Decentralized applications – “experimenting with blockchain” is more than tech

There are four ways how Blockchain-based companies are, in general, re-creating current applications:

Enhancing current products
Building centralized products with tokens
Re-creating applications in a decentralized way
Innovating new applications

This is a series of posts, in this post I will cover “Re-creating applications in a decentralized way”Read “Enhancing current products” here

Re-creating applications in a decentralized way

Many blockchain startups, offer solutions decentralized solutions of existing products. This can, for instance, be observed in social networks, video hosting and music streaming, and marketplaces and shopping apps.

Social networks

Many social networks range already exists but a lot of Blockchain startups are building new ones. One example is Sociall.

Sociall
Sociall, currently in closed beta, is an open-source based social network focusing on privacy and security. All the data uploaded to Sociall is stored in a decentralized way and Sociall aims to be self-governed, i.e. users can manage the platform’s content (e.g. removing spam). For that governance, users will get Sociall’s token — SCL — in return. In regards to privacy, Sociall has implemented a range of privacy-protecting features. Among others, one’s Sociall profile cannot be index by search engines, feed content is chronologically ordered (without any algorithmic influence) and Sociall does not use any facial recognition software.

Video hosting and music streaming

Standing alongside giants like Spotify, Soundcloud, and YouTube, Blockchain-startups are emerging in the area of video hosting and music streaming as well.

Viuly: Viuly is a video platform where viewers and contributors are financially rewarded with VIU — Viuly’s token. Viewers are rewarded for watching ads, contributors for adding content.
Musicoin: In analogy to Spotify, Musicoin is an intermediary-free music streaming platform where musicians and listeners are reward with Musicoin’s coin — MUSIC. Musicians are — similarly to Viuly — rewarded for contributing their work. Listeners, on the other side, can use the add-free Musicoin for free. Furthermore, listeners can earn MUSIC tokens by sharing music or creating playlists. They can also use MUSIC tokens to purchase content (e.g. download songs) or tip musicians, among other things.

Marketplaces and shopping apps

In analogy to big incumbents (who are by now more than just marketplaces or apps, they are „ecosystems“) several Blockchain startups are trying to enter the industry. Among others, there is Wysker.

Wysker
Wysker is a “Blockchain-powered mobile shopping“. wysker shows you up to 20 product images per second (yes, seconds. And yes, 20). Once you pick a product, you are redirected to the seller’s website where you can purchase the items. With Wysker’s token — wys— wants to build a three-sided network consisting of users, retailers, and advertisers.

Users earn wys tokens through, for instance, product views. These tokens can then be used as a currency within the app. Advertisers in turn (who simultaneously can be retailers) use these tokens to promote their offerings. Information between users and advertisers or retailers flows only with the owner’s consent, i. e. only if you want to share your data (e. g. product preferences) the other parties get it.

There are a lot more examples but the message regarding startups from that category is that they are „blockainizing“ existing business models. To be honest, not with all startups it is even clear how they are applying blockchain technology, let alone whether — if they are — they should.

However, they are — in one way or another — experimenting with blockchain technology. However, if we looked at „experimenting with blockchain“ from a „user perspective” would could translate “experimenting with blockchain“ into a range of other experiments and assumptions.

Dismantling “experimenting with blockchain”

Among other things, experimenting with blockchain implies the following:

People want self-governance: refers to the assumption that people will care enough to manage content themselves (e.g. removing spam like in the case of Sociall)
Open-source as a competitive advantage: the assumption that that open-source code can provide enough competitive advantage in the long-run (like — again — Sociall). Of course, it worked in the past, but that doesn’t mean that it will work in the given “Blockchain” content
New monetization models: whether replacing adds with tokens will work must first be validated
Experimenting with privacy settings: it must be questioned whether people value their data enough to live with the consequences (e.g. paying for social networks)
Fighting incumbents: the Amazons, Facebooks, and YouTubes of this world will not just stand by if Blockchain-based startups start taking of
Experimenting with economics and market behavior: how will token value, spending, and saving correlate? (e.g. if people expect a token to rise in value will they spend it?)
Experimenting with new type of money: Knowing that getting people to switch from cash to contactless payment is an extremely slow process, how can we expect that people will switch to cryptocurrencies almost instantly as implied by many startups?
Experimenting with suppliers: advertisers, musicians, and stakeholder must be convinced to invest considerable time and money into new territory
Experimenting with the industry: the industry is still refining the crypto funding process (e.g. DAICOs, SAFTS, ILPs, AirDrops), crypto regulations across countriesare still unclear, and the “codebase“ is still in development (think forks or missing consensus over consensus algos)
Experiment with business models and products: what is it that people want?

What it means to use blockchain

Cumulative implications increase difficulty and hybridization and “better products” as the alternative

Of course, not all these implications are exclusive to Blockchain-startups, nevertheless, they exist and must be overcome. More importantly, they are cumulative. This means, for instance, that while a startup is still trying to figure out their economic token model, they must react to legislation, acquire customers…

Considering especially that many Blockchain startups are not providing a groundbreaking improvement to the end-user and that incumbents are extremely strong, the „re-creating applications in a decentralized way“ strategy might not be the best one to pick.

Having said that, I believe that hybridization (i.e. enhancing current products through hybridization — see Blockchain and socio-technical systems — diffusion through hybridization) is — if we really want or need dapps or Blockchain-based startups — an undervalued strategy. The second approach is truism per excellence: use blockchain to make substantially better solutions. Like Wikipedia was a substantially better way to discover knowledge than the then prevailing Brockhaus Enzyklopädie or how e-mail was a substantially better way to send messages across the world than faxes, dapps will only take off if they are substantially better than existing solutions.