a16z: Misunderstandings in cryptocurrency applications, three major truths that have been misunderstood

Just a few weeks ago, Alex Blania, the founder of World, revealed the latest strategic trump card to a room full of crypto industry bigwigs. While making a move to seize the US market by riding the wave of favorable policies was eye-catching, the real stroke of genius was their lightning-fast breakthrough into mainstream consumer scenarios. This marks that cryptocurrency is shedding the label of "geek club" and truly plunging into the cutthroat arena of daily business.

World played a really tough move: It's actually hard to persuade Americans to use iris scanning in exchange for a "human verification badge", even with the promise of privacy protection (and the timing might be too early anyway). But they had already quietly done a major thing: Over the past three years, they secretly laid three layers of insurance for this crazy plan.

First, create real product value, and then use Tokens to add some incentives

In its early days, World also followed an old path: Using Token incentives to attract new users. But this approach, once hailed as the "Bitcoin success paradigm" and later copied by countless projects, actually has the cause and effect reversed. World hit a snag in its early tests - the incentives were so strong that users did come, but the privacy community and some developers started to criticize: "This isn't growth; it's just using profits as a fig leaf."

But don't forget, the reason Bitcoin has come this far is that from the very beginning, it provided an unprecedented asset logic: Decentralization, a fixed total supply, and no control by central banks. Yes, miner rewards and the myth of skyrocketing prices attracted early speculators, and later institutions and even countries. But the real builders who stayed were attracted not by the "get-rich-quick expectation", but by its radical potential as a brand-new asset and payment system.

Most of the projects that later copied this model are now queuing up in the "cemetery" of the crypto world, waiting to be buried.

The crypto world can't escape the basic laws of economics either. Just like any startup project, first create a truly usable product, and then use Tokens to solve the problems of cold start or ecological incentives. Otherwise, no matter how many economic models there are, they are just empty talk on paper.

Blania used three real pain points to prove his point this time: In the fields of dating, gaming, and credit, Bots are running rampant nowadays, and it's hard to tell humans from machines. So he put World's "human proof" system on the table and made it clear: Why it's worth your while to scan the sphere with your iris in exchange for a "I'm a human" ticket.

In an era where AI is accelerating its invasion of everything, we will all face the authentication need of "Are you a human?" sooner or later. World is just one step ahead.

Learn to deal with "infrastructure inversion"

In the early crypto boom, we all jumped in. When I was designing Bitcoin experiments at MIT, I really thought that we could completely disrupt the payment and financial systems within two or three years. Ten years later, we've only just begun.

To truly bring crypto products to people outside the circle, we have to align with the experiences that traditional users and merchants have long been accustomed to. This means we must build a bridge between the old system and new technologies. And this bridge often requires making some compromises that seem heretical in the eyes of "crypto fundamentalists".

But this stage can't be avoided. You have to go through that awkward period of "coexistence of old and new" - what Andreas Antonopoulos calls infrastructure inversion. Imagine: Dial-up Internet occupying telephone lines, the first rickety car rattling down a gravel road. It just doesn't sound smooth.

This "technology transition period" makes it difficult for new systems to be widely adopted on a large scale at first. They can only be used as patches in certain vertical scenarios, and there's no talk of disrupting the entire system. The AI field also has similar dilemmas.

World initially tried to skip this stage and directly push the token as the main character. But the new version has completely reversed this: Embracing "infrastructure inversion", returning to product practicality, and moving forward more steadily and deeply.

Don't fantasize about creating a wallet that works globally without connecting to the old system. Depositing and withdrawing funds need to be as smooth as PayPal was when it did online payments back in the day. Otherwise, what's the talk of mainstream adoption?

That's why the new version of the World App was connected to Stripe and Visa cards as soon as it launched. A sense of trust, familiarity, and practicality is achieved in one go. And because it's willing to "backwardly compatible", it gives traditional finance a chance to observe and test the waters instead of being directly eliminated.

This logic is also quietly pushing crypto into the background of cross-border payments. In the future, maybe the technology can enter the mainstream, but before that, it has to "borrow the old tracks" first, smooth out the processes, and minimize friction.

Don't forget, many crypto mechanisms (including economic models) only have magic when they reach a large scale. But to achieve that scale, first, people have to get on board. If there's no ramp to get on the train, no matter how perfect the model is, it's just spinning its wheels.

Whether crypto succeeds or not, the key still lies in implementation

Like all new technologies, crypto isn't destined to win. Don't believe the myths peddled by those self-hyping fans. To be more specific, "decentralization", the soul pillar of crypto and also its most crucial contribution to disrupting the market, has never been a sure thing.

Stablecoins are a good example.

To connect to the traditional financial system, the crypto world created such a tool, and it's indeed useful. But problems followed: The specters of centralized management and closed networks were invited back in.

I tend to believe that open architectures will eventually win out, but don't forget that those "incumbents" have no reason to let you pass easily.

Blania and his team have placed a big bet: Betting that users will care about the decentralized control of their data, and also betting that enterprises will build better user experiences on this system. Once decentralized identity impacts the existing landscape, it will be extremely difficult - centralized players have inherent advantages in UX and functionality from the start.

So if World wants to overtake on a curve, the first step is to persuade users to hand over their biometric data. The US market has already started, and soon we'll see if they can find a balance between "privacy vs convenience".

Of course, a more gentle "onboarding method" might be smarter: For example, first issue a familiar "authentication badge" that can unlock additional features in the apps you commonly use. Don't rush to make people scan their irises on the sphere right away. The problem is, doing it this way makes the identity authentication less reliable and prone to being exploited, bypassed, or messed up.

Blania's judgment might be correct. In this endless cat-and-mouse game with AI, only military-grade biometrics is the real "unbreakable" proof of being human. But that doesn't mean he can't be more gentle and not push users in front of the sphere on the first day.

Of course, those looking to "farm airdrops" will line up, but this sweet stimulus will only last a few days at most. Once the subsidies stop, the hype will die down. Truly sustainable growth only exists in the realization of daily value, and that's their real opportunity.

If the World App can break through with its payment experience, plus global smooth deposit and withdrawal channels, then it might really create a breakout moment.

Conclusion

Now, it seems they've bet on the entire rhythm. Next, there's only one thing we need to watch:

Can the crypto world truly break into the mainstream market?

Regardless of whether World's experiment succeeds or not, what I hope to see more is that more crypto projects are willing to shift the spotlight away from "token economics" and "price fluctuations" and turn to actually creating products that can be used in daily life.

Because although this shift is not sexy or exciting, it's the step that the entire industry must take if it wants to enter the mainstream market.

Disclaimer: The views in this article only represent the author's personal opinions and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness, originality, and timeliness of the article information, nor shall it be liable for any losses caused by the use or reliance on the article information.