How many new Web3 solutions have you encountered recently? What was their value proposition? Most likely it was transaction scalability, fee reduction, speed optimization, or a new token for another payment system. It almost seems like the blockchain industry is stuck in an endless day where it only solves one task: transferring currencies from one wallet to another.
A real problem in the early days of Bitcoin, it is now a major obstacle to the development of Web3. This is a good time to recognize that blockchain is no longer a niche sector focused on cryptocurrency transactions, but a powerful framework for revolutionizing various real-world industries. What he needs is to learn how to find the right product-market fit.
We already have enough altcoins
A few years ago, the promising blockchain landscape was radically different: Litecoin, Bitcoin Cash, Monero, Zcash and many others, etc. Although a few of these altcoins are still in the game, they are incredibly far from making headlines. And yet, these altcoins represented the technological frontier of crypto capabilities in 2013-2018. Whether it's Bitcoin forks or bespoke blockchains, altcoins are working to make payments faster, cheaper and more secure.
This era is over. We already have a plethora of functional altcoins in 2024 – please, let's finally raise the bar of expectations higher than basic digital currency transactions. With the advent of layer 2 solutions and account abstraction, the technical layer of blockchain is more than adequately explored. It is now up to new projects to develop a healthy ecosystem approach and learn how to apply these technological tricks to real-world problems.
Add a utility – Merge with the real economy
Ecosystems without added utility are nothing more than speculative investments without fundamental value. Indeed, a generic process of purchasing tokens to stake more tokens looks suspiciously like a Ponzi scheme or asset bubble. No matter how many dApps you have, the hype is short-lived. Dogecoin, at its peak, had a market capitalization of $90 billion. Where are its applications and users now?
On the contrary, Ethereum is successfully taking blockchain to a level beyond simple payments. Starting with colored coins and evolving into smart contracts, Ethereum identified a vacant niche and transformed the way we deal with digital ownership, governance, legal contract enforcement, and finance, paving the way for applications such as MetaMask and MakerDAO.
But even applications that are good in theory can fail in practice. Blockchain transparency was expected to revolutionize the back-end mechanisms of online casinos and achieve true randomness. Years later, Web2 online gaming is still thriving. Decentralized prediction markets like Augur have been heralded to completely replace traditional bookmakers and allow users to regain flexibility and control over their betting lines. In 2024, Augur's token price is only 0.24% of its all-time high.
Real-world blockchain integration: grab the low-hanging fruit
The truth is that it is impossible to gauge consumer interest in advance. Traction is achieved not through visionary assessments but through consistent market testing. Although a Web3-based alternative can improve data efficiency and reduce costs for the business, if it fails to directly appeal to users, it is doomed to failure.
Users need to love the new app like they loved Uniswap and Midjourney – otherwise, revolutionary technology is just wasted potential. Instead of stubbornly sticking to the paradigm of “disrupting incumbents,” blockchain should seek strategic collaborations with traditional industries and improve already tested niches and business models.
In the pursuit of rocket science applications, developers forget the fundamental property of every blockchain: immutability. Yet this property is the lowest hanging fruit and highest potential in real-world use cases.
Blockchain has already been implemented for track the provenance of expensive jewelry And the origin of good wineand to store Austrian government documents. Companies like Walmart, as well as projects like HAQQ and GoMeat, considering adopting blockchain to comply with food tracing policies. Additionally, various initiatives to facilitate direct blockchain voting are emerging at the local and national level.
Efficiency in data storage, speed of confirmation, and assurance that data has not been tampered with enable blockchain to digitize real-world assets into digital tokens. These tokens represent physical and traditional financial assets like currencies, commodities, stocks and bonds. The most notable recent example is tokenized US Treasury bonds.
Recent data shows a 657% annual growth in the market capitalization of tokenized U.S. Treasuries, reaching over $845 million. More and more countries are showing interest in these instruments, with token bonds from France and Italy and even token sukuk expected in the near future.
This transformation brings these assets into the realm of decentralized finance, expanding the availability of financial instruments that are typically inaccessible to many. Therefore, it paves the way for innovative applications and allows people with limited funds to engage in these important assets. A blockchain ecosystem, or a project that can achieve this transformation as efficiently as possible, will thrive in the crypto market for a long time.
Overcoming Future Challenges – Finding Product-Market Fit
Although the future pace of real-world blockchain integration may be limited by the vague fate of smart contract applicability from a regulatory perspective, scalability issues, and poor user experience, these challenges may be overcome.
Account abstraction, layer 2 solutions and the continued development of regulatory frameworks by government and non-government institutions like the International Swaps and Derivatives Association are helping to advance the technical and legal aspects of wider adoption of blockchain.
However, the most crucial thing remains meeting consumer demand and filling a vacant niche. We have advanced Web3 sufficiently technologically, and now we need to consolidate industry positions in real markets. Stop aiming for visionary predictions – aim for product-market fit.