Why Most Cryptocurrencies Will Fail
A new technology is coming out tomorrow that is going to make your online interactions feel more authentic, while improving your mental well-being, your economic status, and your life as a whole. It will be implemented across all the major services you use, like Facebook, Twitter, Airbnb, Uber, and everything in between. Are you excited?
I’d hope you are.
Here’s the kicker. When that tech roles out chances are you’ll barely even notice it.
When tech works the end result is this strange feeling of magical indifference. Kind of like, “yeah, why hasn’t it worked that way before?” Good tech stands out by not standing out at all — it makes itself feel so native and natural that we barely realize we’re using it.
And when something is good, we want it everywhere. We want to reap the benefits of the new tech, and use it to improve our digital experience. Why wouldn’t we?!
Let’s compare that with cryptocurrencies, and their difficulty in finding meaningful mainstream adoption. Think of the last few recognizable companies that have announced the launch of their own tokens, like Telegram, Kik, and Atari. For those in the blockchain industry, our gut reaction wasn’t one of elation and excitement; it was one of disgust, even dread.
Sure, we’re all excited at the investment opportunity — the hype around a Kik ICO, or Telegram ICO suggests money can be made, but at the end of the day we’re left feeling like these companies are joining this space less out of altruism and solid use cases, and more out of greed, or at least naivety. This is a very different feeling than when a company like Apple announces a new iPhone, or Bethesda releases a teaser for their new Fall Out game.
Cryptocurrencies, by nature, bring us out of that feeling of magical indifference. By being financial vehicles, they cause us to inspect them more closely than we’d ever inspect new tech like 3D printing or 5G. Money is just as emotional as it is useful, and thus the very act of using a cryptocurrency reminds us, ever so softly, that we are taking part in a monetary transaction.
The majority of new blockchain platforms that are launching today are using some form of cryptocurrency to administer actions on their network. The idea being that people will be excited to spend tokens in order to use their service. Where these companies are going wrong is in their expectation that people actually enjoy being reminded of their purchases.
Spoiler alert: they don’t. It’s why subscription models have taken off. People would much rather spend $100 per month on a gym membership they may never use over having to fork over $10 every time they walk into said gym.
By constantly reminding us that we’re making a monetary transaction, we start focusing more on the way a platform works (and doesn’t work) than on the service being provided. In essence, we’re losing that feeling of magical indifference, and in doing so, being disincentivized from actually using the platform.
Money changes the way humans interpret and respond to a situation. Studies have shown that it often alters behavior in ways that are less productive and efficient. For instance, paying blood donors when they donate blood causes them to donate less blood. When a school began fining parents for picking their children up late, there was a significant increase in children being picked up late. And, when money was offered to smokers to quit smoking, it improved their chances of quitting in the short term, but drastically lowered their ability to stop smoking in the long term (1).
Money is weird. And when you add it into a system or platform, you need to make it as invisible to the user as possible. Otherwise, we won’t be going to your platform because of the excitement we receive from scrolling through videos or tweets or swiping left or right. We’ll be going to your platform because we’ll be worried about losing or making money.
And that’s the sort of feeling that ultimately fills everyone with disgust and dread.