Desperately Seeking Crypto’s Killer App

Since the start of the year, I’ve been pre-occupied by a question I can’t seem to get decent answers to. I’ve asked it at conferences, on live panels, on podcasts, and to smart friends over zoom. It’s pretty simple: “If you couldn’t get rich off of it, what currently existing products in crypto would significant numbers of people still use?”

Let me break that down. I use Uber, Google Docs, Twitter, Gmail, Spotify, Netflix, PayPal, Calendly, Slack and  iTunes at least once a week, if not every day. And in the case of Gmail and Twitter (I refuse to call it X), I use them pretty much every hour. I use all of these products without any expectation of becoming a millionaire.

Shiv Malik is the founder of Pool Data and a former investigative journalist.

Some of these apps I love. Others not so much: iTunes sucks. I give most of them money. Or I even, as with Uber, Deliveroo and Paypal, transact with third party services through them. But again, even though I use them, I don’t expect to get rich. The utility is enough.

I’ve been in the space since late-2016. Fascinated by the socio-economic possibilities of smart contracts, I started by purchasing some ETH for $9 on Coinbase. I then rapidly degened into 10x margin trading XRP on Poloniex. I’ve  worked for two Web3 companies and founded my own, been to a dozen crypto conferences on four continents, and I once had to hide Gavin Wood in my hotel bathtub. I’m no crypto hater.

I love Uniswap and my Metamask browser extension. I marvel at Aave’s technical accomplishments. I’ve used Opensea and operate a Gnosis Safe multisig. But I use all of these products to move and trade tokens. And I trade tokens so I can increase my wealth. (Though that often doesn’t workout for me). So what, in Web3, would I and say, another five million daily active users, just use? For the utility. And not to make a fast buck.

I’ve been given lots of answers. Most all of them invariably end up pointing me towards some future use case – distributed compute! Decentralized Uber/Twitter/Airbnb! – or some product or use case that in no way has the qualified number of daily users.

Some that do qualify are ENS, though one could harshly argue that when they sit atop speculation, ENS names like CryptoPunks are simply status symbols for traders. There is also IPFS, though it’s hard to discern who outside of Web3 is really using it.

The one hands down, surefire winner is international payments with stablecoins. In many countries across the world, it’s still incredibly difficult for ordinary people to send and receive money without being massively gouged. Crypto solves this. That PayPal is now moving into issuing a USD stablecoin, with the news being released as I type, proves the point. But if that’s it, then that’s a pretty poor showing.

A $1.2 trillion market cap, billions upon billions in funding, tens of thousands of developers and at least five years of buidling, is everything, aside from stablecoins, just powering speculation? In the wake of the horror show that was 2022, there has rightly been lots of debate about speculation actually messing up classic product market fit signals, with plenty of thoughtful pro-crypto people musing that perhaps crypto’s PMF was speculation. After all this time and money, where is crypto’s killer app for normies? It’s embarrassing we even have to ask.

Here’s another question. If you just stripped out all speculation, what utility could crypto offer the world? Aside from “get rich quick,” what can Web3 technology deliver that is 10x better than the experience in Web2? I’m sure, (and I sure hope) there are more examples, but here are at least three areas where crypto offers something entirely set apart from the current status quo: self-custody, peer-to-peer connections at scale and new business models.

Web3 is impeccable at delivering self-custody of assets. Private keys, especially when attached to the utility of smart contracts and trustless verifiability of blockchains, enable users to ring fence code and call those lines of code “mine.” To abstract ownership principles from Roman property law, private keys enable the use, profit, and transfer the rights of digital assets. Paraphrasing Bankless host David Hoffman, private keys are the foundation of responsibility in the digital world.

So, can those assets be more than just money, and more than just hashes linked to a jpeg? What about turning other assets, like social graphs and physical property, into self-owned and controlled assets via private keys linked to public blockchain wallets? Given that it is already largely digitally-native, personal data still looks like the next best self-custody opportunity. Who wouldn’t want to custody their personal data, to stop others from using it, or to directly benefit from it themselves?

The even better news is that the current Web2 system of personal data exchange is completely falling apart. Starting in January 2024, cookies are being deprecated in Chrome. Privacy laws abound, creating ever more regulatory complexity for those holding other people’s personal information.

Tim Berners-Lee’s Solid project, and others, are currently working on just this – a personal and interoperable data vault. The problem with data wallets is they face massive issues with adoption, best summed up by the economist Hyman Minsky, when he said about money, “Everyone can create money. The problem is to get it accepted.”

