Is Crypto a Solution Looking for a Problem?
Why it's time to move beyond self-sovereignty, digital ownership, low transaction costs, privacy and security
“Crypto is a solution looking for a problem”. I hear this often as a criticism of all things crypto, everything from NFTs to DeFi to SocialFi. It’s a logical argument too. The key features of crypto (self-sovereignty, digital ownership, low transaction costs, privacy and security) mean very little to the average internet user who has accepted the inverse of these features in return for ease of use products. The fact is, the average internet consumer places very little value on these gore features of crypto.. This is a crux of the “crypto is a solution looking for a problem” statement. There isn’t a product-market fit for the average internet user.
However, I think this is the wrong way to think about crypto. But before I explain that, I want to ask you a question… what is the most innovative thing you’ve experienced online since 2015?
Here’s how I think about the evolution of the internet since 1995:
1995 - 2005: this decade saw incredible innovation on the internet including search (Yahoo, then Google), music (Napster, then Apple), e-commerce (eBay, then Amazon), payment (PayPal) and chat.
2005 - 2015: this decade saw the rise of mobile internet (smart phones), social media, SaaS-everything (redefining corporate IT), “Uber”ization of all services and financialization.
What innovation have we had since 2015? ChatGPT/AI is certainly one channel of innovation, but how many other examples come to mind? Compare how much innovation has occurred online since 2015 with the time periods prior. I think we can agree that internet innovation has slowed dramatically and it could be that we are reaching the end of the internet innovation cycle, with perhaps only a few examples to the contrary.
It’s natural for a technology (and the industries it supports) to mature and slow down its innovation. However, are we ready for the internet to slow its innovation? Think about this, is this article the first time you’ve thought about the internet innovation cycle coming to an end?
That, to me, is the problem that crypto solves. Blockchain technology provides an entirely new avenue of technological exploration and product development. While self-sovereignty, digital ownership, low transaction costs, privacy and security are core tenets of crypto, we need to stop thinking about them as The Features and instead start thinking about them as building blocks for innovative products. That fact is, blockchain enables products that were not possible even a few years ago and it’s going to take time for entrepreneurs and dreamers to think of these new capabilities and test them in the market. NFTs, DeFi and meme coins are not the finished state of crypto, but rather are the first attempts at innovation using blockchain technology. The next step is to innovate beyond these products to introduce new ideas to the average internet user that are only possible because of the core tenets of self-sovereignty, digital ownership, low transaction costs, privacy and security. Blockchain is currently like the pre-1995 internet, where websites were basically just online versions of things that existed prior. It’s time to innovate beyond that.
It’s worth pointing out that the technology stack of crypto has, up until recently, prevented a lot of innovation because it was incapable of serving a user experience that could come close to the expectations of average consumers. It’s very difficult to find product-market fit when the user experience is poor and thus it’s been very difficult to collect market feedback and evolve. That is until the Internet Computer launched.
The fact that the Internet Computer provides the first web-speed blockchain capable of serving crypto services alongside strong user experience gives me hope that blockchain technology may finally be ready for the masses. Only on the Internet Computer can an application be built in which self-sovereignty, digital ownership, low transaction costs, privacy and security are not the features themselves, but are rather the building blocks of truly innovative features and solutions. And only on the Internet Computer can an application truly be decentralized through a DAO, opening up an incredible world of possibilities for diversified brainstorming and roadmapping.
So is crypto a solution seeking a problem? Yes and no. And I think we’re finally moving more towards the no. So stop thinking about self-sovereignty, digital ownership, low transaction costs, privacy and security as selling points and start building new, crazy things with these as the starting point.
#Buidl on, Kyle