Crypto is a general-purpose technology (GPT) like the steam engine, electricity, the internet, and AI.Because GPTs require a major rewiring of the economy to be useful, we inevitably overestimate how quickly they will change our lives.But when change eventually happens, it is faster and more pervasive than expected.After more than ten years of experimentation and infrastructure building, crypto is at a turning point, and might soon find its ChatGPT moment.
The internet incubated for decades within academic and military circles before becoming commercial .Similarly, artificial intelligence was mostly a research endeavor before OpenAI, Tesla TSLA and big tech turned it mainstream.For crypto believers, decentralization has always been the holy grail.Historically, tech has swung like a pendulum between centralization and decentralization: from mainframes to PCs, Microsoft MSFT Windows to the web, and finally, to the walled gardens of today’s tech giants.
The next logical step? An open infrastructure powered by, you guessed it, crypto.
But what does “open” mean? After all, the web is already built on open standards and protocols, but that led to more market concentration, not less.What is different this time is that crypto pushes for deeper forms of interoperability and portability — from your social graph, to your content, to your “bank” account.
In payments, the lack of interoperability in today’s services is very salient.Digital wallets and card networks do not allow you to send or receive money outside of their curated network.Similarly, you can’t move your funds from one fintech app to another without going back to your bank account, which still acts as the only interoperability layer for our financial lives.
Incumbents with market power fight tooth and nail to prevent interoperability and portability.They don’t want their customers sending or receiving payments to and from their competitors too easily.Nor do they want you to be able to move your business elsewhere if you are dissatisfied with their terms and conditions.It’s not good for their bottom-line, even if it would be great for everyone else.
MORE FOR YOU Where To Find Donald Trump’s Hot New Sneakers ‘True Detective: Night Country’ Episode 6 Review — A Truly Embarrassing Season Finale Google Teases Innovative New Android Abilities With Gemini AI The same is true for access to distribution.
While you may have invested countless hours building your audience, identity, reputation, or social graph on a platform, you never truly own the fruits of your labor, the platforms do.And it doesn’t matter if you are a creator, app developer, gig worker, or merchant — the platform you helped scale has all the leverage.
Crypto, by forcing interoperability and portability into platforms, turns today’s walled gardens into open infrastructure anyone can build and compete on.While this represents a major threat for incumbents, because the technology is developed in a decentralized fashion it also takes a very long time to mature.We’ve now been waiting for crypto’s “killer app” for over a decade, just like AI was waiting for its ChatGPT moment.
So, when it arrives, what will it look like? Probably a bit clunky, niche, and maybe even toy-like at first.
Think Frames on Farcaster : interactive applications that can be embedded in posts — essentially like a fully-fledged App Store in your social feed.Innocuous, right? But this crypto primitive is potentially transformative from a market structure perspective.
It allows developers to distribute their creations freely, escaping the walled gardens that dictate how they get paid and what they can build (remember the recent Spotify-Apple drama ?).
“But couldn’t we already do this on the web?” you might ask.Yes and no.That’s where crypto’s multiyear investment in rebuilding the infrastructure of the internet shines.Frames are crypto-native apps, meaning authentication, identity, and payments are just a click away for users.Unlike Web2 platforms, where control over the underlying data helps build barriers to entry, Frames data can also live on-chain, where it is accessible to everyone.
Multiple companies and projects can build front-ends to that data, aggregate it in novel ways and compete with different business model.Users are in full control of their social graph and content, and can move freely between the resulting products and experiences.
This combination will unlock frictionless commerce , novel ways for creators and developers to monetize their ideas, and eventually new type of marketplaces and platforms will emerge and compete.Developers on Frames are rebuilding key parts of the Web2 and mobile stacks with crypto building blocks, and that’s inspiring.
Even more intriguing? Closed platforms will struggle to replicate Frames’ openness, as it threatens their traditional monetization and curation models.
Are Frames the future? Maybe not, but they’re a glimpse of what crypto has been promising from the beginning.The infrastructure is now in place, and it’s up to developers to unleash their creativity.Remember Bitcoin BTC ? It took over a decade, but now it’s the uncontested bridge between traditional finance and crypto, and its network can serve as the foundation for new payment and financial services.Just like AI went from “meh” to ChatGPT overnight, decentralized networks and applications are finally getting slick enough to capture mainstream attention.
In 2023, it was important to urge crypto entrepreneurs to ditch the obsession with new token launches and reckless trading, and focus on real value for consumers and businesses.
The FTX winter was a harsh lesson, but the seeds that were planted then are starting to sprout.By focusing on utility instead of speculation, crypto can finally deliver on its long-awaited promise.
So, is the killer app here? Maybe not yet, but the stage is set for a much more exciting act two.Stay tuned.
You can follow me @ccatalini .
I am thankful to Leigh Cuen , Jai Massari , Jane Wu , and Linda Xie for their helpful comments, which greatly improved this article.
Christian Catalini.