In the English article discussing blockchain applications, some blockchain applications are described as a solution looking for problems. Chinese means to find solutions to problems. It means that the application has no actual problems to be solved. Unfortunately, this phenomenon is widespread.
In the past few years, I have come into contact with many entrepreneurial teams that focus on blockchain applications and companies that provide blockchain solutions. I found that a common problem is to build an application to find the problem. For example, blockchain technology has the characteristics of non-tampering, so some teams try to apply this function to the traceability of commodities. Some teams believe that the future development of blockchain technology lacks a technical component, so they focus on providing such solutions. There are also some teams trying to commercialize some theoretically feasible technologies now. These strategies either underestimate the complexity of the overall solution, or are too advanced.
catch the moment
When converting technology into a solution, a key factor is timing. Products that are too advanced cannot be accepted by the market in a timely manner and therefore cannot create commercial value. A product that is too lagging, no matter how superior its product performance is to the existing products in the market, and no matter how much resources the product promoter has, it is difficult for such products to be accepted in the market. IBM’s PC operating system OS2 is the most representative case in this regard. Unfortunately, in the current blockchain application market, there are both too advanced and obviously lagging situations.
To be fair, after a new technology emerges, it is difficult to judge whether it can generate actual value now or whether it is too advanced. On the one hand, such a judgment depends on the specific operator’s judgment on the feasibility of the solution, and on the other hand, it is also how much resources the operator can use. For operators with resources, it does not have the pressure to realize commercial value in the short term, so it can go ahead long in advance. Such applications are particularly manifested in infrastructure. Because such operators have resources, they strive for more ambitious goals. But such a strategy may also be too advanced to persist until the arrival of the tide. A data center site leased by a company I have previously served was built by an optical cable company before. However, this optical cable company obviously did not insist on large-scale use of its services. Therefore, even for operators with sufficient resources, timing is also very important.
Specific to the blockchain application field, the participants who provide infrastructure construction face the same risks. These infrastructure parts include the underlying blockchain, digital asset generation platforms, wallets, custody, trading platforms, and even stablecoins. These underlying technical and tool-based applications do not directly generate value in themselves, and need to be used by related business applications to realize their use value. If the application development in this area is too early, it is very likely that you will not be able to persist.
Know your position
In order to avoid the situation of finding a solution to the problem, the relevant team must be clear about the goal it is pursuing. If the team’s focus is research, it doesn’t have to consider whether it can generate commercial value immediately, just focus on the field it is researching. For example, the bottom layer of the Internet of Things, the communication between computers and the distributed storage of data, and so on. But for companies that focus on providing specific solutions, they should not be obsessed with certain technologies, but should focus on using existing technologies on the market to provide a solution. The goal is to solve the problem, not to develop and perfect a technology.
In the process of providing such a solution, one must avoid using technologies that are still in the early stages of development. That would spend a lot of time on perfecting this technology and all the elements needed to promote this technology on a large scale. Such an operation mode will consume a lot of resources, take a very long time, and the risk will be very high. To use a popular metaphor, it is a person who wants to open a restaurant, starting with farming and raising pigs.
Minimize costs
When developing and promoting a new product, there is great uncertainty about whether the market will accept it now. In order to persist in the real development of the market, an important factor is to minimize operating costs. Bitcoin is the best example of this. Due to the superiority of Bitcoin product design, it relies on its incentive mechanism to attract resources from the society to support its operation together. Therefore, it has been launched from the beginning of 2009 and has been developed to today, becoming a product with a market value of more than 200 billion US dollars. The current various DeFi are also excellent designs in this regard. The operation of DeFi does not require human involvement, and does not require any additional capital and physical investment. The application of DeFi can therefore be continuously improved to meet the real needs of the market.
Matching product functions with market demand
In the process of developing technical products, the most important thing is the matching of product functions with market demand, which is commonly called Product Market Fit, PMF. A product can only be promoted quickly if it can solve the problems that urgently need to be solved in reality. In such a landing process, the superiority and complexity of technology are not the key. Appropriate application of a technology can solve practical problems, which is the most critical. The most representative case in this regard is Facebook. The technology used by Facebook is ordinary website technology. But because Facebook can meet the social needs of the public, it has developed into one of the world’s largest companies by market value.
In my blockchain tutorial, I proposed that in a successful blockchain-based application, the proportion of blockchain in the entire solution may not exceed 10%. Whether a solution is successful is not how much it applies to blockchain technology, but whether it reasonably applies the functions of blockchain technology to solve an urgent problem. Traditional blockchain technology includes many features, such as network-wide consensus, full-node accounting, non-tamperable information, and direct digital asset exchange between peers. In a successful solution, as long as a few of the functions, or even one of them, can be applied appropriately, it is completely fine.
