The first half of 2018 has been difficult for crypto investors. The fervor that dominated the market in late 2017 has waned, leaving questions about regulatory uncertainty, ICO governance, and market manipulation. Even investing in “large cap” tokens, which seemed like a sure bet to some, has been revealed to hold sizable risk — Bitcoin, Ethereum, and Ripple have all seen their prices slashed to less than a third of their highs.

While this price volatility has resulted in some retail investors exiting the space, we haven’t lost enthusiasm about the fundamental value of blockchain. We believe that the true opportunity in crypto lies not in speculative trading and “get rich quick” schemes, but in the long-term development of coins that function as currency and enable improved communications, transactions, and other enterprise and consumer processes. (Mike Maples from Floodgate expanded more on this mindset in his great article Slow Money Crypto).

That being said, the first “killer app” of blockchain is undoubtedly cryptocurrency. Recent fluctuations have prevented most coins from being used as true currencies, but as prices stabilize, we believe that crypto has huge potential to beat out fiat currency in two of the three functions of money (and at least tie the third):

We’re hopeful that as blockchain technology develops and some of the investment buzz dies down, we’ll see crypto gain widespread adoption as currency. In the meantime, we’re excited to see signs of life in other parts of consumer blockchain. Cryptokitties exploded onto the scene in late November, 21 Inc. pivoted from hardware to a commercial social network (Earn.com, later acquired by Coinbase), Steemit grew to more than 350k users and distributed upwards of $30M to community members, and Telegram announced a $2B ICO (preceded by Kik and YouNow).

According to Dapp Radar stats (data pulled on 7/20), gaming currently dominates dApp usage, representing the plurality (42%) of the top 50 dApps, followed by Exchanges (22%). These are currently the only two categories whose top 50 dApps see upwards of 100 DAUs and $100k weekly transaction volume, on average. (Check out Chris McCann’s awesome post for more stats!)

All data from Dapp Radar as of 7/20 at 5 p.m. We re-categorized all Dapp listings under the “High-Risk” category as “Gambling”, and also re-categorized several apps listed under “Other” that we believe do fit into another category. All data is for the top 50 dApps only. $USD volume is calculated based on Ethereum average price on 7/20 of $503.

While no dApp has become a mainstream hit, it’s a very promising sign that even a small group of dedicated users is willing to jump through the technical hoops to engage on these platforms (especially given the counterparty risk of exchanges, custodians, and the dApps themselves, since the space is largely unregulated). We’re excited about opportunities to engage these early users, and are looking for dApps and platforms with the following characteristics:

Data from Bloxy shows a severe decline in Cryptokitties market activity — with DAUs down to <500 in early July, from 15k+ at peak last November.

Even heavy crypto users have trouble with the usability of most dApps, as evidenced by the tweet above referencing Augur’s recent launch.

Some of the early success cases in consumer blockchain fall within these parameters. The Brave browser (which recently announced more than 3M monthly active users) has many advantages beyond security and privacy: it’s extremely fast, blocks standard ads, gives users more control over ads they do see, and allows users to earn revenue from these replacement ads. The browser also takes advantage of an existing community that coalesced around private browsers and search engines like DuckDuckGo and Tor.

The Brave browser opens with a tab showing activity blocked (above is a screenshot from a Reddit user). Users tend to save 2–3 hours of time in only a few months of using Brave.

As this space continues to evolve, we’re also excited about platforms that allow consumers to access multiple blockchain apps in one place, particularly if they streamline the onboarding and verification process. Blockstack is a great example of this, and Status is another. We’ve outlined some of the consumer-facing blockchain apps we’ve seen in the market map below, many of which operate on Blockstack or Ethereum (which Status uses).

*Note: We’ve purposefully left out trading exchanges and P2P payment startups. There are too many of these to list, and we see them as fulfilling the “money” use case, while this post is focused on other consumer blockchain implementations.

From an investment perspective, we’re looking for consumer blockchain platforms that can attract a critical mass of users over the next three to five years. This will be more difficult in some categories than others given existing non-blockchain competitors and how much value blockchain can truly add. Here’s a few markets that we are particularly excited about:

Thanks to Saar Gur for his help with this article!

Thanks for reading! We’re excited about the opportunity to build amazing consumer applications in the blockchain space, and would love to talk to anyone working on something we should know about.

We’d also appreciate your questions or feedback — you can reach us at [email protected] or on Twitter @venturetwins.