Consumer cryptocurrencies detailed: The cradle of killer apps?

Written by: BlockchainBrett

Compiled by: Luffy, Forsight News

Imagine we had to explain to people very early oncryptocurrencyThere are use cases outside of finance, which is where we are currently.

NFT technology and intelligencecontractIt has the potential to change and improve every consumer industry, including content, social media and gaming platforms, with TAMs of $2.6 trillion, $200 billion and $250 billion respectively.

The future of the internet will be built on permissionless infrastructure, based on intelligence that developers can freely createcontract. It also includes owning digital objects (NFTs) online that will create digital relationships and online identities, all under the control of the user.

Nearly all network elements will have scalable infrastructure and be ownable. Owning digital objects will become the primary business model for any consumer-facing, digitally native application.

consumercryptocurrency可能是吸引用户使用cryptocurrency的主要类别。大多数应用程序都会让用户参与链上操作并拥有 NFT，无论用户是否意识到。

Why consumers need smart contracts and NFT technology

NFTs represent a unit of ownership of a unique digital object or set of digital objects that makewalletAbility to own and control digital objects.

For context, Bitcoins are the first cryptocurrency, which makes them scarce and impossible to copy. An NFT simply applies it to a file, referencing any file to an NFT makes it scarce and cannot be copied.

Any file format (e.g. .jpegs, .pdfs, .wavs, .mp3s, .mp4s, etc.) can now be scarce, valuable, and ownable. Called Cryptomedia, or Content NFTs.

These file types form the basis of our consumer content and media industries, such as art, music, podcasts, movies, and more. Digital objects bring new capabilities to these industries, potentially transforming their existing business models.

In addition to NFT,Blockchainand smart contracts also facilitate permissionless applications in an open economy. These can be used as developers or companies inXiaobai NavigationPlatforms built on open infrastructure and integrating their economies have the potential to transform industries such as social and gaming.

What consumer use cases are exciting?

When new technology emerges, people often want to replicate existing systems. Even more exciting, however, is that technology enables new behaviors, applications, and business models that were previously unimaginable.

What consumer activities were not possible before smart contracts and NFTs? Which industries might ownership of digital objects change?

• Before the advent of NFTs, digital art could not be owned, purchased, or sold;

• Collecting content is a new business model for other types of media besides art (music, video, articles, podcasts, etc.);

• A permissionless social media platform for social applications to build and monetize content;

• A platform for game apps to build permissionless games and monetize them through game collectibles and an open economy.

There are also use cases that no one has yet considered. The purpose of NFT is not just to represent ownership, they themselves can be dynamic and interactive. For example, NFT has its ownwalletAnd interact directly with applications through standards such as ERC6551 or Tokenbound accounts.

What’s the current state of the consumer cryptocurrency space?

The topics to focus on here are user experience, speculation, and gamification.

The user experience for consumer encryption applications has improved significantly over the past few years. Before, you had to be inexchangeBuy cryptocurrencies, downloadwallet, writing the mnemonic phrase costs $20 in transaction fees, and each NFT requires a minimum of $200.

On top consumer encryption apps like Sound, users can log in with email and use Apple Face ID to get a song for less than $1. Users may not even realize they have set up their wallet, converted from cash to cryptocurrency, and logged in at Layer 2 BlockchainPurchased music NFT on .

The integration work required to build the best available experience remains arduous, with app founders taking 3 to 6 months to add wallet providers, credit card on-ramp, and Layer 2 integrations. Even with a full set of integrations of all the best available tools, there is still a need for more user experience tools, especially from a developer and user perspective, to integrate Layer 2 networking.

Ultimately, applications are ready to serve more users, but more infrastructure and user experience tools are still needed to prepare for mainstream adoption.

Developer’s UX Stack

Speculation is one of the core features of online ownership and one of the advantages of digital objects. Many consumer crypto applications are starting to revolve around representing a type of on-chain digital object as an NFT, whether it's digital art, music, podcasts, gaming items, social posts, etc., enabling users to become collectors.

Web users take ownership of their favorite things, creating a new market. They can benefit from what they choose to participate in and support. While this may be an unpopular opinion, speculation is a key aspect of NFTs as it introduces an open market for any online entity.

