In brief

  • Centralized apps and services have become a lifeline during the coronavirus lockdown, despite concerns over data breaches and user privacy.
  • Decentralized Web3 apps (dapps), which promise to address these concerns, have yet to go mainstream.
  • Dapp developers argue that network effects, useability and short-term concerns over the coronavirus are to blame.

The coronavirus lockdown has led to a surge in the use of video conferencing apps and streaming services. But as people flock to these centralized platforms, it’s highlighted their underlying weaknesses.

Zoom, once the darling of the quarantined remote worker, has been slammed for poor privacy, and has suffered a data breach in which 500,000 user accounts were offered for sale on the dark web. Meanwhile, Google and Apple have pooled their resources for contact tracing, highlighting the amount of information that Big Tech monoliths hold on their customers. 

This, then, should surely be the moment for Web3 to sweep in and save the day, with its promise to wrest power from centralized entities and restore privacy to the masses. But it hasn't. Not a single Web3 decentralized app (dapp) has gone truly mainstream during the coronavirus pandemic.

In what—at first glance—appears to be the perfect opportunity for crypto to hustle to the forefront of the agenda, blockchain has yet to hit the big time, even in a global crisis that plays to its strengths.

The lack of a killer dapp

Michael Anderson, of decentralized finance (DeFi) app Framework Ventures, told Decrypt that—outside of the DeFi space—the lack of adoption for Web3 dapps highlights the “glaring void of a killer app in the space. We don’t yet see a consumer dapp with a 10x better experience than a centralized competitor,” he said. The gambit of Web3 apps, he says, is that the developers assume “that the blockchain feature will be novel enough to garner attention,” but this hasn’t paid off. 

"We don’t yet see a consumer dapp with a 10x better experience than a centralized competitor."

Michael Anderson

Leaders from within the blockchain and crypto industry told Decrypt that the issues include a lack of brand awareness, poor usability, and people being more interested in working around the coronavirus than battling privacy concerns. 

Erick Pinos, Ontology’s Americas Ecosystem Lead, argued that decentralized communications apps have yet to achieve broad adoption because of a lack of awareness about the ultra-niche world of Web3. “Zoom has been around for 9 years and in that time, the platform cultivated a large user community,” he said. (A few months ago, Zoom had 10 million users. Now it has 200 million). Zoom’s huge initial user base made it “well placed to capitalize on the dramatic spike in demand for video conferencing capabilities brought on by the global pandemic,” he said.

But no Web3 dapp has that user base, yet. Pinos added that, for dapps, network effects—essentially, a snowballing technique where you invite a friend, and then they invite their friends, ideally ad infinitum—are “an uphill battle.”

The space is fiercely competitive, and many Web3 protocols aren’t battle-ready for the whole Internet. “Most Web3 dapps are still in their early stages and often don’t have a sufficient following to achieve significant growth through word-of-mouth,” said Pinos. Some dapps can only be web3accessed through a third party Web3 browser like MetaMask, “an additional barrier that steepens the learning curve for new users.”

Keep it simple, stupid

Jon Jordan, communications manager of DappRadar, a market analytics site that ranks and tracks decentralized apps, said that blockchain still isn’t user-friendly. “If you want to get a lot of people into a conference app, you need to choose something the least technical member of the group can use,” Jordan told Decrypt. “There's the odd Twitter, Instagram, chat replacement dapp—but even if using Web3 tech was easy for people, I don't think there's a robust enough dapp for people to use.” 

One new app that hastily launched to meet the demand is SmartSession, an Ethereum-based paywall service for Zoom calls. “We built it in only 3 weeks, so it's V1,” Erez Ben-Kiki, founder and CEO of SmartSession developers 2key, told Decrypt.

The idea is that a yoga teacher or a psychotherapist can put up a crypto paywall for their Zoom calls using SmartSession, instead of asking people to pay them through, say, PayPal. But the number of yogis whose students also understand how to purchase and spend Ethereum is… small. There’s interest, but “no significant users there yet,” he said. 

Bigger things on the mind

Jon Jones, of Taiwanese blockchain firm Unity Chain, thinks he knows why: “In a crisis, people’s psychology tends to be more concerned with basic necessities. In the short-term people go into survival mode and tend to care less about “nice to haves” such as individual freedom, privacy [and the] environment,” he told Decrypt. ‘Nice to haves’, of course, includes Web3 applications. “I think most people have more obvious economic and medical concerns at the moment,” added DappRadar's Jordan.

But these dapps are still coming, Web3 developers say. Jack O'Holleran, co-founder and CEO of SKALE Labs, is among those who believe that people really do want privacy-first apps. But while there is clearly demand, he told Decrypt, key infrastructure components—like sidechains, infrastructure integration with API wallets, and roll-up techniques—“are still being finalized and have yet to be let loose in the wild,” For now, while technically impressive, these aren’t so easy to use for most people. And third-party audits still need to be implemented, as wel as bug bounties.

"H2 of 2020 will be the catalyst to drive massive growth in dapp usage in 2021."

Jack O'Holleran

All that work isn’t in vain, though. “The industry will be well poised to soak up the momentum of change driven by the impact of coronavirus. H2 of 2020 will be the catalyst to drive massive growth in dapp usage in 2021, making it the breakout year,” said O’Holleran.

As so often happens in the blockchain space, Web3, it seems, is just around the corner.