I recently wrote for Blockworks that the future of the blockchain is one in which the next billion crypto users (the first billion, as today blockchain has only been used by about 100 million people) won’t hold bitcoin, ethereum or any other fungible tokens. Consumers will have no reason to have a Coinbase account, nor a MetaMask wallet. Any tokens in their “wallet” will be accessed by signing into an account with their email address. They’ll use fiat to purchase these tokens, and that fiat will be exchanged for the tokens somewhere on the back end. As we embrace abstraction in blockchain, I’d argue that any consumer application that has “Connect Wallet” as its primary CTA isn’t venture backable and is probably DOA.
Web3 was an exciting period where cryptocurrencies and the blockchain had increasing utility but users still had to jump through a ton of hoops to interact with it. “Connect Wallet” is an artifact of this bygone era, and one that dApp developers would be well advised to bury under the auspices of simply signing in. The fact that we can now build things on the blockchain in a fast, secure, decentralized, and resilient way is the true game-changer for the future, and its effects are going to be widespread but largely invisible to the end user. Going forward, most people who use crypto to buy something or use a dApp won’t even know it.
Today, the process we put up with is honestly ridiculous when you break it down:
First, sign up for an unregistered securities exchange account (Coinbase, Crypto.com, Binance – pick your poison)
Connect your bank account to your exchange account
Wait a couple days for your account to be funded
Purchase a token (BTC, ETH, etc.)
Install a browser wallet (MetaMask, Phantom)
Send your token to the address on your wallet. Now, to do this, you have to click on the wallet, get the address, copy and paste it into your exchange, then press “Send” and hope you got it right – because if you didn’t, that money is gone forever. A lot of money has been lost to “fat finger” mistakes during this step (to say nothing of exchange failures, scams and speculation)
Refresh over and over until the token shows up in your wallet
Now you can use Web3: go to a website, hit “Connect Wallet,” sign a transaction, convert it and stake it, play a game, and so on.
If you ever need to convert that token into currency, you have to reverse this whole process: sending the token back to the exchange, selling it, eating the fees, and then withdrawing the money – which could take days (if the exchange is allowing withdrawals at all!).
This – this clunky, unwieldy, error-prone process – this was what we are so excited about? This is a process designed for people who already hold crypto in a wallet, and often at a low-cost basis where it’s monopoly money to them. OpenSea, arguably the most trafficked dApp, now markets buying an NFT with dollars as their primary call to action. Starbucks is issuing customers "stamps" in their Odyssey loyalty program on Polygon, yet no one ordering a PSL will ever need MATIC or care. Another example is Reddit, whose “Collectible Avatars” (notably not called NFTs) were downloaded by over 4 million people just from August to December last year, more than the entire 2.5 million wallets with NFTs prior to September 2022, according to Nansen.
"It's not about NFTs. It's about the use case. A ticket, access, experience, loyalty. The tech and Web3 terms need to fade into the background," says Mathew Sweezey, Co-founder of Salesforce’s Web3 Studio.
There’s still a pervasive belief that if you’re not self-custodying your assets in a hardware wallet, you’re subject to the same centralization risk that’s been at the center of catastrophe after catastrophe.
Here’s what I have to say to that fear: In the late ‘90s, there were about 30 million AOL users. Currently, MetaMask has about 30 million users. The technology is changing and it will continue to change – and improve. In MetaMask, you already have the option to export your keys if you want to go and play in another sandbox.
That option won’t disappear in the abstraction era. You’ll be able to export your assets and take them with you, including into self-custody. Most users probably won’t, because most users probably won’t care.
If you’re building a consumer application and looking to fund your development with venture capital, the outcome has to be massive, and the only massive consumer tech outcomes have been platforms with hundreds of millions of users. Even Airbnb, which operates in one of the highest consumer spending categories (lodging), has over 150 million users. Targeting the Web3 wallet market artificially constrains your TAM, when instead, by simply abstracting the tech, you can expand your market manyfold. Web3 might not be dead, but consumer app developers would be well served to build for the masses.