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Is Web3’s Culture and Technology Enough to Expand the Blockchain Market on Their Own?

The core blockchain sector should reevaluate whether they believe they can independently onboard the next millions or billions of consumers. 

I relate to a section from Gavin Wood’s Polkadot 2023 Roundup.

“…the failings of certain individuals who seem to think the messaging and marketability of Web3 can be successfully divorced from its technology and culture,” was Gavin’s explanation for the crypto winter.

Although I agree with the first paragraph about the “failings of certain individuals,” I don’t think the mismatch between Web3 culture and marketing messaging is to blame. 

Rather, there’s a mismatch between the go-to-market strategy of the Web3 culture and the realities of customer adoption. 

Web3’s technology and culture have been challenged in their own ways pertaining to their messaging and marketability. More than ten years into the birth of this industry, we still can’t point to a mainstream-class application with millions of daily or even weekly active users (not counting exchanges or wallets).

Web3 is reaching a wall in terms of user expansion because of subpar user experiences, as I’ve previously written, We Need Web2 User Experience To Get Us to Web3, Not Blockchain Protocols

There is too much attention on the infrastructure players, yet they aren’t the ones that will ultimately own the consumer experiences.  

Most L1 blockchain infrastructure teams are relatively small businesses (at the most, less than 250 in headcount). It is very difficult for them to wage multiple battles at once. First, they are fighting each other for mindshare and marketing messages to get attention. Second, they are continuously focused on herding people to develop and evolve their technologies. Thirdly, they must work very hard to draw in developers and users to reach significant adoption.

It’s difficult to execute all three parts well unless the surrounding ecosystem has expanded significantly to the point that, in the event of the central entity’s disappearance, the ecosystem as a whole would continue to advance with little to no harm. 

Few infrastructure protocols are as (organizationally) decentralized as the ethos they evangelize to be enabling. Except for Bitcoin, most Foundations (or Labs) organizations continue to act as the main locomotive that pulls the whole train forward. Perhaps Ethereum comes in a close second due to the ongoing self-effacing nature of the Ethereum Foundation, whose role has shrunk considerably in relative terms compared to what the ecosystem is delivering.

Since adoption is the one factor that matters in terms of success, let’s return to it.

So, how will the remaining millions (and billions) of users be drawn to crypto and the blockchain? 

Within the current landscape of Web3 apps, the mainstream user will be hard-pressed to get excited and take on current Web3 apps like duck to water because there is too much of a jump to get into crypto with both feet and expect to figure things out. 

Consequently, we shouldn’t be disparaging app efforts posing as Web2-first. When paired with a Web3 aftertaste, Web2 apps make a delicious appetizer. 

I’m excluding “users” that speculate on cryptocurrency prices because, for many of them, central exchanges will give them user-friendly capabilities.

Infrastructure developers currently dominate the blockchain industry, but to attract application-first developers, we need to increase the number of developer-friendly services available.

Web3 and Web2 need each other. Let’s admit it.

The Web3 culture and technology have given us an incredible vision. But they need help in realizing it. 

We Need Web2 User Experience To Get Us to Web3, Not Blockchain Protocols

To unleash blockchain’s creativity, awkwardness and quirks in the Web3 user experience must be fixed.

There is a joke in tech circles that “if the user experience is bad, it must be Web3.”

While the focus on incorporating blockchain technology is a priority, there is a growing concern that, in the pursuit of this innovation, valuable lessons learned from Web2 in terms of user interface (UI) design are being overlooked. This oversight is hindering the broader adoption of this new technology. 

Web3 should embrace proven user experience (UX) practices from Web2 rather than reinvent the wheel, ensuring a more familiar and user-friendly transition into the next phase of the internet. If they don’t, they risk alienating mainstream consumers and creating products accessible only to a small, tech-savvy niche of crypto natives.

Years have been spent painstakingly creating fluid and understandable user interfaces for Web2 and mobile applications. It has been demonstrated that clarity and simplicity deliver engaging and productive user experiences. These principles have resulted in billions of users flocking to social media platforms, content destinations, travel services, streaming venues, and e-commerce giants. 

The allure of Web3 espouses a radical departure from the norms of established Web paradigms. However, the shift to blockchain technology, decentralization, and cryptographic ownership should not come at the expense of user experience. 

