When can we have a ubiquitous Web 3?

9 January 2018

Cryptocurrencies are quickly approaching 1 trillion dollar market cap but besides the value of exchanging them conveniently, very little has been created to justify it's potential. This is due to a number of technical and social challenges. Here I want to discuss these topics and introduce projects that have made the best effort towards these.

1. Barrier to entry is still too high

To purchase a cryptocurrency, there are hoops to jump through. Firstly, the only method of getting your hands on some is to sign up to centralised exchanges. These exchanges are receiving record levels of new users every day and struggle to keep on top of the demand. This can come in the form of their web servers not scaling or lacking customer support.

The notable exchanges require strict Know Your Customer(KYC) checks which deter and some times mistakingly deny users access.

Exchanges charge inordinate fees. To take Coinbase again for an example, they charge a 4% fee for card purchases on top of prices that are top of the market already. When you add the transfer fees and withdrawal fees, it quickly adds up.

Best effort project: Local Ethereum.
Local ethereum allows you safely, cheaply and securely purchase cryptocurrency.

2. Stability

One of the big reasons usage of cryptocurrency hasn't become widespread yet is because as a measure of value, crypto currencies fluctuate immensely. After all, why would you spend an Ether today when it could be more valuable tomorrow?

This becomes clearer when you consider the DApps that have been the most successful in attracting transactions.

EtherDelta - the exchange. It is used to trade between Ether and ERC20 tokens. Is it worth the usage? Yes, because there could be profit involved that may produce more value than the total of the spent transaction fees.

CryptoKitties - a game to breed and trade virtual cats. While it's undeniable that this was a well made game, in honesty the main propeller of its usage is scarcity. i.e. kitties will increase in value quicker than the Ethereum price. Take this away from it and the usage will drop drastically.

Therefore we will only be comfortable with truly using Ethereum when there is no incentive in hoarding it.

Best effort project: MakerDAO.
The DAI is a token that has implemented the correct incentives to allow it to have a stable market price.

3. Usability

"Cryptocurrency" and "blockchain" still give off the vibe that only the tech savvy can comfortably use. Even then, there are so many options for holding and interacting with crypto currency. None of which have really abstracted away from the technical concepts of the blockchain. It is not at all uncommon to come across a wide array of technical concepts such as "gas price" or "gas limit".

The other aspect is that the means to interact with the blockchain have been for some reason focused on desktop. Besides mobile wallets that merely allow sending transactions, is there really nothing more we can do? Mobile has overtaken desktop web traffic and there is a whole generation that are growing up with mobile being their primary (sometimes only) device. Still, extensions like Metamask have only made an attempt at becoming available on mobile.

Best effort project: Status.im
Status have taken a very novel approach. They have begun with the chat app, a familiar interface. They have support for interacting with DApps within their in-app browser as well as acting as a standard mobile wallet.

If there's anything to take away, it's that the vision is there and we are moving towards the right direction. I'm excited to see what the state of Web3 looks like a year from now.