We must break the habit of trying to fit specific use cases onto blockchains. Each industry has its unique requirements, and the Web3 industry is no exception. Instead of building general-purpose blockchains and hoping for specific functionalities to be added later, we need to adopt a more forward-thinking approach.
While generalized blockchains like Ethereum have shown great progress with the growth of DeFi and NFTs, this approach is not sustainable in the long run. Scaling remains a significant challenge for Ethereum and other generic blockchains. To shape the future of blockchain technology effectively, we need to move away from the blueprint approach and create purpose-made blockchains that are driven by specific use cases.
Continuing to focus on general-purpose blockchains will hinder innovation. The era of “smart contract platforms” is coming to an end, and the industry is already shifting towards specialization. Appchain protocols like Polkadot, Cosmos, and Avalanche are embracing this change. Even layer-2 rollups, such as Optimism’s OP Stack and Arbitrum’s Stylus, are steps towards a future of specialization.
We have witnessed similar trends in other industries, from smartphones to social media to SaaS platforms. The Web3 industry, encompassing blockchain, crypto, and decentralized technologies, is made up of various sectors and niches that collaborate and connect, each with its distinct characteristics and use cases.
To avoid the fate of former market leaders like Kodak, Blockbuster, and Nokia, we must embrace specialization. While infrastructure for custom blockchain apps is currently being developed, the onus is on app developers to build them for their specific needs. This will unlock the true potential of blockchain as a means to an end, rather than an end in itself.
For example, trying to fit tokens and NFTs onto the Bitcoin blockchain, which was never designed for such purposes, is not a sustainable approach. Instead, we should acknowledge that Bitcoin is primarily a store of value and payments blockchain, and other blockchains specifically built for tokenization and NFTs will outcompete it in those areas.
In the future, custom blockchains will be utilized for various applications, but the focus is likely to be more B2B-oriented. Many current use cases are hindered by clunky infrastructure and expensive storage. For instance, a blockchain designed for Big Data analytics would incorporate features necessary for data scientists, such as data warehousing and verification.
Imagine every industry having its own custom-built blockchain. Examples already exist, such as IBM’s custom blockchain solutions for supply chain networks. The concept of blockchain as a sandbox for industries, where they can build and innovate, is gaining traction among established tech powerhouses.
It’s time to shift our mindset from trying to adapt blockchains to fit specific use cases to building blockchains that align with the goals and requirements of the applications we want to develop. This perspective may not always be easy to convey, but, as Steve Jobs once said, “a lot of times, people don’t know what they want until you show it to them.” While not all use cases are suitable for blockchain technology, approaching blockchain with the right mindset will empower ambitious founders to find meaningful applications for it.
Ralf Usbeck is a German entrepreneur and founder of Chain4Travel, a venture in shaping the travel industry with innovative travel technology. He has successfully built and exited companies in the travel industry, and he is now pioneering the adoption of blockchain technology in travel through Chain4Travel and the Camino Network.