Here are three reasons why Web3 needs more Web2:

  • The average user prioritizes usability over blockchain technology. Complex onboarding processes, jargon-filled interfaces, and lack of intuitive navigation hinder adoption and alienate them.
  • Familiarity with Web2 interfaces fosters trust and engagement, enhancing comfort and security for users entering the Web3 space, promoting further exploration and engagement.
  • Simplicity and clarity are key for promoting accessibility to a wider audience. Web3’s decentralized nature is innovative, but its user interface doesn’t have to reinvent the wheel. 

Amidst the majority of Web3 apps that have no chance of gaining mainstream adoption, there is a new generation of apps that are not so smitten by Web3 geekiness and prioritize Web2 ease of use instead. Here is a sample.

In the dining category, Blackbird looks like a restaurant loyalty app to the user. Somewhere in its technology structure, blockchain magic enables unique, non-transferable badges (NFT-based) that users earn as a visit counter. There is also a private cryptocurrency akin to airline miles that can be exchanged for restaurant perks, all with very little transaction friction.

In decentralized finance (DeFi) where apps tilt on crypto nerdiness, Prime is a cross-chain prime brokerage service that lets users deposit, borrow, repay, and withdraw cryptocurrency across 8 different chains seamlessly. This sounds like a boring trait in traditional finance because currency fluidity is taken for granted (though at the cost of a lot of inner friction). In the blockchain world, Prime represents an advanced level of tucking-in interoperability across blockchains while hiding it from the user. 

In social media, Warpcast looks almost exactly like Twitter (now known as X), but behind the scenes lies a social network protocol with a few web3 features such as blockchain-based identity, encrypted authentication, and decentralized data that the casual user need not worry about unless they want to. The initial experience is very mainstream Web2, while the platform gently surfaces Web3 snippets. 

In the sports fantasy world, Silks lets you take ownership of a jockey, a horse, and land for your stables. The most interesting aspect is a synthetic 1:1 linkage from your fantasy (NFT) horse to a real one that could be racing at the Kentucky Derby, Belmont Stakes, or other known races. No one else owns that relationship. You can follow the real horse’s activity via a virtual stable dashboard on Equibase. When the horse wins, your account is credited 1% of earnings, automatically deposited in your (crypto) wallet. 

In messaging, Converse is a simple messaging application with embedded wallets. Users create any number of accounts, and a crypto wallet automagically appears, enabling you to send/receive cryptocurrency or even collect event tickets. Converse flipped the traditional crypto wallet model by embedding it inside a messaging app, elegantly and without obfuscation. 

In the money transmission field, several new apps are vying to replicate Venmo’s popularity with a fresh approach. Among them are Beans, Code, and Sling. Even Coinbase has entered the fray with the simple thought of generating a special link that can be shared across messaging apps to enable stablecoin transfers. 

What is common to all these lighthouse examples is a voluntary design goal to not force the user to geek out on Web3 from the first encounter. Rather, Web3 is hidden and appears at the right moment, allowing the user to get their feet wet before deciding to venture further. 

Blockchain purists might disagree with this approach by stating that everything must be decentralized from the get-go. They argue that, if you sign on with Google credentials, for example, you’re defeating the purpose of decentralization.

However, the counterargument is grounded in user experience best practices: let users take Web3 in incremental doses. Small, familiar ones first, bigger ones later.

If we want early adopters to invite their friends into Web3, we need to let them ease themselves into it by tucking crypto features under a Web2 veneer. You don’t typically get too many first chances. 

By prioritizing user-centric design, Web3 can truly revolutionize the internet experience, making it more accessible and intuitive for everyone.

In the long run, the popular blockchain protocols that we know today will be little more than stepping stones for developers. They are not legitimate consumer on-ramps. The true on-ramps will be user-friendly apps that will bring in millions of users.

A version of this post was publised in Fortune Crypto, These Web3 companies are embracing Web2 principles to reach users more interested in restaurant rewards than blockchains.

A Critical Perspective on Ethereum: Too Much Tinkering 

The tinkering ratio of output can be improved to yield more mainstream products

I’m writing this critique with a deep and long historical perspective on Ethereum because I want Ethereum to succeed better. I’d like its ecosystem to get stronger. I’d like its apps and services to be more useful. I’d like its end-user experiences to be on par with what the mainstream consumer expects. 

At a time when many other L1 blockchain infrastructures are struggling for growth, Ethereum has a chance to clean up and solidify its position as the preeminent blockchain infrastructure. 

Whether changes happen or not depends to a great extent on what the Ethereum community does or doesn’t do. There is a limit to what the market can do to pick up the pieces and innovate on top of what is handed to them.

