The crypto market continues to trade based on speculation. Token prices are largely determined by supply and demand on exchanges. The market remains highly volatile. It attracts high risk takers as participants while scaring off most ordinary investors. This focus on speculation also leaves the market vulnerable to possible manipulation. Whales could easily control the supply and affect the price at their choosing.
To illustrate, the crypto market recently lost around $40 billion in total market capitalization within a two-day period in early September. The concrete cause was difficult to identify leading some to cite suspected manipulation as the reason for the crash. Price swings in the traditional stock market can be more easily attributable to factors like a company's fundamentals or some impactful event in the industry.
The lack of attention to fundamentals has also been to the detriment of the space. Crypto activities have become perceived as highly-niche and high-risk endeavors. Blockchain ventures get the short end of the stick as they struggle to build critical mass as users shy away from decentralized apps (dapps) and blockchain-based services.
Interestingly, these ventures should be instrumental in bringing normalcy to the space. The mainstream adoption of dapps should provide basis for the market to determine the intrinsic values of crypto tokens and prompt the market to speculate less. As such, ventures must make the effort to trigger wider adoption and promote the usefulness of their offerings.
Struggling to Launch
Speculation has undermined the potential of many dapp projects. Most dapps seek to challenge the dominance of industry giants through democratization, decentralization, and transparency. However, it has been a steep uphill battle for them.
Success in getting funding in initial coin offerings (ICOs) are by no means a strong indicator of the strength of the venture or their dapps. Some, like Tezos, failed to launch. Others found it tough to establish user bases. As DappRadar's charts show, even the top-ranked dapps only have a few scores of daily users.
As with any venture, legitimate dapp projects need support from investors and users, not speculators. Most utility tokens are designed to be used and spent on the actual dapps and platforms. In a sense, their ICOs ideally should have functioned more as discounted pre-sale periods for access or credits.
Unfortunately, this has not the case. Many traders participated in ICOs just to buy tokens at a discount which they then dump once the coins get listed on exchanges. Many utility tokens significantly dropped in price because of this pump and dump behavior.
Providing Superior Experience
All is not lost for blockchain ventures and developers. Wider adoption will be able to curb speculation. To achieve this, ventures first must be able to entice ordinary users to use dapps.
Giving users the ability to personalize their experience is one way to do this. Fortunately, orchestration has also found its way to blockchain through Cardstack. The project provides orchestration capabilities for the crypto space. Dapp functionalities are envisioned as cards on the Cardstack platform. Using an easy-to-use interface, users can then “stack” these functionalities to build customized workflows.
Cardstack can even provide access to various dapps using only its CARD token as the platform can take over performing the blockchain transactions in behalf of users. This potentially takes away the need for users to store and hold multiple utility tokens and crypto wallets. This cumbersome token ownership and storage mechanic has been among the reasons why ordinary users have avoided dapps. The CARD token can truly change this dynamic.
Given how users now demand user experiences, dapps must also feature intuitive interfaces like conventional apps and obscure blockchain's technical complexities. Developers have made strides in making dapps behave much like conventional apps since it’s easier for users to take to new technologies with familiar interfaces. Blockchains have also worked on improving transaction speeds to improve the overall experience.
In addition to user experience, ventures must be able to demonstrate that dapps are secure and useful services that could replace the existing services offered by tech giants and centralized authorities. Ordinary users must be convinced that dapps and blockchain-based services address their needs. Moreover, dapps should be able to provide added value to the specific use cases they seek to disrupt.
For instance, the advantages of decentralization must be effectively communicated. A decentralized rental marketplace like Beenest could offer better pricing mechanics for renters and owners by linking these parties directly. The service charges no commissions on bookings and listings which could result in competitive prices for renters and better margins for owners. In contrast, Airbnb takes a percentage from transactions which prompts renters to pad their prices to offset the cost.
Another way is for developers to showcase that blockchains are becoming more interoperable. Users know that no application exists in a vacuum these days and the ability to integrate with other services is simply expected. Blockchains may have been initially designed to operate in isolation but projects like Blocknet and Wanchain are now working to allow them to exchange assets and information.
This capability enables developers to come up with better functionalities for their dapps. For example, atomic swap support could allow a decentralized marketplace to directly support various cryptocurrencies for payments without having to use a third-party processor or exchange.
Mainstream adoption will be key to change people's perception of the crypto space. Dapps are ideal candidates to encourage this shift as they are primarily designed to appeal to ordinary users. Proving their usefulness and usability should make them practical alternatives to existing services.
Once dapps take to the mainstream, fundamentals would begin to matter more in the market. The price of utility tokens in the market would be based on the actual value dapps create. Ventures could also then be evaluated in terms of the business they can generate.
The market will inevitably move away from speculation. Hopefully, this brings about a much-needed normalcy in the crypto space.