Crypto continues to not only survive but grow, despite mainstream media’s predictions of its demise after the 2022 FTX exchange crash, followed by numerous other popular crypto exchanges getting stung over the past year.
This was overwhelmingly due to poor business practices and failure to comply with increasing regulations, not with the underlying principles of the technology.
The value of crypto lies not just in its price, but also in its ability to attract developers to create quality products.
Blockchains are often seen as an ideological choice, but they are essentially platforms with unique benefits and drawbacks.
Developers decide to build on blockchains if the benefits outweigh the drawbacks for their specific product.
It’s peculiar that recent market improvements have occurred without any new killer use cases.
Higher prices may encourage developers to reconsider blockchains, and a larger number may find the trade-offs acceptable for their projects.
Blockchains’ success as platforms depends on developers’ willingness to build products on them.
The more developers create superior products on blockchains, the more users will be attracted to them.
When choosing a platform, developers must weigh the benefits against the drawbacks.
Over time, as the infrastructure improves, the trade-off may favor blockchains for more use cases.
Blockchains offer several benefits, including decentralization, smart contracts, tokens, global exchange, ownership, governance, verification and transparency, permissionlessness (yes, it’s a word), composability, immutability, security, and the ability to make provable commitments in software code.
However, blockchains currently have significant drawbacks, including slowness, higher costs, clunky user experience, limited privacy, regulatory uncertainty, key management difficulty, and stigmatization.
Despite these drawbacks, a small number of developers find that the benefits outweigh the costs because blockchains enable them to do things that they couldn’t otherwise do.
Many products built on blockchains are financial – exchanges, NFTs, and payments—because these couldn’t be built on traditional infrastructure in the same way.
As blockchains’ capabilities expand, performance improves, and drawbacks get addressed, the number of things built on blockchains increases.
If crypto’s infrastructure continues to improve, more developers will find that its benefits outweigh its drawbacks, leading to more on-chain development.