This comes at a time when a large part of the Ethereum community is getting ready to re-assemble in Waterloo where the first ETH Global event took place six years ago. I participated in that event, wrote From Waterloo to Zug, Retracing Ethereum’s Journey and made a presentation chronicling the then-emerging Ethereum ecosystem.

I’d like to talk about what Ethereum can do better. So, I’m going to focus on some parts that could be improved, in order to maximize Ethereum’s potential. 

There is no need to extol Ethereum’s strengths, as you all know them. But sometimes your strengths create a weakness. So we can start there. 

One of Ethereum’s strengths is the diversity of its ecosystem and how much development activity there is around it. It is undoubtedly the most vibrant laboratory for blockchain innovation. 

However, that strength has become a weakness because there is too much TINKERING in that ecosystem. 

Tinkering is not bad because it can lead to great things as you iterate. But when I said “too much tinkering”, I meant on a relative basis. 

Tinkering as a ratio of output can be improved. This means that we don’t necessarily need less tinkering, but we need more tinkering that results in fully deployable and usable solutions. And not just at the technical level. We need more end-user applications with user-friendly, mainstream-appeal types of applications.

If your tinkering doesn’t produce an end result, do you know what happens?

Other chains take your half-baked ideas and they add the last mile to it, and they deliver something usable. Sounds familiar?

One of the drawbacks of too much tinkering is that we tend to forget about tuning the end-user experience. 

Of course, the first level of the Ethereum ecosystem is mostly comprised of developers, and that’s a great thing. Developers typically work on infrastructure or they work on services for other developers to build applications on, or they work directly on applications.

The part that needs the most improvement is the last part, the part that touches the end user.

If Ethereum wants to be in the hands of one billion users, it needs to think more about the importance of mainstream user experiences. The mainstream user wants SIMPLICITY first, and two or three clicks to get impressed and hooked. That challenge, by the way, doesn’t only apply to the Ethereum community. It does also matter for the entire blockchain industry. I recently wrote, What The Blockchain Industry Can Learn From the Popularity of Artificial Intelligence pertaining specifically to the user experience.

Here are two related parts where Ethereum can improve.

First, the Ethereum development ecosystem needs more product managers. Product managers focus on getting the product to the market in its most usable form. Sadly, sometimes, they are the ones who realize that at one point, you need to shoot the engineers in order to get the product out. Product managers obsess about the user experience, user flows and user interactions. Product managers understand how to lay out a roadmap and prioritize features rollout accordingly. 

Second, the L2 layers fragmentation is another strength-turned-weakness. L2’s have been undoubtedly beneficial to Ethereum’s scalability, but from a user perspective, the experience is not ideal, because of the switching friction. As a user, imagine if you had to switch browsers to access different parts of the web. It would be unthinkable, yet we ask Ethereum users to decide which L2 to choose from. Furthermore, we make them jump through hoops and take security risks to bridge from one network to another if they seek to move assets across L2’s. 

I don’t have a solution for this fragmentation, and some believe it’s not an issue, but I do think it is. Therefore, I’m just laying out the challenge to elevate its visibility and importance. When there is less friction, there is more adoption.

I realize that the Ethereum ecosystem is obsessed with an extreme form of decentralization at all levels of the stack. But that also creates challenges, because as you unbundle various pieces in order to decentralize the system, you then need to re-bundle everything to properly assemble a solution. Then, you need a lot of coordination and making sure that many parts work together at the same level of readiness and response, and that’s not always so easily achieved. 

This challenge was validated in Vitalik’s last essay, The Three Transitions where he advocates there are three essential capabilities that need to work together in Ethereum: L2 scaling, wallet security, and privacy. There is nothing new with these individual features as they were part of the early vision of the Ethereum blockchain. However, with increased decentralization, there are increasing degrees of complexity that compound when you start to implement these three prongs simultaneously. 

Ethereum is approaching its ten-year mark on its original inception. It’s time that we polish the ongoing tinkering in its base infrastructure and services so that apps can prosper on top of it. 

I’m looking forward to seeing more product managers and entrepreneurs drive the Ethereum ecosystem in addition to the base technology developers who are obsessed with technology tinkering. 

What The Blockchain Industry Can Learn From the Popularity of Artificial Intelligence

The A.I. industry’s approach to user adoption could prove instructive in the area of user friendliness

Image generated by DALL-E

In my third Fortune Crypto column, What Blockchain Can Learn from A.I., I contrast and compare how artificial intelligence burst onto the scene and is being adopted by end-users a lot faster than blockchain products have.

