that design and intuitive function is critical to an app’s success. The same is true for blockchain products, which have failed to heed the best practices found in leading internet products.
In order to maximize utility it’s important to acknowledge and identify where the maximal utility for a new technology can be derived. Blockchain is amazing at doing some things, while it struggles with others. Blockchain has proven extremely effective at storing and transferring funds in a friction-free and immutable way, whereas it struggles to compete with speed and scalability found in centralized systems. In order to increase utility it is important that blockchain plays to its strengths and builds products that highlight those advantages.
Building utility means more than just producing great technology and building a big telegram group, it requires people using products on a daily basis. Without strong community building around new technologies, blockchain will fail to create the utility that will strengthen and mature the industry.
🎁 Products creating utility🛠
There are amazing products focused on creating this utility for blockchain technology, and they need to be both acknowledged and supported. By growing user bases around disruptive products, we can create a blockchain equivalent of the FAANG internet giants, capable of modernizing and strengthening the entire industry. The following are some industries and products within them that are bringing utility to the blockchain.
Banking & Payments
Banking and payments are getting restructured in a big way, as projects like Ripple and Stellar Lumens look to provide immutable and friction free payment rails to the entire world. Beyond facilitating payments, these projects aim to bank the unbanked, and provide financial resources to the developing world.
Gaming is on the brink of being reimagined with true item ownership. This means that players can carry with them possessions of value as they travel between previously isolated games. Games that incorporate blockchain in innovative ways will usher in an entirely new era for the industry. This trend will lead to an explosive rise in collectibles.
Supply Chain / Logistics
Blockchain-powered supply chain management is being implemented as we speak. Retailers like Walmart are already using blockchain to fight E. coli breakouts. Projects like VeChain are working to combat fake luxury items while providing logistics solutions for pretty much every other industry and product you can imagine. VeChain have a prototype product that is working already. Other noteworthy projects in the space include IBM, WaltonChain, OriginTrail and Ambrosus. Look for massive adoption of supply chains in the near future.
Right now social platforms extract far too much value from users without any reciprocation. This dynamic needs to change, and will be radically disrupted with blockchain. The ability to share in the revenues generated by social platforms with users will help grow new communities based on real value.
TronChat is building products designed to disrupt the trillion-dollar social media world with features that empower each and every user to earn cryptocurrency from simple actions. TronChat is a Social 3.0 DApp that rewards users for valuable actions within the network.
Support our Social DApp in building utility for blockchain: TronChat
Utility is possible
Utility is possible, but it requires great products that captivate the hearts and minds of users. Support the projects listed in this article to help the blockchain community make the necessary transition from speculation to utilization. With this vital transition can come a new era of prosperity and abundance in the blockchain space.