Giving people the tools to self-custody their personal data is actually the easy part. Creating common protocols and infrastructure for exchanging similar fields of personal data to make that self-custody worthwhile is what is hard. Nevertheless, self-custody that can enable the use, trade, or rights transfer of an asset, is 10x better than Web2.

When people hear “peer-to-peer connections,” thoughts inexorably drift towards messaging. No wonder when so many of Web2’s killer apps, including Facebook, Twitter, WhatsApp, have been messaging products. None of these apps are pure peer-to-peer: their messages are intermediated. But, for the end user, what’s the genuine problem Web3 could solve if the messages themselves can be end-to-end encrypted? What, for normies, is Web3’s 10x advantage here?

Censorship resistance is often Web3’s rallying cry. And yet un-censorable social networks bring their own end-user issues. Unending streams of bot fuelled porn and race-hate anyone?

But P2P connection doesn’t have to be just messaging. One of my favorite actions in Web3 is connecting my wallet to Uniswap or Aave. Each time I do it, it still feels magical, empowering, and best of all, damn convenient. On the other hand, my most frustrating experiences in Web2 are when I try to login, register, identify myself, or pay for things. I simply don’t understand why 30 years into the web, I’m still filling out tediously long forms, which often ask for the same information, again and again. It’s soul-destroying.

SSO via 0Auth is the most dominant Web2 system to solve for this. It is used by hundreds of millions of people each day. And yet, major publishers, most especially in news media, detest Google/FB/Apple SSO. They get almost nothing in return – an email they can’t use for marketing purposes and a user name. That’s it. Meanwhile, they’re giving over even more control to the very people eating their lunch. But brands really care about disintermediated P2P connection. They call it loyalty. So Web3 has powerful allies.

Why shouldn’t Sign in With Ethereum be the protocol we use to replace OAuth and re-create the new future of SSO? Imagine brokering peer-to-peer connections that enable instant registration, account creation, customer insights, imparting of home delivery information, user preferences, and yes, even money transfer, all easily controlled by the user.

Again, adoption is the hard part. Big commerce brands and publishers aren’t just going to install SSO outside of the well-regulated OAuth stack. But here again is a 10x experience that Web3 can offer the world and doesn’t involve speculation. Every site on the planet could be as personalized and as convenient to checkout from as Amazon. And, utilizing zero knowledge proofs, it could be far more privacy-preserving.

New socio-economic models

Perhaps the most irreconcilable dividing line between Bitcoin and Ethereum is not the tech, but that they tend to attract supporters with very different outlooks on the world.

Bitcoin draws the more hyper-libertarian crowd who believe emancipation from corporations and government via self-sovereignty is the solution to a better future. Ethereans, in my six years on the conference circuit, tend to be more communitarian minded; people who ultimately think disintermediated cooperation between humans is the most rewarding strategy.

Why so? Most likely because, given that Ethereum smart contracts can be constructed in infinite ways, then the socio-economic possibilities of how digital wealth and revenues are created and distributed can also be infinite. Bitcoin resolutely doesn’t solve for this.

In theory, then, Ethereum should be a creative wonderland for new socio-economic models. There’s no denying that since 2017, there have been a profusion of ideas. Some of this has desperately uncreative. “Let’s make X [Uber, Airbnb, Google, Facebook, Twitter …] but without X taking all the profits!” Other models have focussed on more efficient forms of the “X to earn” template e.g. play/ share/ move-to-earn. (With the advent of Worldcoin, you could argue we’re at the  “eyeballs cans to earn” stage of the cycle.)

It’s worth recalling that before they got buried in grift, ICOs and utility tokens were about creating new business models. They solved an age-old problem of how to fund open source software. It’s why Ethereum can not be bought out by a Microsoft or IBM. It’s also how it funds the continuous improvement of the protocol. That’s a stunning success.

Even more novel was the nascent events site Kickback, which asked event attendees to stake a small amount of a given token to assure their attendance. If they didn’t show up, the remainder would be distributed to those who did. That’s something that could only be built in Web3.

But those creative experiments seem to have fallen away. Many novel patterns such as staking and airdrops have been co-opted to fuel adoption of coins themselves, rather than create new models to empower people, rooting rewards in user groups, not external parties who leverage their capital to capture those gains. Hopefully, we’ll soon see much more being utilized with soulbound tokens, gated access via NFTs and other forms of loyalty.

So can crypto build killer apps for normies? Absolutely. The technology can, indeed, create a better world in all sorts of ways. We just have to want to kill the grift first.