While speculation is a prominent aspect of owning digital objects, it is not the only functionality offered to users, even in the simplest form of owning on-chain digital objects as NFTs. For online collectors, two other key value propositions are relationships with creators and those around them.CommunityBuild relationships and strengthen their online identity with on-chain asset data.

Atomic unit of NFT

Gamification enhances user interaction with applications, beyond ownership and speculation. The consumer cryptocurrency space has reached a level of maturity where it is starting to focus on integrating additional experiences around digital collectibles using gamification capabilities. Key elements of gamification in consumer cryptocurrencies include aspects related to gameplay, social gratification andCommunityAwareness-related user experiences.

There are already many examples of gamification in this space: gameplay in games such as Axie Infinity, Dookey Dash and The Worlds Largest; social gratification in media and entertainment applications such as leaderboards on Sound, SuperRare and 9dcc; through A range of unique NFTs (such as Punks, Squiggles, and Apes) to enhance the project's sense of community.

Gamification of apps can attract more users and grow during bear markets, something that ownership cannot. By prioritizing gamification and making speculation a secondary feature, cryptocurrency-based applications can engage users throughout market cycles. When markets rise, speculation can spur faster growth.

Key components of gamification

Looking ahead to consumer cryptocurrencies

Looking to the future, what we are most excited about is the world of encrypted media and autonomy powered by NFT technology and smart contracts.

encrypted media

The crypto media space encompasses the infrastructure and applications that place or interact with content such as art, music, podcasts, articles, TV/movies, and social posts as NFTs on the chain. The first major phase in this space involves a shift in content monetization models. Instead of relying on consumer subscription or advertising-based models, it is moving toward selling digital objects directly to consumers, much like the models in existing Web2 games.

Many early platforms have been established covering a variety of content types. SuperRare and Foundation serve the field of digital art, Sound and Catalog serve the field of music, Paragraph and Mirror serve the field of writing, Pods serve the field of podcasting, and so on. Most leading products in each field have mature user experiences, including features such as email login, Layer 2 support, credit card entry, and cross-chain NFT purchases.

Much of the activity around the ecosystem is formed around ownership and collectability, with end users becoming collectors to establish their own on-chain identity, build relationships with creators, and speculate on great content and creators.

As many leading apps overcome user experience challenges, the next product release is focused on building gamified experiences and better delivering the instant gratification that comes with ownership. In crypto media, the gamification aspect places a strong emphasis on accessibility and exclusivity. Early examples include gated chat and tiered access to exclusive content, as well as real-life experiences. Social gratification is evident in rankings of top collectors and viral artists, curator rewards, and social feeds. The community component is highlighted by generating collectibles or unique editions.

In addition to using NFT technology to represent media on-chain, the application is also developing key parts of its technology stack on-chain. They take the form of protocols that provide permissionless infrastructure for their own applications and other applications. These content agreements provide minting, curation, and participation capabilities. Examples include SuperRare's management agreement, Sound, Zora and Manifold's minting agreements, and Titles' publishing agreement. As more layers of the consumer media stack are built on-chain, applications can better customize the user experience and monetize using these new business models.

It is widely believed that crypto media and content NFTs primarily benefit artists and collectors, rather than users. But this model actually promotes free consumption and valuable collection, which is similar to the free model in games. It provides the best experience to consumers as it eliminates advertising and upfront fees.

The combination of superior consumer experience, gamification of the user base and ownership interests has the potential to revolutionize many media and content industries.

To better understand early adopters in the crypto media space, let’s explore a simple user journey.

• Bob enjoys music for free. If he likes a certain song or artist, he can collect their music. His purchases directly funded the musician. The music he collects becomes part of his online profile and contributes to his ranking on the charts (based on the number of songs he collects). The collection gives him access to exclusive chat rooms where musicians can share updates and other information. As Bob's collection continues to grow, he has access to more exclusive content.

• In turn, musicians expanded their audiences through these collectors. As an early collector, Bob was able to make a profit by selling his early collection of songs to new collectors interested in early, limited-supply versions.

autonomous world

Autonomous World (AW) is a fully on-chain experience powered by smart contracts. These contracts act as servers and enforce the logic of the experience, with early use cases focused on gaming and social. The core value of an autonomous world is rooted in the permissionless and composable smart contract infrastructure that drives experiences, and the ownership of entities in an on-chain open economy.

