Arwen Smit is the founder of MintBit, a boutique blockchain consultancy, and DOVU, a tokenized startup for the mobility sector.
The following is an exclusive contribution to CoinDesk’s 2018 Year in Review.
From security token offerings to the crypto winter, a lot has happened in 2018.
Beyond the flashy headlines, though, larger trends are manifesting. I believe three areas of conflict, between six "incompatible truths," have been slowly taking shape, and that 2019 will see them unleashed in full force.
1. Ideology vs product-market fit
Venture capital funding is dead, so they say.
By crowdfunding token creation events early, blockchain startups have taken a different route to market than the unicorns we know today. Web 2.0 startups raised in tranches. Web 3.0 startups raise early, in bulk. Web 2.0 startups wrote a ridiculous valuation around their Series D. Web 3.0 startups obtain a ridiculous valuation on day one.
Both startups look for product-market fit, but the biggest difference between the two is that Web 3.0 companies need, and advocate, their ideology as the final product on day one. From ideology all else follows. Ideology is the coordinating principle between all parties taking part in the ecosystem.
Amazon set out to to use internet protocols to transform book buying into the fastest, easiest and most enjoyable shopping experience possible. Although Google has kept its mission statement of "organizing the world’s information and make it universally accessible and useful" for over 14 years, its interpretation of the statement has changed dramatically.
Such a change is relatively easy to achieve in a centrally organized company. Now imagine that when proposing a change of direction, Amazon and Google needed buy-in from all their stakeholders. Would they still be where they are today? Maybe, but probably not. Aligning and evolving ideology at scale is tremendously complex.
In 2019, we will see a shift. Open-source initiatives will still crowdfund from the garage-phase onward, but Web 3.0 companies with a profit function will to wait until they demonstrate early product-market fit, typical for an A-round.
In short, 2019 will be the comeback of the VCs.
2. Market capitalization vs adoption
Consider two numbers: 131,000,000,000 and 10,000.
The first one is the total crypto market capitalization in dollars, which is spread over 2,000 crypto-assets. The latter is the total dapp user base of ethereum. Now let’s look at adoption.
Close to 14,000 venues worldwide accept bitcoin. Look at all that impressive red. Until you realize that in the U.S. alone there are 47,481 people named John Smith. "But, wait," you say. "Crypto’s main feature is a currency!" Reality hits again. The most popular ethereum decentralised exchange (DEX) has just over 700 daily active users (DAU).
We could argue only a subsection of those active within the crypto space frequents DEX daily. However, games, which encourage DAU as a metric, aren’t doing much better.
In 2019, we’ll realize that the valuation metrics we use as a sector are broken.
The metric of multiplying circulating tokens with price is ridiculous. Together with exponential adoption of distributed ledger technologies (DLT) and crypto assets alike, we’ll see the industry mature in how we evaluate these new models of creating value.
3. Believers vs non-believers
Every time a Jamie Dimon or Nouriel Roubini gets a platform, a tweet storm to set the facts straight is not far away.
A shouting match ensues between the "crypto bros" and the "bitcoin-is-a-scam" camp, doing little for mutual understanding or empathy. Historically, every major shift has required a strong foundation of support. Evangelists who keep challenging, challenging, and challenging the status quo, until it dents. The DLT community has got tenacity in spades.
Now it needs a new narrative.
The market is moving at a thousand different paces. We’ve seen teams who completed a successful token creation event, but were swallowed by their communities. The ones who keep their heads down, build and deliver (shout-out to 0x). Corporations who are tight-lipped about their stance on DLT, but are working like maniacs behind the scenes. Fortune 500 companies who are engaging in shiny innovation theater, but with no true intention to ever bring those PoC’s in-house.
Christine Lagarde, managing director of the IMF, got it right:
I would echo those sentiments for the wider promise of DLT, because we are not there yet. But we might get there in 2019.
Have an opinionated take on 2018? CoinDesk is seeking submissions for our 2018 in Review. Email news [at]to learn how to get involved.
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