Emphasis on Utility Needed to Bring Blockchain to the Mainstream

There is money in blockchain. It is hard to dispute an industry that boasts of a nine-figure market capitalization. Money continues to flow as well. Hundreds of blockchain projects have been holding their respective initial coin offerings (ICOs) since 2016 generating over $20 billion in funding.

What is worrying, however, is that mainstream adoption has been slow. For these projects, finding success in funding does not necessarily translate into being able to launch. Blockchain ventures are supposed to deliver crypto-driven and decentralized alternatives to mainstream apps and services but it is struggle to find post-ICO projects that have truly taken the fight to the incumbents.

Crypto is a tough space. Many ventures struggled to even get out of the ideation and proof-of-concept phases. Hundreds of such tokens are now listed as dead due to derailed development, failure, fraud, and cyberattacks.

Fortunately, there are a number of platforms and decentralized apps (dapps) that continue to show signs of activity. Virtual games CryptoKitties and decentralized exchange IDEX have an active user base. Financial platform OmiseGO and cloud storage service Storj, which were among the top-performing ICOs of 2017, are still actively being developed.

But despite these developments, mainstream adoption still remains elusive.

The hype surrounding the crypto market has also become a double-edge sword. While the prospect of making major gains the crypto market have generated much buzz, people’s interests remained mainly in trading rather than in using these dapps and services.

Unfortunately, the preoccupation with crypto trading limits people’s view of tokens as just being tradable assets. It is still common for most to just lump them together as “coins” regardless of their true function. Tokens could actually be security tokens which function as equity, utility tokens which provide access to platforms, and payment tokens which function as digital currencies.

This misconception needs to be corrected. Otherwise, utility tokens and the dapps that use them would not get their due attention. Dapps are best positioned to attract mainstream users since they are specifically designed to engage them and cater to their needs. It is high time for “utility” in utility tokens to be emphasized.

It is not just the labels that need correction. The current means to gain access to utility tokens is also a limiting factor. Outside ICOs and exchanges, there are few other ways users can get hold of utility tokens. If a user suddenly becomes interested in a particular dapp, the person has to go through these channels just to try the service out.

Say, a user wants to use Storj. To do this, the user has to acquire Bitcoin or Ether and use it on an exchange to trade for Storj tokens. The user also has to create and manage wallets to store these different tokens.

This is a cumbersome process which makes dapps particularly unattractive compared to the convenience provided by centralized services. A user can simply use credit cards or PayPal to pay for a Dropbox subscription.

Easier mechanisms for users to acquire utility tokens are clearly needed. Projects could technically airdop utility tokens for publicity and review purposes yet this is rarely done. Even better are mechanisms that take away the need for users to fuss about managing tokens entirely.

Orchestration platform Cardstack foresees such a need and has been working on ways to create better user experiences for blockchain users. The platform simplifies token management by allowing users to tap into various blockchains and dapps using only its CARD token. CARD can be seen as a “universal gas” that can be used for a variety of dapps. It eliminates the need for end users to manage multiple wallets and exchange for tokens.

To further minimize the influence of the volatile crypto market on utility tokens, Cardstack is also exploring the possibility of allowing users to purchase CARD using more traditional payment methods like credit cards. These tokens can only be used on the platform. A custodial smart contract can be used to distinguish these platform-only tokens from publicly-tradable CARD. This way, acquiring CARD for platform use works just like any e-commerce transaction.

It would serve other dapps and platforms well to have such mechanisms available too. As such, Cardstack is mulling promoting such a standard. If realized, this would be among the more exciting development for dapps. By providing convenient access to utility tokens, such mechanisms take away one of the biggest barriers to actual use.

What blockchain needs now is for mainstream users to use the technology beyond trading and digital currencies. Utility must be underscored as the valuable proposition of the technology. The space must be able to highlight the availability of the various services mainstream audiences can use. Creating easier access to platforms could only encourage wider adoption.

 

Disclaimer: This content does not necessarily represent the views of IWB.

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