Sometimes, Crypto Doesn't Need Crypto. That's Ok

Even passive observers of crypto tech have probably seen the recent explosion of social Web3 app friend.tech. The mobile-based app is pretty simple—you buy a key to enter a specific chatroom. The owners of these rooms tend to be content creators, influencers, traders, or other prominent community members. If people buy the keys of a given creator, the price of the key goes up.

Likewise, if people dump keys, the price of a specific key goes down. Below are some of the top creators on the platform; some of which you may recognize. The biggest creator on the platform, Twitter/X-user Vombatus has a market cap of about $1.6m dollars: pretty incredible for access to a chat app.

Part of friend.tech’s success comes from its social-based virality, another part comes from its early-adopter-wins-most ponzi mechanics, a savvy team promising airdrops and rewarding traders with ‘points’ that will theoretically lead to free tokens: further incentivizing the platform.

Meanwhile, fundamentals make friend.tech look phenomenal, even compared to blue-chip DeFi platforms like Aave and Uniswap. Over the last 24 hours, friend.tech has beat out every DeFi app in fees except Lido; it also beats out every Layer One network besides Ethereum and Tron.

But, when I sit down and really think about it, there’s a catch: there’s no need for friend.tech to exist on crypto rails. Why? A savvy team could quickly create this same infrastructure on a mobile app, use Stripe to process payments, keys could trade back and forth in the same way some gaming digital economies work.

Sure, you could make some arguments about regulation or securities laws or anonymous founders. I don’t buy it.

Yet, it’s undeniable: friend.tech has been a wild, viral success. Is there a contradiction here? Do crypto apps need crypto at all?

I think the success of friend.tech can be summed up by the following:

The value of the crypto community is, perhaps, larger than the fundamental value of the crypto rails it is built on.

It wasn’t immutable blockchains that created the value unlocked by friend.tech, it wasn’t NFTs, sovereign ownership, or anonymity that produced $50m in fees: it was the value directly provided by the users and creators on the app. Crypto simply provided a foundation.

And that’s ok: I think it’s alright to move beyond the ‘hard’ value propositions of blockchains and take stock that billions (or even trillions) of dollars of social capital exists in the crypto space. Many astute technologists and investors advise young people to work in the industries that attract the most brain capital, crypto is certainly up there.

The value proposition of crypto ecosystems has evolved: originally; crypto relied on ‘hard’ value: stateless money, permissionless finance, self-custody. This attracted early technofiles and financial hardliners that onboarded the next tier of intellectual and social capital.

Today, value shifts to the social layer of crypto: the ability to access an ecosystem of millions of bright minds attracted to those original hard value propositions. As friend.tech launched, they launched to this community. Since friend.tech is a crypto native app, they had built in payment structures, digital infrastructure, distribution, go-to-market strategy, and a whole content plan laid out in front of them. It’s hard to imagine that friend.tech would’ve gotten here without the help of the crypto community.

But the ultimate value of crypto moves far beyond this: I imagine that, eventually, crypto will evolve into a broad platform with tools analogous to things like Wordpress, Stripe, YouTube, and Shopify.

Similar, but crypto-native tools can all be built on top of crypto rails--as infrastructure improves, and as people begin to realize that crypto is simply a good platform to build on beyond it’s ‘hard’ utility, I imagine a whole layer of consumer apps will come in to play in crypto arenas.

Simultaneously, as we see with friend.tech, the utility brought by these apps has a lot less to do with the first crypto functionality and a lot more to do with the larger, consumer focused apps that have created trillions of dollars of value in legacy finance markets.

And ideally, that cohort of users will eventually be sold on the specific value propositions of crypto itself. But as friend.tech proves, we don’t need to leverage crypto-specific features to bring crypto to the mass market.

We just need good products—crypto provides the launchpad.