Adam Ludwin co-founded Chain.com, a bitcoin developer platform. Prior to Chain, Adam was a venture investor in companies including Vine, Slack, Kik, and Paperless Post. Here, he gives an overview of specific use cases for bitcoin that could become the digital currency's 'killer apps'.
Most people think about bitcoin as an alternative to something they already know, as opposed to an enabler of something they never considered.
In 1985, Steve Jobs was asked by a journalist for concrete reasons why anyone would buy a computer for the home. He answered that “so far, that’s more of a conceptual market than a real market”.
He went on to say that if you aren’t buying a PC to help you do business work at home, then you probably want one because “you know there’s something going on, you don’t exactly know what it is, so you want to learn”.
But, he added, “this will change: computers will be essential in most homes”.
When the journalist pressed him to explain why, he predicted the Internet:
“The most compelling reason for most people to buy a computer for the home will be to link it into a nationwide communications network. We’re just in the beginning stages of what will be a truly remarkable breakthrough for most people – as remarkable as the telephone.”
A lot of people thought he was crazy.
Bitcoin is in the same place today. Many people are intrigued because they can feel “something is going on”. But they wonder how buying a sandwich with bitcoin is better than using, say, a credit card. As with many breakthroughs, most people think about bitcoin as an alternative to something they already know, as opposed to an enabler of something they never considered.
To get from here to the future, we need to start imagining and building services that are not simply bitcoin versions of existing financial products, but are novel systems that solve problems that could not be solved until the advent of bitcoin.
These will be bitcoin’s killer apps.
What might they look like? Here are a few examples:
- Digital resources – like energy, bandwidth, storage and computation – will be allocated to the connected devices and services that need them through efficient, bitcoin-based marketplaces. Load your smartphone with bitcoin, and it will automatically purchase access to the least expensive Wi-Fi hotspots as you roam Paris. And one day, your phone could pay for itself by selling connectivity back into a mesh network, similar to how solar panels can sell energy back to the power grid today.
- Immersive virtual worlds accessed through devices like the Oculus Rift will have bitcoin-based economies, meaning there will be no bright dividing lines between where these virtual economies end and the real world economy begins. People will walk virtual pets to earn money for a flesh-and-blood Chihuahua. Teens will become millionaires for projects they launch in virtual worlds (sneak preview: today’s YouTube stars and League of Legends players you’ve never heard of). As the size of these virtual world economies grow, currencies that don’t cross over easily, like Euros, will feel antiquated.
- Synthetic versions of financial assets will be traded on the block chain, reducing default risk, increasing transparency and providing universal access to financial instruments. Farmers will buy crop futures they couldn’t previously access. Better still, smart farms will automatically buy and sell hedging contracts throughout the season using data about soil, weather, yields and prices.
- Artistic works will flourish as digital content gets pre-funded through tips from patrons and then purchased in tiny increments when consumed through metered players. Original digital works will be bought and sold by tracking ownership and provenance on the block chain.
- Bitcoin will allow people to own more income-producing assets and less unproductive stuff. The block chain will reduce the friction of share issuance and ownership, allowing us to be stakeholders in entities, large and small, that we care about and contribute to. And the trend toward shared usage of “things” – cars, computers, living space – will accelerate when the objects themselves become self-sustaining economic units.
Over the next few years, a lot of the underlying infrastructure and technologies to enable these killer apps will come online. As this happens, bitcoin will begin to expand markets and make them more efficient. Everyone – and every thing – with an Internet connection will be a market participant regardless of who they are or where they were born.
There will be more opportunities to earn money and more ways to spend it. All of our assets, not just our savings, will be connected to a financial grid, earning us a return commensurate with their utilization. There will be more ways to finance ingenuity and therefore more innovation. The world-uniting force of the Internet will begin to take its hold on all of our economic activity.
This article has been republished here with permission from the author. Originally published on Chain.com.
Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.