Ryan Solomon (Sully)

Posted on Aug 16, 2022Read on Mirror.xyz

The Apple Blockchain

Decentralization is kinda bullshit. Apple will have one of the most powerful and widely used blockchains. Now that I have your attention, you web3 degen, let’s dive in.

Will Apple have a layer 1 blockchain in the next year? Probs not. What about in 5? Possibly. If you had to bet if they would have one in 50 years, I’m assuming you’re shaking your head. “Well, yes, in 50 years, sure”. I’d agree. If you’re bullish on web3 adoption, It’s silly to think that Apple won’t build some form of blockchain technology in the next five decades.

My three core theses

  1. Consumers care more about crypto enablement features like NFT technology than decentralization
  2. User experience and decentralization have an inverse relationship
  3. Consumer behavior and user experience are the most important factors in Web3’s broader adoption

Note that all three of that thesis’ have some overlap around the wants of the end consumer and not the underlying technology itself.

Ok so back to Apple! They will eventually have a blockchain, but why? And why would anyone use this hypothetically very centralized Apple Blockchain over ETH, Sol, or Near?

If you’re bullish on web3, you’re excited to see the intersection of crypto and music, movies/tv, finance, gaming, etc. And if someone has all of that software infrastructure already built, it’s Apple. Plus the hardware products work with them seamlessly. To me, it sounds like a lot of dollar signs.

I see your Fortnite mobile NFTs being imported into other games on the App Store. Your Apple TV NFT gives you exclusive content. Then it all be held together with your Apple ID in your Apple wallet. Similar to current web3 products, like Open Sea, this will create Apple's own marketplace to buy, trade, and sell digital assets and charge a small transaction fee.

Next, I think the adoption of the Apple blockchain will be greater and faster than any other chain because of the sheer reach of the $3 trillion behemoth. For comparison, ETH has a total of 4073 DApps (Decentralized Applications) built on top of it versus the 2 million apps on the Apple App Store. Then only around 4000 developers building on ETH vs the 20 million IOS developers. Then lastly Apple already has 1 billion people with iPhones in their pockets. Adoption could be overnight.

Sully, this sounds CENTRALIZED AF… well, the general public doesn’t care. Why?

I believe the two most important factors in border web3 adoption are user experience and consumer behavior. Not decentralization.

The general public cares about products doing what they want as easily as possible for as cheap as possible. When I open Apple Music (I use Spotify), I want my favorite music/podcast for a good price. Simple as that. Great user experience creates consumer behavior that is difficult to change.

If you’re pushing back on me, try this.

Explain NFTs to a crypto noob. Share how they could buy, trade, and sell Fortnite skins, Drake's new album, BTS footage from Ted Lasso, etc. They might think it’s pretty cool because it enhances their user experience and give them a new avenue for self-expression.

Then ask them if they want this experience to be decentralized, I promise you will get responses like “What do you mean? Decentralized?”. Even after explaining it, I’d bet that most people won’t care very much. This is because decentralization causes more problems than it solves with few, but important, exceptions.

I’m not saying that current blockchains won’t have success. Nor am I ignoring the value of decentralization, like the freedom against de-platforming. I am saying that the more decentralized a product becomes the worse the overall user experience will be. For example, if you have a completely decentralized music platform, what is stopping the sale of copywriting music? Replace the App Store with a decentralized competitor and expect viruses and malware. CP on decentralized content platforms… the list goes on.

It all comes down to the question of whether consumers care more about freedom or security. I love both, but for the general public, I predict security. This security creates better user experiences to protect users.

Even beyond the security component, web3 consumer-facing applications have pretty rough user experiences and we all recognize that.

Some products will be far more decentralized than others. Currently, many of the “decentralized” products that web3 natives are using are still owned by VCs. Being on the investor side of things, this makes sense. I believe that “web2.5” products will inevitably be the future. They will have the web2 benefits of security, content moderation (scams, CP, etc.), and a fast-moving centralized team while having web3 benefits of NFT technology. Along with this, some products will give their users some form of governance, but significant decisions will still end up at the core team.

Wrap Up

Maybe you get my points here, but inside, you’re still saying, “But ETH2, Near, Solana, etc are so much better,” and I get it. I’m not saying that other blockchains won’t have success. I’m pointing out that if you’re a $3 trillion company and already in the pocket of 1 billion people, the adoption of your blockchain will be much faster and easier.

A blockchain is only as valuable as applications built on it, the developers that build them, and the consumers that use the applications. Apple has the apps, the developers, and the consumers.

One question that leaves me pondering is, “What will this look like when Google/Android rolls out their blockchain? How will that play out?”.

I think that will have to be for another piece.

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