Blockchain’s evolution path is similar to the invention of the internet, and we are already in its second phase.
he internet started its life over 30 years ago, and since then, it has penetrated almost every aspect of our lives. Today, it underpins virtually everything we do. In fact, it’s difficult to imagine our lives without it. The march of technology continues, and we have reached a crossroads. A different technology evolution that I predict is likely to have a similar impact on all our lives is blockchain, and if you haven’t seen its potential, you aren’t looking closely.
Skeptics keep asking the same questions over and over again about blockchain: Why is no one using it? What will people do with digital assets? When will people buy products with Bitcoin (BTC)? These questions are now so commonplace that they are fast becoming a cure for insomnia.
We are looking in the wrong place. If we think we will soon have the ability to directly buy products on Amazon using Bitcoin, we will not — although Amazon does allow you to buy gift cards with the crypto asset.
If we think we will use Bitcoin to pay for gasoline, we will not. All innovation cycles take time and most of them jump through the same hoops and go through the same layers before they become a mass-market product or service. To understand the evolution of blockchain and the potential it has to pervade every aspect of our lives, we need to take a step back and to consider how the internet went from a cool, niche idea to one of the most ubiquitous forces on the planet.
Our first experience of the internet was when companies such as AOL started to drop CDs in our mailbox. Those of us old enough to remember had those cheap 9,600-baud or 28.8K modems. We would sit and listen to the dulcet tones of those modems as they attempted to connect to the internet. These service providers were called ISPs — internet service providers — and without them we wouldn’t have had the World Wide Web. It was fun though to play around with our newfound toys. At this point in history, the use case for the web was, well, nothing. But we connected nonetheless. It piqued our interest, and we were all intrigued.
So, we didn’t really need a “use case” for the internet or go as far as to question why it existed. We never once asked: Will the internet scale? We didn’t complain that we couldn’t send a movie over it or that it was too slow at delivering information we needed. Even so, no one suggested that we should switch it off and go home. Instead, we suffered countless hours of failed connection attempts just because we could and because — some of us — had no social life.
Fast forward this internet evolution and, eventually, we arrive at e-commerce. Contrary to the way it may seem now, e-commerce arrived slowly but surely. We didn’t need to “go online.” Instead, we just ended up always online. We started to shop. We started to buy and sell. Before we knew it, we had a mass-market use case.
What was the one thing that everyone needed before they could shop at Amazon or before they could set up accounts on social networks, such as ICQ? Email addresses. Without the humble email address, one could not access almost any service on the internet.
Blockchain’s evolution path
So, the key here is: How does this evolutionary path relate to blockchain and crypto? In crypto, we first need the crypto. With the internet, we needed the connection. In order to access or acquire this crypto, we need the exchanges to sell it to us, which is similar to the ISPs in the internet example. These exchanges will continue to grow, and like ISPs, they too will eventually become commoditized. Like with internet access, the first stage of blockchain is now done. The second wave, similar to broadband, is coming.
The first wave of email addresses was provided by the ISP, and then we had standalone email providers. All of these needed desktop-based clients and we downloaded our email — a big pain in the posterior. Then came Hotmail, which was a game-changer. It changed the user interface and made it so easy for everyone to obtain an email address and read their emails from anywhere. Suddenly, we could use this one piece of information to build relationships with any company on the web. They could talk to us.
This begs the question: What is the blockchain equivalent of email addresses? Put simply, wallets. What is the one thing we all need to have before we can start to use crypto? Wallets. Without any place from which we can send and receive crypto, and have others receive it, we cannot use crypto.
The first wave of wallets has been, just as the first wave of emails was, provided by the exchanges. The second wave will be independent. There will not be one winner but several, just as there was in the email address race.
It is usability-dependent. Currently, the user interface for a crypto wallet is not simple. Wallets are also a lot more complicated than email. Currently, each blockchain has its own wallet. We need some sort of interoperability between them — a master wallet or even subwallets. We need different wallets per blockchain. How do we do this? Maybe a master wallet or container where like having multiple email addresses sending email to one account, you have subwallets.
The key to the next phase of crypto and blockchain development is the wallet. Whoever cracks that challenge could well be a key architect of our future. I’d bet on that, but unfortunately for me, I don’t know who that will be. Let’s witness it together.