Building a decentralized future with centralized applications
CoinList started a new project called „Airdrops“. Airdrops should help crypto projects conduct compliant airdrops. Moreover, Blockstack and ShapeShift are partnering and have created a $50.000 for the team that can build the best crypto wallet using Blockstack and ShapeShift. Additionally, Coinbase has only recently acquired task-app Earn (see How Coinbase is building a crypto empire for users’ crypto lifecycles).
Each of these projects could become significant gatekeepers and centralized platforms given adequate scale:
- CoinList’s Airdrops and Coinbase’s Earn serve as the first touch point between new projects and end-users. If a project is not listed on Airdrops it doesn’t exist for users. Analogously, if something cannot be found on Google, it doesn’t exist.
- Wallets in general operate in a winner takes it (almost) all market: Like with normal, non-crypto wallets they are mostly undifferentiated and supporting multiple wallets is cumbersome for developers. In fact, we can already observe that with hardware wallets such as the Ledger Nano S.
Some companies such as Ledger, Coinbase or Coinmarketcap have already become go-to resources in their respective fields and with Earn and Airdrops we might see two other candidates going in that direction.
The first question then is the future of such “incumbents”.
Established lock-ins or pre-Blockchain crash
Have companies like Coinbase, Ledger, or Coinmarketcap already established lock-ins so significant that they will be the Amazons, Facebook, and Googles of Blockchain? Or will these “incumbents” be overtaken by yet younger startups? It must be noted that many of today’s top Internet companies are companies from the second generation (i.e. after the dot-com crash). This being said, current go-to resources (and those slowly becoming one) might either keep their status or be overtaken by yet younger startups.
Nevertheless, this leads to the more interesting and final observation that these companies — which are used to build a decentralized, “blockain-ized” world — are in fact centralized and “blockchain-less”.
None of the “top Blockchain companies” are actually Blockchain-based
None of the above-mentioned companies are actually decentralized or using Blockchain. More far-fetched examples include the use of centralized companies like YouTube or Twitter for Blockchain and crypto marketing. None of these marketing channels (except for maybe Steemit) are decentralized, but are still one of the most important players in the ecosystem. That’s especially interesting as Coinbase and Coinmarketcap offer great blockchain use cases (i.e. decentralized exchanges instead of Coinbase and Coinmarketcap as an token curate registry). Furthermore, it shows that the industry operates in hybrid mode combining centralized and decentralized systems (see Blockchain and socio-technical systems — diffusion through hybridization). This is actually pretty common for so-called Bitcoin, Blockchain, and Cryptoassets: discussing bubbles vs. discussing socio-technical systems. Moreover, it shows that “experimenting with blockchain” is more than tech. As I have argued in Decentralized applications — “experimenting with blockchain” is more than tech building decentralized applications involves, among other things, fighting incumbents.
However, the most important observation is that Blockchain startups shouldn’t fight incumbents from the beginning. Instead, they should start in niches where the technology’s current limitations are not a bottleneck (e.g. lack of clear governance models is one of the reasons why Coinmarketcap as an token curate registry wouldn’t work “today”). Additionally, one should also keep in mind that there is no use in claiming that Blockchain will “disrupt” every industry “tomorrow”. Yes, the space advances at sometimes scary speed, but we nevertheless must accept the fact that the centralized and decentralized paradigms will exist next to each other for still a couple of decades.