Every industry is unique, with its own needs, idiosyncrasies and customer demands. The Web3 industry is no exception, especially on the quirky front.
The prevailing approach in the industry so far has been to build general purpose blockchains, hoping that people will later build specific layer 2 functionality for them. But the idea that existing generic blockchains can later be formed for specific use cases lacks foresight.
We have made great progress with generalized blockchains like Ethereum, as the growth of DeFi and NFTs has so clearly demonstrated. But that approach is not sustainable: scaling was and still is one of Ethereum’s most challenging tasks.
To properly prepare for the future of blockchain and shape blockchains for the future, we must stop anchoring our thinking in what already exists. Instead of keeping established blockchains as a blueprint for specific apps and use cases, we need blockchains that are purpose-built and have use cases.
Be a generalist – and risk destroying innovation
The era of generic ‘smart contract platforms’ is coming to an end. Space is already moving steadily in that direction.
Appchain protocols such as Polkadot, Cosmos and Avalanche are fully embracing the change. But even layer 2 rollups, the most popular chain story of the moment, are a first step towards this future of specialization. Optimism’s OP Stack is a clear contender as a framework for implementing custom EVM rollups. Over time, additional capabilities can be developed on rollups in addition to the EVM, as we see with Arbitrum’s Stylus.
We’ve seen this push for specialization countless times: from smartphones, to computers, to social media and the hundreds of different SaaS platforms that target specific niches. We must remember that Web3, blockchain or crypto (whatever your nickname) are all-encompassing terms for an industry that is actually made up of dozens of sectors and niches. These sectors connect and work together (they work together!), forming a coherent whole while retaining their distinctive features and use cases.
Industry observers can point to many previously successful companies as examples of how short-sighted vision led to the demise of some former industry leaders. Kodak, Blockbuster and Nokia all gave up their dominance to products with better, more consumer-oriented use cases and a clearer vision of the future.
The future lies in specialization
The infrastructure for custom blockchain apps is under development, but now the burden is on app developers to start building them for their own custom uses. And this has the potential to unlock the actual adoption of blockchain as a means to an end – and not an end in itself.
Take the example of Bitcoin. With Taproot and Ordinals, people have tried to manipulate tokens and NFTs onto the poor Bitcoin blockchain, which was never even close to being designed for such use. It’s alright if Bitcoin is just a value and payment blockchain. Everything else would ultimately be outcompeted by a blockchain built specifically for that purpose.
In recent years we have seen a real boom in the use of smart contracts in the form of DeFi, GameFi and NFTs. However, despite some undeniable success, all popular uses of smart contracts involve some form of speculation, which becomes unreliable when market conditions are still notoriously volatile (although secretly loved).
The types of future applications that will use custom blockchains will be varied, but in my opinion it will be much more B2B focused than before. Many of these types of applications are currently locked behind clunky infrastructure and expensive storage. For example, a blockchain for Big Data analytics covers the needs of data scientists in data warehousing, SQL, verifying output, and much more.
Imagine if every industry had its own custom blockchain. There are already examples where this works; IBM offers customized blockchain solutions for supply chain networks. The idea of blockchain as a sandbox into which industries – from travel to IT to fintech – can be built is quickly being adopted by some of the most established tech powerhouses.
It’s time to stop thinking about how to tailor a blockchain to a particular use case, and instead think about how to build a blockchain that fits what we’re trying to build. This is not always easy, and it is certainly not easy to convince everyone of this view.
To borrow a quote from Steve Jobs, “often people don’t know what they want until you show it to them.” It may not always work – using blockchain to start your coffee maker is probably not wise – but it will help ambitious and creative founders find meaningful reasons to use blockchain the right way.
Ralf Ubeck is a German entrepreneur, founder and CEO of Chain4Travel, his latest venture in shaping the global travel industry with innovative travel technology. As the founder of Peakwork, TravelTainment (sold to Amadeus in 2006), Vtours and Weekend.com, he has successfully built and exited businesses in triple-digit million in volume. In 2013, Ralf Usbeck received an international award as ‘Serial Innovator of Travel Technology’ at the World Travel Market in London. Today, he is pioneering the adoption of blockchain technology in the travel industry with Chain4Travel, founded in 2021. The Swiss startup has initiated the L1 “Camino Network for the global travel industry, enabling the next iteration of technology and the Web 3.0 era is made. More than 150 travel organizations worldwide already support Camino Network.