@adlrocha - Using web3 without holding cryptocurrencies?
Overcoming one of the barriers to mass adoption
In the past few weeks, I’ve had the chance to discuss web3 with teams from different “traditional” organizations (i.e. non-web3 big companies). Many of them are aware of the potential benefits and impact these technologies may have in the future: from decentralized storage, to decentralized computations or even DAOs. They think that decentralized technologies could open them the door to creating new innovative products, to a new user segment they were not capitalizing on, or to the opportunity of building completely new business models and revenue streams. If this is the case, why are none of them already integrating these technologies to their current products, or building MVPs of all the new opportunities they’ve identified? The answer I got to this question was expected and shocking in equal parts.
Web3 technologies are still in the works. They don’t provide yet the performance of their Web2 counterparts. They can be hard to grasp by regular users —we should blame ourselves of this, as we haven’t yet abstracted and decoupled complex technical concepts from the products—. And to make matter worse, the technical substrate on which they are built sometimes can impose some UX limitations that make the products hard to use. Surprisingly, all these teams were OK —to a greater or lesser extent— with these limitations on the current state of the technology. Especially those of them exploring new opportunities and building small MVPs. You know what was their main blocker? (Spoiler alert: it is not technical)… That they can’t hold cryptocurrencies.
Many (if not all) web3 technologies require the use of cryptocurrencies to operate and pay for the service. How can a big organization use these services if they can’t hold crypto? For them, holding crypto is a pain. First, they need to purchase them and comply with the corresponding regulation; they need to handle their volatility and consider them in their products cost model; they are the solely responsible for the keys that handle the funds; access permissions to this funds may not be as straightforward as with traditional banking; and their financial teams need to be aware and trained to handle these “non-traditional” currencies. The overhead is too high. No risk averse organization is willing to go through all of this pain for a small MVP, especially because if it succeeds, they’ll need to figure out how to handle all of this at scale. Should big corporations then just pass on the train of web3 then?
A business opportunity: middlemen to mind the gap
I can see the day where holding cryptocurrency is as simple (or more) than having a traditional bank account. No more worrying about losing your private keys or having to remember a dozen useless passwords and 2FA methods. Unfortunately, these days haven't come yet, and some individuals and many corporations don’t appreciate what it entails to hold cryptocurrencies. How can we then provide all of them with the access they need to build and use web3 products? My take… by building what I like to call “web3 façade” products and services.
Blockchain and cryptocurrencies are a necessary evil for web3 technologies. We need the technical substrate to give trust to all of these decentralized systems. This substrate builds the economic model that aligns the incentives of all of its players. We can’t have web3 without crypto, but we can build services to abstract from this.
Thus, the main role of web3 façade products and services is to abstract from the complexities and overheads of using web3 technologies. To some extent, we already have this in the cloud. What are PaaS (Platforms as a Service) but a convenient abstraction to IaaS (Infrastructure as a Service)? The same way some people use PaaS so they don’t have to worry about having to spawn and scale the right machine for their service, façade web3 services should enable users to leverage many of the benefits of web3 technologies without having to, for instance, hold cryptocurrencies.
Someone looking to store their data in the Filecoin network, or host their website on Dfinity’s Internet Computer, needs to hold both FIL and ICP. There is no way around this. You can’t pay for the service in Fiat and let the protocol figure out how to convert it to the right crypto to pay for the service. Or can we? As mentioned above, this is a “no-go” for many, and fixing it could onboard an interesting cohort of new users to web3.
Some current examples of what I call façade web3 services are NFT.storage, web3.storage, or fleek. These services allow you to host your files in a decentralized storage network without having to worry about the underlying crypto. If you have a quick look at fleek’s pricing page and you didn’t read anything else about their service, you could easily think of them to as a “traditional” web2 company. All plans are paid in USD, you chose a different plan according to you needs, etc. Our daily bread in the web2 world. Fleek charges you in USD, and they are the ones responsible for handling all of the required “crypto-interactions” for you, You just need to worry about building the best decentralized web service. Why can we build all of our web3 products like this?
Use FIAT like if it was crypto
Web3 shouldn’t be about cryptocurrencies, but about building products that everyone wants to use and that offer an alternative way of doing things on the Internet. Cryptocurrencies shouldn’t become a barrier for adoption, or the only sake of these technologies. I’ve been thinking a lot for the past few weeks about this, and I am starting to consider as a good idea to invest some time on building an aggregator protocol (or product, I haven’t figured out what is the right approach yet), where users can pay for any web3 service with Fiat. The system would operate as a gateway for web2 users. It would handle the required conversions between Fiat to the right cryptocurrency on your behalf. No more having to buy ETH in an exchange to use DeFi services; or having to hold FIL every time you need to perform a storage deal. This system would give you a gateway (maybe a configurable marketplace for everyone to be able to be listed there?) to use your Fiat to pay for web3 services as if it was any other cryptocurrency.
If tomorrow someone builds a decentralized Netflix offering decentralized streaming services with its own native token, anyone should be able to get a subscription in Fiat without having to fund their wallets with NTFX tokens every month.
I may be generalizing, and this may not be that big of an issue for everyone, that is why I would love to know what you think. Is this something worth building? Do you (as a company or an individual) see the fact that you need to hold cryptocurrencies to use web3 as a blocker to adopt these technologies? Or you don’t want or need web3 at all? Enlighten me!