With success comes a survival bias – the logical mistake of focusing on people or things that made it through a selection process while overlooking those who didn’t – as well as possibly a superiority complex ingrained in survivors.
Due to their previous successes, this has led to an overweighting of financial products in the crypto sector, but to a lack of products and marketplaces for real trading. Entrepreneurs in the blockchain space don’t supposedly serve the most common class of users, and those who do often deliver products that fail to commercialize.
Blockchain and finance
The 2016-2017 era of crypto startups launched many companies that promised blockchain-based products – blockchain social networks, phones, logistics, legal technology, e-commerce technology, and many, many more. Most of these projects failed for general reasons, such as the poor marketability of the product or the lack of a network effect, which increased the attraction of the product.
The winners of the early era of blockchain products were mostly financial products, which their customers sought out among the many hunting for appreciation by exchanging currencies. These were also the only products that provided interfaces that didn’t force the user to interact directly with the chain until they needed to make a withdrawal, and also, millions left their assets on the exchanges instead of using native wallets protection.
In fact, the blockchain’s focus on finance was so disproportionate that we kind of gave up on a real economy. Most crypto products target the same finance-minded user. When you look at practically every well-funded product in this space, it is geared, in one way or another, to providing solutions to speculators. Most of the industry vies for the exact same amount of attention.
We see the growth and maturation of decentralized finance before our eyes – for example, the introduction of non-fungible tokens and the growth of decentralized exchanges. From a product perspective, it is extremely important to see how the industry is doing as a whole. Cryptocurrency needs to evolve into an efficient marketplace where one can easily use cryptocurrencies to buy services and products. That means using it as a means of payment for a diverse range of easy-to-use and intuitive products and services, not just for financial speculation.
Related: Understand the systemic change from digitization to tokenization of financial services
Again and again
Until we make cryptocurrencies available for non-investment purposes, there is a risk that market growth will stagnate. Currently the market is saturated with products that target the same group of users. If we want to expand the category and market, we have to start by putting cryptocurrencies in the hands of people who are not investors or speculators.
For well over a decade, blockchain-enabled products have developed at a rapid pace, but the most successful companies in the industry and their products focus almost exclusively on strengthening the financial sector. The biggest remaining opportunities in this area are those aimed at using cryptocurrencies as a medium of exchange and putting them in the hands of non-tech people who want to do business with non-government currencies. El Salvador, for example, is at the forefront of this approach.
Related: What is really behind El Salvador’s “Bitcoin Law”? Experts answer
Today’s winners, companies that process trillions of dollars every day, are the result of the “Age of Financial Products,” and it is up to us, the engineers and entrepreneurs, to build the next generation of companies and products. Survivor bias can dictate that the best and brightest minds in this industry should be working on next generation CeFi and DeFi platforms. In reality, now is the time to start delivering the products that use cryptocurrencies and blockchain powered assets and deploy them the way they should be used – as the peer-to-peer currencies that power the exchange of goods and Services.
This is because the most experienced minds and product designers in the blockchain space have focused on what has proven itself – financial products. This opens up a great opportunity in areas where people are not paying their attention to developing a different range of products to solve a different problem.
This article does not provide investment advice or recommendations. Every step of investing and trading involves risk, and readers should do their own research when making a decision.
The views, thoughts, and opinions expressed herein are those of the author alone and do not necessarily reflect the views and opinions of Cointelegraph.
Anderson McCutcheon is the founder and CEO of Chains, an operating system for the cryptocurrency-enabled economy. Anderson is building a full-stack crypto economy that consists of a marketplace, a freelance platform, and a cryptocurrency exchange. He is also an investor and entrepreneur with an interdisciplinary technology and marketing background and a long history in the crypto space. As a pioneer in the blockchain industry and an 8,200 alumnus, he founded Unicoin, Synereo (later HyperSpace) and currently runs Chains.com and the Nemesis Capital process fund.