Successful tech companies all have three key ingredients: a following of die-hard users, sleek customer experience, and high-performing technology. For tech startups, in which order are those things prioritized? There’s an old saying -- if you build it, they will come. If that trope holds true in today’s business world, why does the crypto space operate as if it’s different?
To date, the crypto ecosystem has gone through roughly two main stages. The first started with the base-level protocols — mainly Bitcoin and Ethereum. This “infrastructure age” (think pre-2013) was where we as a community focussed on the basic tenets of blockchain tech: accessibility, speed, and affordability. From this sprouted projects like Coinbase, making crypto more accessible for those seeking to participate in the growing blockchain movement. For the first time ever, anyone in the world could send money to anyone else in the world in the most affordable way available. That was a huge advancement and many of us quickly rallied behind it.
Next came the the “Application Age,” which spanned 2013 to mid-2018. Here we saw the first big application for Ethereum -- the Initial Coin Offering (ICO). As a result, we saw things like dApp ecosystem begin to thrive. As Ethereum development grew, so did speculation as the popularity of ICOs skyrocketed. The key focus for many ICO projects at the time was not on developing a product, but on growing massive online communities of followers to act as a network of marketers, all contributing to spread the word about their favorite projects. Many of these companies raised tens of millions of dollars as a result.
ICOs raised over $20 billion in 2018, according to Coinschedule. And of those, nearly 70% of those projects are worth less than their launch price, as reported in CCN. And as a result, Forbes claims that crypto investors are shying away from increasingly risky coin offerings. Those are some staggering figures that should raise an eyebrow for anyone watching the blockchain ecosystem.
With speculation no longer driving the crypto markets, focussing on growing community can’t be the main focus of blockchain startups. In our last blog post we discussed how the crypto community needs to shift from a “store of value” to a “source of value” mindset. Community does not drive value. But technology that looks good, that works, and that works better than what already exists does.
There are a number of ICO projects that have successfully launched their tech, especially in the Ethereum ecosystem. For example, Brave (BAT) launched their popular web browser that emphasizes privacy and an ad-free web experience. In August it was reported that Brave passed 10 million downloads.
Ethereum dApps are another promising tech in the space, but struggle to capitalize on the huge communities they’ve harvested during the ICO rush. James from Loom explained this point pretty well:
“If you add up ALL the 100+ active DApps on dapp.review combined, it’s still less than 10,000 users in total who are interacting with an Ethereum DApp on a given day.
"For context and comparison, Facebook has around 1.4 billion DAU, and Twitter 157 million. PUBG Mobile, just one mobile game out of thousands, has 10 million DAU.”
The dApp community has struggled with converting their token investors into users. As we’ve discussed previously, the future of the crypto industry will focus on simplicity of use and design. The majority of projects in this space are still far too complicated for the average person to use. Getting an app up to even 1 million daily active users is a struggle for the average tech company. And for an industry in its infancy, crypto needs to focus on improving upon existing infrastructure to reach a critical mass.
The larger crypto companies in the space need to lead the way by creating value in their tech, and then leverage their community to spread that value outside our crypto bubble. Growing a community to increase market cap has been made irrelevant in the current market conditions. However, successful crypto companies are in the unique position to pave the way for the rest of the industry by building products that are easy to use, look good, and seamlessly integrate blockchain into a user’s daily life.