a16z: Misconceptions about Crypto Assets Applications, the Three Misunderstood Truths

Can the encryption world really break into the mainstream market?

**Written by: Christian Catalini, **a16z

Compiled by: Portal Labs

Just a few weeks ago, Alex Blania, the founder of World Company, revealed the latest strategic cards in front of a full house of big shots in the encryption circle. While it was eye-catching to seize the opportunity of policy to enter the U.S. market, the real stroke of genius was their lightning breakthrough into mainstream consumer scenarios. This marks that cryptocurrencies are tearing off the “geek club” label and truly entering the battlefield of everyday business.

This move is quite ruthless: it’s actually difficult to fool Americans into using iris scans for a “real person authentication badge”, even if privacy protection is promised (and the timing might be too early). But they have quietly done something big: over the past three years, they have laid three layers of insurance for this crazy plan.

First create real product value, then use Token to add some sweetness.

World also walked an old path in the early days: relying on Token incentives to attract new users. However, this approach, which was praised as the “successful paradigm of Bitcoin” and later copied by countless projects, is actually a case of reversed causality. In early testing, World fell into a pitfall— the incentives were too aggressive; users indeed came, but the privacy circle and some developers began to criticize: “This is not growth; this is using profits as a cover.”

But don’t forget, the reason Bitcoin has come this far is that it has provided an unprecedented asset logic from the very beginning: decentralization, a fixed total supply, and no central bank control. That’s right, miner rewards and the myth of skyrocketing prices attracted early speculators, and later attracted institutions and nations. But the builders who have truly remained are not focused on the “get rich expectations,” but on its radical potential as a new asset and payment system.

Most of the projects that copied the gameplay are now queuing for burial in the “graveyard” of the encryption world.

The encryption world cannot escape the basic laws of economics. Just like any entrepreneurial project, first create a real and usable product, and then use Tokens to solve cold start or ecological incentive issues. Otherwise, no matter how many economic models there are, they are just theoretical discussions.

Blania presented three real pain points as evidence: socializing, gaming, and credit fields. Nowadays, bots are rampant, making it hard to distinguish between human and machine. Therefore, he brought the World’s “real person verification” system to the forefront and explained clearly: why it is worth it for you to scan your iris on a sphere to exchange for a “I am a real person” ticket.

In an era where AI is invading everything, we will eventually face the certification demand of “Are you human?” World is just a step ahead.

Learn to Deal with “Infrastructure Reversal”

In the early years of the cryptocurrency boom, we all jumped in. When I was designing the Bitcoin experiment at MIT, I genuinely believed that it would completely disrupt the payment and financial systems within two or three years. Ten years have passed, and we have only just begun.

To truly push encryption products beyond the circle, it is necessary to align with the experiences that traditional users and merchants are already accustomed to. This means building a bridge between the old systems and new technologies. Often, this bridge requires making some compromises that may seem heretical in the eyes of “encryption fundamentalists.”

But at this stage, there’s no way to avoid it. You have to go through that awkward period of “new and old coexisting”—what Andreas Antonopoulos calls infrastructure inversion. Just imagine: dial-up internet hogging the phone line, the first broken car rumbling over the gravel road; it just doesn’t sound right.

This “technology fence-sitting period” makes it difficult for the new system to be widely implemented at the beginning, and it can only serve as a patch in certain niche scenarios, without being able to disrupt the entire system. The AI field also faces similar dilemmas.

World initially tried to skip this stage, directly launching the tokens as the main characters. But the new version has completely reversed: embracing “infrastructure inversion,” returning to product practicality, and moving more steadily and deeply.

Don’t fantasize about creating a wallet that can be used globally without integrating with the old systems. Deposits and withdrawals need to be as smooth as PayPal made online payments back in the day; otherwise, how can we talk about mainstream adoption?

This is why the new version of World App integrates with Stripe and Visa cards as soon as it goes live. Trust, familiarity, and practicality all come together in one day. It is also because it is willing to “be backward compatible” that traditional finance has the opportunity to observe and test the waters, rather than being directly eliminated.

This logic is quietly pushing encryption towards the behind-the-scenes of cross-border payments. In the future, perhaps technology can gain a foothold, but before that, it first needs to “borrow” on the old track, streamline the process, and minimize friction.

Don’t forget, many encryption mechanisms (including economic models) only have magic when scaled. But to achieve scale, someone needs to get on board first. Without even a ramp to get on, no matter how perfect the model is, it will just be running in place.

Whether encryption can succeed ultimately depends on its implementation.

Like all new technologies, encryption is not destined to win. Don’t believe the myths of those self-congratulatory fans. To be more specific, the “decentralization” which is the soul pillar of encryption and its most critical contribution to disrupting the market has never been a sure thing.

Stablecoins are a good example.

In order to connect to the traditional financial system, the encryption world has produced such a tool, which is indeed useful. But problems have also arisen: the specter of centralized management and closed networks has been invited back.

I tend to believe that open architecture will ultimately prevail, but don’t forget that those “vested interests” have no reason to make it easy for you to pass.

Blania and his team placed a big bet: betting that users care about decentralized control over their data, and also betting that companies will build better user experiences on this system. Once decentralized identity disrupts the existing landscape, how difficult will it be to manage – centralized players already have a natural advantage in UX and functionality from the start.

So if World wants to overtake in the curve, the first step is to persuade users to be willing to give up their biometric data. The U.S. market has already started, and soon we will see if they can find a balance between “privacy vs convenience.”

Of course, a gentler “boarding method” might be smarter: for example, first send out a familiar “certification badge” that can unlock extra features in your commonly used app. Don’t rush to have people immediately focus on the sphere to scan their irises. The problem is that this makes identity verification less reliable, making it easier to be exploited, circumvented, or misused.

Blania’s judgment may not be wrong. In this endless cat-and-mouse game with AI, only military-grade biometrics can serve as a truly “unbreakable” proof of identity. But that doesn’t mean he can’t be a bit gentler; there’s no need to push users hard into the sphere on the very first day.

Of course, those who engage in airdrop activities will line up online, but this wave of sweet stimulation will last at most a few days; once the subsidies stop, the heat will dissipate. True sustainable growth only exists in the daily realization of value, and this is precisely their real opportunity.

If the World App can break the circle with a payment experience, combined with a globally smooth deposit and withdrawal channel, it may truly hit a breakthrough.

Conclusion

Now it seems they have staked the entire rhythm. Next, there is only one thing we need to watch:

Can the encryption world truly break into the mainstream market?

Regardless of whether the World experiment succeeds or not, I hope to see more encryption projects willing to shift the spotlight away from “token economics” and “price fluctuations” to truly create products that are usable in daily life.

Because this shift, although not glamorous or lively, is the crucial step that the entire industry must take to enter the mainstream market.