Survival bias has led to an imbalance in the crypto ecosystem

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With success comes a survivor skewing the logical error of focusing on the people or things that have passed the selection process while neglecting those that have not as well as, potentially, a superiority complex rooted in those. who survived.

This has led to a preponderance of financial products in crypto due to their successes so far, but a shortage of products and markets for real trading. Entrepreneurs in the blockchain space aren’t reaching out to what was supposed to be the most common class of users, and those who do often end up shipping products that fail to market.

Blockchain and financial economics

The 2016-2017 era of crypto startups saw the launch of many companies promising products based on blockchain, social media, phones, logistics, legal technology, e-commerce technology and many more. Most of these projects failed for common reasons, such as a lack of fit with the product market or a lack of network effect leading to traction towards the product.

The winners of the early blockchain era were primarily financial products, which found their customers among the many chasing asset appreciation as they switched from one currency to another. They were also the only products that provided interfaces that didn’t require the user to interact directly with the channel until they needed to make a withdrawal, and millions of people were also storing their assets on exchanges instead of protecting yourself with native wallets.

In fact, the focus of blockchains on financial economics has been so disproportionate that we’ve basically abandoned a real economy, in a sense. Most crypto products target the same financial-conscious user. If you look at pretty much any well-funded product in space, it’s somehow focused on providing solutions to speculators. Most of the industry is vying for the exact same attention.

We saw before our eyes the growth and maturation of decentralized finance, the introduction of non-fungible tokens and the growth of decentralized exchanges, for example. From a product perspective, it is extremely important to keep up with the development of the industry as a whole. Cryptocurrency must evolve into an efficient market where one can easily use cryptocurrency to purchase services and products; that is, to use it also as a means of payment for a diverse assortment of easy-to-use and intuitive products and services, and not just for financial speculation.

Related: Understanding the Systemic Shift from Digitization to Tokenization of Financial Services

Again and again

Until we make cryptocurrency accessible to people for non-investment purposes, market growth is likely to stagnate. In its current state, the market is saturated with products targeting the same user base. If we are to grow the category and grow the market, we have to start putting cryptocurrency in the hands of people who are neither investors nor speculators.

For more than a decade, blockchain-enabled products have grown at a rapid pace, but the most successful companies in the industry and their products are almost entirely focused on increasing the financial economy. The biggest remaining opportunities in this space are those that aim to target the use of cryptocurrency as a medium of exchange, putting it in the hands of non-technical people who wish to do business using currencies not issued by the government. El Salvador is a pioneer of this approach, for example.

Related: What’s Really Behind El Salvador’s Bitcoin Law? Expert response

Today’s winners, companies that process billions of dollars in daily transactions, are the results of the era of financial products, and it’s up to us engineers and entrepreneurs to build the next generation of businesses. and products. Survivor bias may dictate that the best and brightest minds in this industry should be working on the next generation CeFi and DeFi platforms. In reality, now is the time when we start rolling out the products that will use cryptocurrency and blockchain-powered assets and use them in the way they were meant to be used as peer-to-peer currencies, fueling the exchange of goods and services.

This is because, as the survival bias suggests, the most sophisticated minds and product designers in the blockchain space have focused on what has proven to be effective for financial products. This opens up a great opportunity, in areas where people don’t focus their attention, to design a different set of products to solve a different problem.

This article does not contain any investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research before making a decision.

The views, thoughts and opinions expressed here are the sole authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Anderson Mccutcheon is founder and CEO of Chains, an operating system for the cryptocurrency-based economy. Anderson is building a full stack crypto-economy consisting of a marketplace, independent platform, and cryptocurrency exchange. He is also an investor and entrepreneur with an interdisciplinary technological and marketing background and a long history in the crypto field. A blockchain industry pioneer and 8200 alumnus, he founded Unicoin, Synereo (later HyperSpace) and currently runs Chains.com and the Nemesis Capital litigation fund.

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