Over the last few days, I have been going back and forth with members of both the EOS and ETH community on what makes a blockchain token “useful”.
I’ve come up with a simple view. A token is useful if a lot of users find it useful. End of story. It doesn’t have to do staking. It doesn’t have to have “maximum decentralization”. It just has to be “popular”.
Note this is NOT a “Bash EOS” article. Or a “Bash ETH” article. It’s intended to start an actual discussion on where we are in the BlockChain industry.
EOS is no longer “popular”.
Here’s a graph of EOS from June 2018 when it launched to today. Started out strong and hit almost 150,000 daily active users in June 2019. Then it started to get congested, RAM costs went up, CPU ground to a halt with EIDOS. Nobody is effectively using EOS.
Now, speculators still value the EOS token very highly. Despite the fact that nobody is actually using it anymore, it has a market cap of over 2.5 Billion dollars.
In EOS chat rooms, this is viewed as a “temporary setback”. Block One, the company behind EOS has a massive war chest that presumably can be used to “fix” this situation. Nevertheless, it’s hard to argue that EOS has a lot of “utility” today.
Not many people are using ETH, either.
EOS looked (to me at least) like it had a real chance at mass market adoption in 2018. But that hasn’t happened — yet. But how about ETH? It’s a ghost town. There are less than 5,000 daily active users on all Ethereum apps.
How to think of blockchain utility
From a users perspective, this industry called “blockchain” consists of tokens (like Bitcoin, ETH and EOS) and apps (which includes wallets) that use these tokens.
All these tokens have two key characteristics:
- freely transferable and
- you can’t take them away.
Now most tokens have no value or utility at all. Nobody wants these tokens. Nobody is using these tokens for anything.
But ETH and EOS are still useful for sending money!
And here I have to agree. Despite the low numbers, both ETH and EOS do have one key use: they can be used to transfer money from A to B. While there is not a lot of people using them in this way, the dollar value is substantial.
So what if a chain is popular but somewhat centralized?
In the first 1,500 years of the history of christianity, church sermons were done in latin. It didn’t matter that the average church goer spoke French or German — latin was the language of the clergy. The language of “blockchain” is a similar set of quasi-dogmatic values and tools. The average person does not understand “MetaMask” or “Proof of Stake”. But what if it was truly accessible?
One of the horrifying thoughts of the crypto illuminati is that their religion will be taken over by something like Libra, controlled by a central committee. The idea that such a thing could be popular is terrifying. Who are these heretics printing bibles in German? Burn them at the Stake!
But users don’t care. They will vote with their eyeballs. The Gutenberg Bible was the first best seller. You may not like TikTok, but users do. If TikTok came up with a “Tik” coin that you could use to reward video posters, it would be a hit. You just know it.
This is not a statement on which chains are valuable as investments, or which are “the best”. It’s just intended to get people to start thinking about blockchain from a consumer point of view.
Our gut feel is “consumerization” of BlockChain will happen. Screaming that “you might as well use AWS” is not going to make a difference. If something useful is built on AWS with a committee running it, and a ton of users, it wins.