A primary reason is that A.I. has nailed the user experience, especially on a relative basis while blockchain products continue to miss their appeal to mainstream users.

A.I. refrained from overhyping itself prematurely, allowing ample time for development and refinement over the past decade, before it was ready for prime time. During that gestation period, developers dedicated themselves to fine-tuning the technology, tackling intricate challenges, and only now are we witnessing the true impact of A.I. on the average consumer.

In contrast, the blockchain industry continues to expose its tinkering to the public, resulting in a large gap between hype and reality. Several participants in that industry persist in promoting unproven products or exaggerated business models, exposing their experimental ventures to public scrutiny and inviting criticism or skepticism.

As a long-time blockchain enthusiast, this makes me incredibly jealous. I think A.I. can teach the blockchain a few lessons.

Here’s the link to the article (no paywall), A.I. exploded in popularity because it’s so easy to use. Here’s what blockchain developers can learn from that.

What’s Wrong In The Blockchain Industry

No, I’m not going to write about what the naysayers are already saying about the blockchain. We have heard these objections ad nauseam: tokens are made out of thin air, it doesn’t do anything we can’t do already, no use cases, every token is a scam or Ponzi scheme, cryptocurrencies are not real currencies, crypto can’t become too big to fail, etc. 

Rather, I’m writing about a constructive critique in terms of weaknesses that need to be addressed if we want to see the blockchain/crypto industry prosper to greater heights. That’s why the title specifically says “IN” the blockchain industry, not “WITH” the blockchain industry.

Here are the issues that need to be fixed, in my opinion.

1/ Become Regulation Friendly 

I’m not saying the industry needs to blindly surrender to established de-facto regulation. The regulatory field is complex and nuanced. Whatever the end-game is, crypto needs to be compliant with it, and then prosper within those rules. Regulation shouldn’t be suffocating innovation. So, that doesn’t mean that the industry needs to stop lobbying for, and educating legislators about the right way to evolve some parts of the current rules or create new ones. Ideally, we need to see updated regulation that is more friendly to crypto. 

2/ User Experience Matters 

No technology has gained mainstream experience without espousing absolute simplicity and ease of use. Today, many products and services (including wallets) in the blockchain space have horrible user interfaces and user experiences. As if they were not designed with the mainstream consumer in mind. This needs to change. I am longing to see crypto products that generate a “Wow” effect from a user experience point of view. 

3/ Standards, Standards, Standards

There are two types of standards: de facto or industry ones. De facto standards just happen because of adoption success. Industry standards are developed by competing industry players that agree on common ground principles that are neutral to their competitiveness. Sadly, I do not see enough de facto standards emerging in the blockchain space (especially across chains), and I see no cross-industry initiatives at the technical level. That brings us to the next topic. 

4/ Inter-Industry Cooperation

Related to the point above on standards, the industry needs to collaborate more on important infrastructure or middleware related technologies because these are the enabling blocks for creating the ultimate applications that users will be attracted to. As it stands, there is too much competition, and not enough co-operation. In the non-technical realm, yes, there are some “blockchain associations” counting several industry members, but I firmly believe we can do better and more in this area in terms of effectiveness and results.

5/ No-Code Solutions

The reason we now have 5 billion Internet users is because it’s so easy to get in and start using it via the many on-ramps such the ones provided by social media, email applications or e-commerce. Behind the scenes, what also made this possible is the wide availability of “no-code solutions” that allow anyone via a few clicks and some common sense to create something worth attracting users to. For e.g., in the area of publishing, WordPress or Tumblr (previously) lowered the bar for creating a personal website by enabling anyone to do that without the help of a developer. Shopify allows anyone to start selling their products online, just like that, with a few clicks. We will need similar types of no-code solutions that allow anyone to create new experiences that depend on the blockchain.

6/ Better Industry Voices

Last year, the mainstream media was too heavily focused on painting Sam Bankman-Fried as the perfect poster boy of crypto. Today, we know where that story led, and we are still overhung by that unfortunate head fake from the previously (arguably) most popular crypto cheerleader. Industries need cheerleaders to advance, just as for example Elon Musk was that special charismatic voice for the Electric Vehicles industry. There are lots of good and smart people in crypto, but we need more of their voices to be heard, and we need the mainstream media platforms to find them, respect them and amplify their voices while they give less airtime to the promoters, speculators and wannabes.

These are all strategic issues that will take time to get fixed. But we need to work on them.

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