Source: Hackernoon
Author: Haseeb Qureshi
It wasn’t too long ago that Silicon Valley scoffed at cryptocurrencies. All over coffee shops in Mountain View and Menlo Park, you heard the same conversation: “Sure, it’s cool technology, but when are we going to see the killer app”?
A few merchants dipped their toes into accepting Bitcoin in 2014. But adoption largely backed off. I remember seeing a few Bitcoin ATMs in Austin, and then they disappeared. Bitcoin reneged on its promise to replace cash, so most venture capitalists assumed it was dead on arrival. Without a killer app driving consumer adoption, cryptocurrencies seemed like they would be nothing more than a curiosity for cryptographers and paranoids.
In the last year, interest in cryptocurrencies has skyrocketed. The public cryptocurrency market cap has surged to highs of over $170B. With over 1.5B raised through ICOs in 2017, over 70 crypto exchanges open for business, and crypto hedge funds and VCs popping up left and right, it seems that everyone is clambering to get a seat on the rocketship.
In all this frenzy, nobody is asking about killer apps anymore.
I believe this is a mistake.
As a consumer technology, cryptocurrencies are a hot mess. They’re extremely difficult to purchase, the networks are slow, the transaction fees are high, the community is full of trolls, hackers, and scammers, it’s far too easy to lose your funds or have them stolen, and even if you win the battle to secure your funds or use a custodial service like Coinbase, merchant acceptance is scarce.
The developer tools are even worse. The cryptocurrency ecosystem is fragmented and territorial. The tooling, documentation, and developer education are shoddy to nonexistent.
Cryptocurrencies suck for both users and builders. Yet, despite these glaring problems, the demand and hype only go up.
This should strike you as alarming. If it doesn’t, you’ve fallen asleep at the wheel.
What does this mean?
To make sense of this phenomenon, you’re forced to one of two possible conclusions.
The first is that the value of crypto is entirely in speculation.
There’s a lot of unfounded speculation in cryptocurrency markets, no doubt. Many of my close friends think cryptocurrencies are entirely a bubble. This kind of skepticism is a healthy perspective in a frothy market, but I’d say this is too broad a claim.
The other possibility is that crypto’s underlying value is in something other than the user experience. But this seems to belie everything we know about how technological value creation takes place.
The founder of Ethereum, Vitalik Buterin, argues that crypto won’t have a killer app at all:
… There will be no “killer app” for blockchain technology. The reason for this is simple: the doctrine of low-hanging fruit. If there existed some particular application for which blockchain technology is massively superior to anything else … then people would be loudly talking about it already. … And so far, there has been no single application that anyone has come up with that has seriously stood out to dominate everything else on the horizon.”
Vitalik Buterin (The Value of Blockchain Technology)
Vitalik repudiates the “killer app” framework. He believes that blockchain will become valuable for the many long-tail applications that it enables.
I disagree.
I think the “killer app” framework is the correct one. While there are many cutting-edge applications that technologists will find exciting (myself included), the major drivers of blockchain’s value are relatively narrow.
Amidst the hype-train of ICOs, “decentralizing the Internet,” and bullshit artists trying to hoist everything they can think of onto a blockchain, it’s instructive to take the 1000-foot view and remind ourselves of the big picture.
I argue there are four killer apps for blockchains:
- Dark web and black market payments
- Digital gold
- Payments (macro and micro)
- Tokenization