a16z: Misconceptions About Cryptocurrency Applications, Three Misunderstood Truths

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Original Title:

Original Author: Christian Catalini, a16z

Translated by: Portal Labs

A few weeks ago, Alex Blania, founder of World Company, unveiled his latest strategic move in front of a room full of crypto industry heavyweights. While leveraging favorable policy winds to target the U.S. market was a notable move, the real masterstroke was their lightning-fast push into mainstream consumer scenarios. This marks a significant moment as cryptocurrency sheds its "geek club" label and enters the battlefield of everyday commerce.

World’s bold approach is both audacious and calculated: convincing Americans to trade an iris scan for a "proof of humanity badge" is no easy feat—even with promises of privacy protection (and it might still be too early for this concept). However, they've quietly been laying the groundwork for this ambitious plan over the past three years, assembling a triple-layered safety net behind the scenes.

Create Real Product Value First, Then Add a Sweetener with Tokens

World initially followed a beaten path: using token incentives to drive user acquisition. This strategy, heralded as the "Bitcoin success paradigm" and later replicated by countless projects, is actually reversing cause and effect. World hit a snag during early tests—over-aggressive incentives brought users, but drew criticism from the privacy community and some developers: "This isn't growth, this is just putting lipstick on a pig."

But don’t forget, Bitcoin succeeded because it offered a groundbreaking asset logic from the very beginning: decentralized, fixed supply, and free from central bank control. True, miner rewards and meteoric price surges attracted early speculators, and later, institutions and even nation-states. However, the builders who stayed for the long haul were drawn not by "get-rich-quick" dreams, but by Bitcoin’s radical potential as a novel asset class and payment system.

Many projects that copy-pasted Bitcoin’s playbook now find themselves waiting in line in the crypto world's "graveyard."

The crypto world is not exempt from the basic laws of economics. Just like any startup, the first step is to build a genuinely useful product, then use tokens to solve bootstrapping or ecosystem incentive problems. Otherwise, even the most elaborate economic models are nothing more than exercises on paper.

Blania addressed three real pain points to make his case: in socializing, gaming, and credit, bots are rampant, blurring the line between humans and machines. He then put World’s "proof of humanity" system on the table, clearly explaining: why it’s worth scanning your iris to get a ticket that says, "I’m a real human."

In an era where AI is rapidly infiltrating everything, we will inevitably face the need to verify "Are you human?" World is simply getting a head start.

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Mastering the Art of "Infrastructure Inversion"

Back in the early crypto frenzy, we all jumped in. When I was designing Bitcoin experiments at MIT, I genuinely believed we could completely revolutionize payments and the financial system within two to three years. Ten years later, we’re barely scratching the surface.

To truly push crypto products beyond the crypto-native audience, they must align with the experiences that traditional users and businesses have long grown accustomed to. This means building a bridge between the old system and the new technology. And this bridge often involves some compromises that a "crypto purist" might consider heretical.

But at this stage, there’s no avoiding it. You must navigate through that awkward phase of "new and old coexisting" — what Andreas Antonopoulos calls "infrastructure inversion." Picture it: dial-up internet tying up your phone line, or the first clunky car rattling down a gravel road. It’s not exactly smooth.

This kind of "technological limbo" makes it hard to roll out new systems at scale initially. They’re limited to patchwork solutions in niche scenarios, far from disrupting entire systems. AI has faced similar challenges.

World initially tried to skip this phase, pushing tokens into the spotlight before the onboarding was ready. But the latest version represents a thorough pivot: embracing "infrastructure inversion," focusing on practical usability, and advancing with both stability and depth.

Don’t fantasize about building a global wallet that ignores the old system entirely. On-ramps and off-ramps need to be as seamless as PayPal made online payments back in the day — otherwise, forget about cracking the mainstream.

That’s why the new version of the World App integrated Stripe and Visa right out of the gate. Trust, familiarity, usability — achieved in one fell swoop. By choosing to be "backward compatible," it opens the door for traditional finance to engage, experiment, and adapt, rather than being outright displaced.

This same logic is quietly propelling crypto into the backdrop of cross-border payments. In the future, the tech might rise to the forefront, but until then, it needs to "borrow" old rails, refining processes and reducing friction to the absolute minimum.

Never forget: many crypto mechanisms (including economic models) only unlock their true potential at scale. But to achieve scale, you need people to get on board first. If there’s no ramp for onboarding, even the most flawless model will go nowhere.

The Future of Crypto Hinges on Real-World Adoption

Like all new technologies, crypto isn’t guaranteed to win. Don’t buy into the myth perpetuated by overzealous evangelists. To be more specific, "decentralization" — the core pillar of crypto’s ethos and its most transformative market contribution — has never been a certainty.

Stablecoins are a great example.

To integrate with the traditional financial system, the crypto world gave rise to this tool, and indeed, it has proven quite useful. However, it also comes with its own set of challenges: the specter of centralized control and closed networks has once again been invited back in.

I’m inclined to believe that open architectures will ultimately prevail, but it's worth remembering that those vested interests won’t let you pass easily.

Blania and his team are making a big bet: betting that users will care about decentralizing control over their data, and that businesses will build better user experiences on this decentralized system. If decentralized identity shakes up the current landscape, it’s going to be a tough battle—centralized players inherently have a head start when it comes to UX and functionality.

So if World wants to pull off an overtake on the curve, the first step is convincing users to hand over their biometric data. The U.S. market is already up and running, and we’ll soon see if they can strike the right balance between “privacy vs. convenience.”

Of course, a more gentle “onboarding approach” might be smarter: for instance, starting with something familiar like a “verification badge” that unlocks extra features in the apps you already use. Don’t rush to shove a glowing orb in front of users and make them scan their irises right from day one. The problem, though, is that this method of identity verification won’t be as robust—it’ll be prone to exploitation, manipulation, or outright abuse.

Blania’s assessment might not be wrong. In this never-ending cat-and-mouse game with AI, only military-grade biometrics can serve as the truly “unbreakable” proof of human authenticity. But that doesn’t mean there isn’t room for a gentler approach—one that doesn’t push users into the orb on the very first day.

Sure, airdrop hunters will line up on launch day, but the sugar rush from that dopamine spike won’t last more than a few days. Once the subsidies stop, the buzz dissipates. Sustainable growth can only be rooted in delivering everyday value, and that’s precisely where the real opportunity lies.

If the World App can use a seamless payment experience to break into the mainstream, combined with globally accessible fiat on/off ramps, then it might just hit the jackpot.

Conclusion

So far, they’ve bet everything on this rhythm. What comes next boils down to one single question:

Can the crypto world genuinely break into the mainstream market?

Regardless of whether World’s experiment succeeds in the end, what I truly hope to see is more crypto projects willing to shift the spotlight away from “tokenomics” and volatile “price movements” toward building actually usable, everyday products.

Because while this shift might not be flashy or exhilarating, it’s the very bridge the industry needs to cross in order to step into the mainstream market.