a16z: Misconceptions About Crypto Applications, Three Distorted Truths
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a16z: Misconceptions About Crypto Applications, Three Distorted Truths
Can the crypto world truly break into the mainstream market?
Navigating Web3 tides with focused insightsAuthor: Christian Catalini, a16z
Translation: Portal Labs
Just weeks ago, Alex Blania, founder of World, stood before an audience packed with crypto elites and unveiled his latest strategic move. While leveraging policy tailwinds to seize the U.S. market grabbed attention, the real masterstroke was their lightning push into mainstream consumer use cases. This marks a turning point where cryptocurrency sheds its "geek club" label and finally enters the battleground of everyday commerce.
World’s play here is bold: convincing Americans to scan their irises for a "proof-of-personhood badge" isn’t easy—privacy assurances aside, the timing might even be premature. But what they’ve quietly accomplished behind the scenes is far more significant: over the past three years, they’ve laid out three layers of insurance for this audacious plan.
Create Real Product Value First, Then Add Token Incentives as a Bonus
In its early days, World followed a well-trodden path: using token incentives to drive user acquisition. Yet this approach—hailed as the "Bitcoin success model" and copied endlessly since—is fundamentally backwards. World hit this wall during early testing: aggressive incentives brought users in droves, but privacy advocates and some developers pushed back hard: "This isn’t growth; it’s profit-driven window dressing."
But remember, Bitcoin succeeded not because of incentives alone, but because from day one it offered a radical new asset paradigm: decentralized, fixed supply, immune to central bank control. Yes, miner rewards and price surges attracted early speculators, later institutions and even nations. But the builders who stayed weren't drawn by get-rich-quick dreams—they believed in its potential as a revolutionary asset and payment system.
The countless projects that blindly copied only the incentive mechanics? Most now sit in crypto’s graveyard, waiting for burial.
The crypto world can’t escape basic economics. Like any startup, you must first build a genuinely useful product, then use tokens to solve cold-start or ecosystem-incentive problems. Otherwise, no matter how elegant your economic model, it remains theoretical.
Blania now presents three real-world pain points to justify his vision: social networking, gaming, and credit systems—all now flooded with bots, making human identification nearly impossible. So he puts World’s "proof-of-personhood" system front and center, clearly articulating why it’s worth scanning your iris to earn a "I am human" ticket.
In an age where AI infiltrates every corner of life, we will inevitably face authentication demands asking, “Are you really a person?” World is simply getting there first.
Learn to Navigate “Infrastructure Inversion”
We all rushed headfirst into that first wave of crypto enthusiasm. When I designed Bitcoin experiments at MIT, I truly believed we’d overhaul payments and finance within two or three years. A decade later, we’re barely getting started.
To bring crypto products to the mainstream, you must align with the experiences traditional users and merchants already expect. That means building a bridge between legacy systems and new technology—and that bridge often requires compromises that feel heretical to “crypto purists.”
But this phase is unavoidable. You must pass through the awkward period of “coexistence,” which Andreas Antonopoulos calls infrastructure inversion. Imagine dial-up internet hogging phone lines, or the first clunky car rattling down a gravel road—neither smooth nor elegant.
This “technological limbo” makes it hard for new systems to scale broadly at first. They can only patch specific niches, falling short of systemic disruption. AI faces similar hurdles today.
World initially tried to skip this stage, launching full-throttle with tokens at the core. But their new version flips the script: embracing infrastructure inversion, refocusing on product utility, and moving with greater stability and depth.
Don’t dream of building a wallet that rules the world while refusing to connect to old systems. Onboarding and offboarding must feel as seamless as PayPal did when it pioneered online payments. Without that, mainstream adoption remains fantasy.
This is why the new World App launched with Stripe and Visa integration from day one. Trust, familiarity, and utility—all delivered instantly. By choosing backward compatibility, they allow traditional finance to observe, dip a toe in, rather than being immediately displaced.
This same logic is quietly pushing crypto into the backend of cross-border payments. One day, perhaps, the technology can take center stage—but until then, it must first travel along the old rails, smoothing processes and minimizing friction.
Let’s not forget: many crypto mechanisms—including economic models—only gain power at scale. But to reach scale, you first need people onboard. Without a smooth ramp, even the most perfect model spins idle.
Crypto’s Success Hinges on Real-World Adoption
Like all emerging technologies, crypto isn’t destined to win. Don’t buy the hype from true believers. To be precise, decentralization—the very soul of crypto and its most disruptive promise—is anything but guaranteed.
Stablecoins are a perfect example.
Created to interface with traditional finance, they’re undeniably useful. But they also reintroduce the ghosts of centralized control and closed networks.
I believe open architectures will ultimately prevail, but don’t underestimate entrenched interests—they have every reason to block your path.
Blania and his team are placing a massive bet: that users care about owning control over their data, and that businesses will build better experiences atop such a system. Decentralized identity disrupting the status quo won’t be easy—centralized players start with inherent advantages in UX and functionality.
So if World wants to leap ahead, their first challenge is convincing users to hand over biometric data. The U.S. market is already live—soon we’ll see whether they can strike the right balance between privacy and convenience.
Of course, a gentler onboarding path might be smarter: say, issuing a familiar “verified badge” that unlocks extra features in apps people already use. No need to force users to stare into an orb on day one. The downside? Such identity proofs become weaker, prone to exploitation, bypassing, and abuse.
Blania may be right. In this endless cat-and-mouse game with AI, only military-grade biometrics offer truly tamper-proof proof of humanity. But that doesn’t mean the experience can’t be softened—no need to shove users face-first into the orb from the start.
Airdrop farmers will line up regardless, but that sugar rush lasts days. Once subsidies end, interest fades. Sustainable growth only emerges when value is realized in daily life—and that’s where their real opportunity lies.
If the World App breaks through via superior payment experiences, combined with seamless global on- and off-ramps, it could truly ignite.
Conclusion
Right now, they’ve bet the entire timeline. From here on, there’s only one thing to watch:
Can the crypto world truly break into the mainstream?
Whether World’s experiment ultimately succeeds or fails, I hope to see more crypto projects shift their spotlight away from “tokenomics” and “price charts,” and instead focus on building genuinely useful, everyday products.
This pivot may lack glamour or excitement, but it’s the essential bridge the entire industry must cross to reach mainstream relevance.
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