It’s going to be blockchain, not crypto

It’s going to be blockchain, not crypto

[gpt3]rewrite

Everyone has been busy predicting the death of crypto and Web3 recently – and to that I say, fair enough.

But as we all know from history, a burst bubble is not the end of the story. It is often the start of a new one.

The future of the blockchain is one where the next billion crypto users will not have bitcoin, ether or other fungible tokens. They will use fiat to buy goods and services, and that fiat can be exchanged for tokens somewhere on the back end.

Blockchain has already been through two eras, the Crypto Era and the Web3 Era, and we are heading for a third: the Abstraction Era.

Simply put, the blockchain is going to become infrastructure. Just as nobody really talks about “the cloud” anymore, we don’t want to talk about “the blockchain” either. We don’t need to know or care which blockchain our purchases are stored on.

Going forward, most people using crypto to buy something may not even know.

Blockchain, not Bitcoin

If I’m going to Italy, I don’t start collecting a bunch of Euros ahead of the trip. When I get there and sit down in a restaurant, all I care about is eating my pasta and drinking my wine. I pay by credit card and my dollars are converted to euros. If the back-end technology uses the Solana blockchain to do the conversion and it converts my fiat to USDC and then to EUROC, the merchant saves currency fees, fantastic.

I don’t need to know how the technology works: I still pay in dollars and the restaurant still gets paid in euros. The blockchain technology that enables this seamless transaction does not need my attention.

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In this new era, the exciting thing will not be currency; it will be the underlying technology: The blockchain itself.

And it’s already happening: On OpenSea you can now buy an NFT with dollars. In fact, it is becoming their primary call to action.

Starbucks also announced that it will begin issuing “stamps” to customers in its Odyssey loyalty program at Polygon, but no one who orders a pumpkin spice latte will ever need MATIC or care.

Reddit’s “Collectible Avatars” (not specifically called NFTs) have been downloaded by 4.3 million people since September 2022, more than the entire number of wallets with any NFTs at all (2.5 million) before September, according to Nansen. These avatars can be purchased with your local fiat currency.

These are all precedents for how to cut out all the clumsy steps of our current, declining Web3 era, so that the end user can make the purchase with a single click, rather than working through the entire complex process themselves.

It is the age of abstraction in action.

Predict the future

With the mobile evolution, users could only benefit if they had access to a mobile device, a certain level of technical skills and a willingness to make behavioral changes. Hardcore crypto types can then say that so far the crypto movement has only reached the same point as the original mobile revolution.

The process we endure using crypto is amazing and a little ridiculous when you break it down – sign up for an exchange, connect your bank account, buy tokens, install browser wallets, connect your wallet. And if you ever need to convert that token to currency, you have to reverse this whole process: send the token back to the exchange, sell it, eat the fees, and then withdraw the money – which can take days (if the exchange was allowing withdrawals in it at all!)

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This – unwieldy, error-prone process – was this what we all got so excited about?

The cloud revolution, on the other hand, is a natural evolution of technology and the internet: Everyone is on the cloud now, often without even realizing it. The end user doesn’t know or care about how the cloud works, and you don’t need a new device, new technical skills, or new behavior to use the cloud. The cloud simply works in the background, streamlining your experience.

Think of it this way: No vendor brags to their potential end user about the cloud. The end user does not care where the information is stored or what the technological basis looks like. They just want a great user interface and the knowledge that their information is stored securely.

We are seeing the same kind of evolution with blockchain technology.

In the age of abstraction, we want to invest in great businesses and technologies – and most of them just want to happen will be built on the blockchain. Many funds used to call themselves “cloud” funds or invest in “mobile”, but not anymore: these distinctions would sound ridiculous.

Likewise, in five years or so, there will be no difference between a fund being a “Web3” fund. Where the technologies or philosophies of cryptocurrency or Web3 make sense, they will simply be used by the best businesses and everyone will benefit.

The future is all about abstraction, and this new era will usher in the next billion users… who actually will be first billion, since neither our “crypto” era nor our “Web3” era was able to bring in more than 100 million people.

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Nick Ducoff is a partner at G20 Ventures, co-founder of ON_Discourse and founding member of OurNextDAO, and was previously a 2x founder and securities attorney.


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