The autonomous world of gaming is called Fully On-Chain Gaming (FOCG), where the rules and economic mechanisms of the game are completely managed by on-chain smart contracts. This structure allows developers to build additional game applications on top of existing games without having to obtain a license. They can expand existing games, enrich lore, and further foster open economies. Users can also reap the benefits of digital object ownership within the game’s on-chain economy.

Autonomous Worlds pushes the boundaries of existing games and the business model of the Web2 games industry. So far, most games in the cryptocurrency space have followed the Web2.5 approach, using NFTs as in-game items. However, before the advent of FOCG, the business model was very similar to existing Web2 games. While a Web 2.5 approach anticipates that in-game items will interoperate with other games or social ecosystems, this is less likely when the game has its own infrastructure and community.

FOCG represents a new paradigm shift that allows games to be built on top of other games as shared infrastructure. Games can benefit from combining popular existing titles with an established user base and aim to enhance the gaming experience by including the underlying gameplay experience and economy. End users can also use UGC to personalize their gameplay, lore, or create additional experiences for themselves and other members of the ecosystem.

One of the most exciting use cases in AW is that non-player characters (NPCs) in games can become NFTs. By leveraging the ERC6551 standard, these characters can have their own wallets, allowing NPCs to be owned by real users who can then use them to act on their behalf.

The AW space is still small but growing rapidly across multiple ecosystems, including Ethereum VM (EVM), Cairo VM (Starknet), Solana VM (SVM), and others. Each ecosystem has open source frameworks, such as MUD built by Lattice for EVM, DoJo built by Cartridge and Realms for Starknet, Bolt built by Magicblock for SVM, etc. Each ecosystem has many games built on top of it, such as Primodium and Skystrife on MUD/EVM, Realms and Dope Wars on DoJo/Starknet, SolCIV and Sage on Bolt/SVM, etc. Even within a specific game, there are multiple spin-off games. For example, the Realms ecosystem has dozens of spin-off games.

Autonomous world map

An interesting example of permissionless expansion of games within an ecosystem is where multiple games across the ecosystem stem from the same lore surrounding Loot. Loot is a collection of 8,000 NFTs represented by an image of white text on a black background. Each NFT symbolizes a bag of Loot, reminiscent of fantasy adventure games. Since launching in August 2021, Realms, Dope Wars, Treasure and more have innovatively expanded on the original series across different frameworks and game engines, each establishing a game of their own ecosystem.

The AW field is still in its early stages and there is still much to be developed. These developments include game engines and service providers, as well as various layers of game protocols such as physics, hidden secrets, missions, world-building, and more. The ecosystem requires significant user experience improvements, including enhanced wallet infrastructure, account abstraction, gas fee optimization, and higher transaction throughput.

Let’s look at the user journey of early on-chain gamers:

• Alice starts the game by creating a character and defeating enemies using acquired weapons. She realizes that her characters, weapons, and beasts all exist in her wallet as NFTs. She discovered another interesting game that expanded on the gameplay of the previous game. In this new game, her character and weapons are fully available, as well as their experience.

• As a developer and experienced AI user, Alice decided to further customize the gameplay. She wants to gain an advantage and get higher scores on the leaderboard. With the idea of sharing her innovation with the ecosystem in mind, she created a tool. This tool expands NPCs into AI-powered characters that Alice can control. Now, she can play games with a group of characters without her having to actively participate.

Crypto Market Needs Consumer Cryptocurrency

While markets are inherently speculative, that becomes less speculative when supported by real user data and metrics to justify valuations. For the crypto market to sustain growth beyond financial product speculation, technology upgrades, and market narratives, the key is to increase the number of users and application adoption.

Of course, there are also users in DeFi, and there is no doubt about the demand and potential of the DeFi industry. But in fact, ordinary users come to consume products. They will adopt consumer behaviors in the media, entertainment and gaming sectors, which is where the majority of usage of crypto applications will come from.

This is what institutional and retail investors care about when deciding whether to invest new capital into cryptocurrencies. To some, consumer cryptocurrency may seem like a great option and an industry with potential, but in reality, we need it and there is no doubt that the killer use case is within it.

The article comes from the Internet:Consumer cryptocurrencies detailed: The cradle of killer apps?

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