Limited Traction
Note: Data in this section last updated September 12th, 2022
One of the most common criticisms of Web3 is that there are no “real-world” use cases.
At first glance, I can see how someone could think that. After all, most vendors don’t accept Bitcoin and it’s too volatile (and slow) to be used as money anyway, the NFT market seems to just be a bunch of rich kids spending hundreds of thousands of dollars on pictures of monkeys and most DAOs are unbelievably disorganized and inefficient.
None of this should come as a surprise, however, because disruptive technologies are – by definition –notoriously inefficient when they begin. As such, they are often relentlessly mocked.
Early skeptics of the internet believed that online companies would never turn a profit, and Clifford Stole of Newsweek argued that “no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works.” Even early users of the telephone thought it was useless because the signal could only travel a few miles.
Newsweek’s Early Opinion of the Internet
While there has undoubtedly been a lot of absurdity and hype in the crypto market – such as Dentacoin, the coin for dentists – when we dig a little deeper we can see several burgeoning use cases:
DeFi: Decentralized exchanges recorded over $1 trillion in trading volume in 2021. While this is just a fraction of the $14 trillion boasted by centralized exchanges, there is one major difference – DeXs can’t restrict users based on their geographic location. As such, when China banned cryptocurrency trading in 2021, many users were still able to get their money out using Uniswap
NFTs: Nearly $40 billion of NFTs have been sold since 2020. While one may argue that this interest in digital apes, punks and goblins was just a fad, they’re missing one major point – the creators of these NFTs were paid a royalty each time they sold. While this is common practice for recording, television and movie stars, it had previously been all but impossible to employ for visual artists
Decentralized Infrastructure: While it has long been a dream to create a user-owned internet, every attempt has failed because users aren’t incentivized to host their own infrastructure. Helium changed this through the use of cryptoeconomic incentives, growing a network of 1 million connected devices that spans 182 countries.
DAOs: Most talent networks such as Upwork charge contributors up to 40% for participating in the platform. By organizing itself into a decentralized autonomous organization, Braintrust was able to build a 700,000 member, $100M+ volume talent marketplace that only charges 10% fees
Fair Marketplaces: Content marketplaces such as Spotify and iTunes often charge artists up to 30% of their sales. Combined with the cut taken by the major labels (UMG, Sony and Warner Music Group), the average musician takes home less than 10% of the revenue they generate. Decentralized marketplaces such as Audius change this and allow artists to earn up to 90% of sales
Permanent Webpages: “Link rot” – the phenomenon where you try to access a webpage and receive the 404 “page not found” error – is a major problem in today’s web. Because of the high cost of ongoing server maintenance, it is estimated that over 30% of links posted on social media will be dead within two years and over 98.4% will fail after twenty. Companies such as Arweave are using cryptocurrencies to pioneer new solutions that allow a user to pay once and receive hosting forever.
Play-to-Earn Gaming: While the project ultimately crashed, the blockchain-based game Axie Infinity recorded over $4 billion of sales, allowing many users to earn thousands of dollars a month in cash collecting and selling virtual goods (more than the average income of a teacher, construction worker or office assistant in the Philippines, the game’s most popular region). This would have been all but impossible for many “Web 2.0” games, which often restrict the ownership and transfer of digital items
Borderless Currencies: During the early days of its war with Russia, the Ukraine was hampered by a series of restrictions that made the transfer of fiat money into the economy complicated and slow. As such, the nation turned to crypto, raising over $100 million in Bitcoin, Ethereum and other tokens to fund its defense.
While this may not seem like a lot in the grand scheme of things, it’s progress. After all, the criticism after the last market crash in 2017 was that there were “no uses cases” for cryptocurrencies. At least now we’ve progressed to “barely any use cases”.
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