The Blockchain is such an innovative and fundamentally transformative technology, but Bitcoin and Blockchain apps have not yet scaled as much as I would have liked.
This slow traction is likely due to two things. First, Bitcoin startups that focus on commerce/payment solutions in North America are competing with existing products with strong network effects. Credit cards actually work very well for most consumers to buy things online and in stores.
Secondly, there’s still too much friction to bring on new users. The UI of most Bitcoin apps is cumbersome and uninviting. More importantly, apps require users to already own Bitcoin in order to engage. That approach won’t encourage the average consumer to give it a try.
This is why I believe that the most successful Bitcoin/Blockchain company won’t look anything like what we’ve seen to date. In order to scale, a startup will need to address these two factors.
Enable a service that is not yet possible today
The first wave of Bitcoin apps went after payment-related use cases in North-America and hence against strong existing network effects. The second wave has started to go for more green field opportunities by focusing on those areas where current fees are really high (i.e. remittances), where consumers are underserved (the unbanked), or where the existing payment infrastructure is weak (developing countries). But the most promising opportunities may be in completely new use cases of the Blockchain and we have seen a few early attempts at this: managing licensing of digital products through the Blockchain or enabling distributed data storage – all use cases that enable services that – at scale – are only possible through the Blockchain technology.
Lower sign-up friction
Start-ups need to focus more on the user experience for first-time users. More specifically, a successful Blockchain app will allow users to engage and participate even if they don’t yet own Bitcoin and get them hooked on a service before having to get Bitcoin.
The bottom line is I’d love to see Bitcoin/the Blockchain succeed, and am rooting for those entrepreneurs who can scale the technology up – perhaps by following these two principles…