2022 was a frustrating year for crypto and the blockchain. At least it was for anyone involved in it.
At the height of the dot com crash of 2000, the ominous 9-11 event and subsequent Enron fiasco (a couple of months after) delivered the final blow on the tech sector and budding Web. It was the end of an era; the era of imperfect technology, crazy ideas, immature solutions, scams, over-valuations, unrealistic promises, poor market fits and questionable business models with too few users. Many seemingly reasonable Web ideas and promises went dormant for almost 2 years. It wasn’t until 2003/2004 that Web 2.0 rumblings started to make sense with a Web renaissance of sorts.
How we are ending 2022 reminds me a lot of how 2001 was ending. Perhaps the FTX, Terra and other spectacular failures combined to produce the equivalent of an 9-11/Enron effect and deliver a final blow to end that first blockchain era.
Take that previous statement I made to describe the end of the Web 1.0 era, and we can squarely apply it to describe the blockchain space today. There is a frightening analogy about where we are exactly today in the blockchain sector: “imperfect technology, crazy ideas, immature solutions, scams, over-valuations, unrealistic promises, poor market fits and questionable business models with too few users.”
We need Blockchain 2.0 to emerge in order to re-spark, re-energize and re-inspire a blockchain sector that has been put on notice that it wasn’t nearly out of the woods in terms of steady growth and mainstream acceptance.
A new era typically takes firm hold after it is finally seen in the rear-view mirror. While still metamorphosing and shaping itself, it is difficult to pin it down because transitory states are not always a good representation of the final state.
Of course we can hang on to vision and aspiration and connect the dots. But these are not very accurate, because things almost never happen as envisioned.
While everyone is spitballing web3 prognostications and expecting it to lift the technology sector forward, web3 will not fully materialize without another leap in blockchain technology and more around that sector.
Web3 has its own issues. It is not well defined and it doesn’t really exist (yet) despite numerous dissertations that it’s on the way.
What is Blockchain 2.0?
Blockchain 2.0 is not a better blockchain, and it’s not about better technology. The 2.0 moniker here depicts a new era where the ensemble of iterative technologies will be easier to adopt, spur more widespread usage, invoke all-around positive awareness, and yield use cases that the common user finds appealing enough to try out and be loyal to.
Blockchain 2.0 will put the users at the center, not just developers. Maybe Blockchain 1.0 placed too much emphasis and expectations on developers, and rightfully so. It was the way to start in order to build-out the infrastructure and tools around it.
What does Blockchain 2.0 look like?
I don’t know what it will look like. But I have an idea about the conditions that will need to exist in order to pave the way for it. For Blockchain 2.0 to start unraveling, we will need orders of magnitude improvements along 5 dimensions:
Behavioral, Regulatory, Design, Adoption and Technology.
Behavioral: The mainstream public needs to be more receptive about blockchain technology, and not see it with disdain as something that is not necessary nor needed.
Regulatory: Governments and regulatory bodies need to stop blowing strong headwinds in the face of blockchain tech and cryptocurrencies, most importantly in the United States. US regulators and legislators are standard bearers. The impact of their actions (or inactions) is felt around the world.
Design: Putting users at the center with a user design experience mindset is not only necessary, it is essential. User experiences matter. Users don’t want a user manual to dive into the world of blockchain, web3 or crypto-enabled apps.
Adoption: With good design, more users will be active participants, and not just spectators or speculators. We need to see killer use cases that everyone talks about (viral element), and ones that reach a critical mass of users.
Technology: There is too much fragmentation currently across the range of blockchain infrastructure choices, so we will need to see a healthy consolidation at the top. Developers want less, not more choices. They need more robust options without having to jump through hoops to cross different technology stacks, because ultimately end-users don’t really care about the intricacies of the underlying technology.
All these dimensions are interrelated, and they will need to align for us to see a full effect.
In terms of candidate technologies and solutions, almost anything that currently exists is up for grabs and re-invention. New leaders will emerge out of this period of doldrums, just as new tech giants emerged from the rubbles of Web 1.0 (e.g. Google, Facebook, Twitter).
Let’s face it, there is a lot of immaturity and tinkering in blockchain technology, and the industry needs to do better than tinkering. The use cases for regular users just have to get better. Just to name one sector that holds a lot of promise, I’m holding my breath for more innovation in cryptocurrency wallets, or maybe a browser/wallet combination of sorts. Also, I’d like to see more apps (web or mobile) with embedded wallets as part of the experience. Of course, the App stores policies are a gatekeeper, but that is going to change over time.
Will it take one, two or three years for the blockchain sector to start shedding old 1.0 constraints and decisively enter a 2.0 phase? I hesitate to pin down a timing prediction.
The blockchain and cryptocurrencies sectors have been beaten down in 2022. But they are not dead.