A Study of Blockchain Consumer Adoption: Cryptokitty and Steem

cryptokitty - blockchain adoption

How do you bring blockchain directly to the consumer? Must speculation first be taken out of the equation? After all, even in the dot com boom, high degrees of trading and speculation occurred before mass implementation of the products and technologies were refined and launched. Furthermore, as we saw before the dot com explosion, was the development of the internet with business to business implementations long before there was an individual consumer focus.

 So, fast forward 20 years and here we are, on the brink of an emerging new decentralized technology with significantly more potential than implementation and the playbook is happening just as it did 20 years ago: B2B implementation, heavy speculation, lots of players in the space, and the looming cloud of a crash promising to bring it all to a bitter cold end. But amidst all this noise and predictability, two companies right now are tearing up the playbook, skipping the line and going straight to the consumer. The glimmering light in the vast space of the blockchain multiverse.

The Cryptokitty Go-To-Market Playbook

Crytptokittys is a pier to pier decentralized gaming app (DApp) that allows users to create, alter, sell and trade their virtual Kittys, promising a fun and catchy gaming experience for users on the Ethereum Blockchain. Crytopkitty has also been the first in the industry to successfully scale and showcase the potential utility of the ERC 721 non fungible token, a unique and distinguishable token offering with vast use implications that include personal identity, distinct-individual product capabilities, rare trade applications and, of course, Kittys. Since its inception in Nov. 2017, Crytokittys has added 250,000 users with over 2,100 daily transactions, and has sold almost 400,000 unique kittens totaling in almost $25 Million (44,500 ETH) in over all sales.  

The Launch – A Hackathon 

Less than 6 months ago, Cryptokitty burst onto the scene promising the fun and mindless entertainment that all great current consumer internet products offer. Originally unveiled during a 2017 Hackathon, Cryptokitty quickly became a playful favorite in the block community and attracted outside developers to help bring the product to launch. These developers then became the first Crytokitty user base. Signaling the strength of open source solutions as, both, a development tool and a marketing platform.

Mainstream Adoption – Less Jargon More Fun 

Something in between a Tamagotchi of the 21st century and a Pokemon-Go of the decentralized world, Cryptokitty has lured the attention of casual consumers by simplifying their product, refraining from any and all technical cyrpto-jargon from their site while retaining the core financial incentives of most blockchain platforms that motivates users. All the while, launching a product that is, dare I say, FUN. Cryptokitty is by no means a perfect product. It’s susceptible to market volatility and while the financial incentives proved useful in the beginning to draw consumers, it has proven to be an ineffective form of consumer retention for obvious reasons. If your consumer are wholly attached to the product for its financial movement, then your consumer adoption will have a direct correlation with the movement of the market.

Financial Incentives

Crytopkitty directly lines up financial incentives with user creativity by creating equity in the value of popular Kittys that can be traded and sold by its creators. This creates a clear & easy to understand incentive in the open source initiative and offers a way to bring in talent to improve product. This is a clear example of one of the many reasons open sourcing will be a future of creative company employment and expansion.

Metrics – The Rise and Fall 

During its meteoric launch, Crytopkitty reached an average daily active user count of 14,000 in less than two weeks. The transactions accounted for anywhere between 11%-25% of all Ethereum transactions at any given time during that period, singlehandedly slowing down the Ethereum network. However, with a primary reliance on financial incentives and a lack of forward movement of the actual product, Cryptokitty usage has fallen even faster than the value of the market. With a peak of 14,000 active daily users in Dec. 2017 and a current daily usage of just 600, Cryptokitty has seen a usage decline of 95%. Proving to be even more volatile than the over all crypto market valuation, with a decline of 60% in the same period. With current total users at 250,000; daily active users make up for less than 1% of their total ecosystem. Cryptokitty has, still, proven to be a profitable product. The company keeps 3.75% of all breeding and selling auctions. To date, there have been almost 400,000 kitty sales with an average price of just over $65, making the company an estimated $1,000,000 in just 6 months. A huge feat, on the blockchain platform, from a perspective of revenue that comes purely from product movement between consumers rather than coin liquidation.

Moving Forward, The Customer Always Matters

The success of Cryptokitty, as a consumer product, exists in the fundamentals of any successful consumer product, whether decentralized or not. A Smart, simple, fun product, that is easy to understand and that connects with consumers. The limitations of Cryptokitty as well as other blockchain consumer products may lie in the current limitations of the industry. Low consumer knowledge, low consumer adoption, and slow transaction times. Pokemon-Go, a centralized consumer product on a much bigger stage accounted for just 5% of app daily active usage, yet has retained 90% of its American consumers in this past year with 80% of users making in-app purchases, resulting in revenue of over $200 million dollars. It’s clear that the potential for consumer products in the DAPP world is relevant, however the potential must be met with higher overall consumer applications of DAPPs, smarter connectivity with consumers, better marketing, and a consumer retention plan that is equally as strong as a consumer capture plan.

The Steem Playbook

Introduced in March 2016, Steem is a unique Blockchain that works as a platform for its flagship decentralized social media platform, SteemIt. Initially launched as an open source crypto message board, SteemIt has evolved to a full-fledged social media platform reaching almost 1,000,000 total users, 200,000 daily posts, 2,100 new accounts added daily and a current market cap just shy of $800 Million.

The Open Source Community 

Like Cryptokittys and most companies on the blockchain, SteemIt offers strong financial incentives to users for providing the social media community with strong, quality content. Even in the 3rd month of its inception, Steem distributed 10% of its market cap ($1.3 Million at the time), as rewards to its committed users. A giveaway program that was unprecedented at the time and offers glimpses into the current utility value of drivers such as airdrops as a new launching platform. This incentive has proven strong in the world of social media. Even in the centralized business world, companies like Youtube, provide assistance to influencers on their platform. Steem has also stayed true to their community first philosophy, having implemented one of the strongest uses of open sourcing in the ecosystem. From tech development, to user acquisition, Steem has not been shy about reaching out to its community to build a stronger product. As the old saying goes, 2 heads is better than 1, and a decentralized platform has, embedded in it, the ability to scale that to the thousands. This utopian stance has been what has allowed SteemIt to scale up to an almost 1,000,000 person user base with 70,000 daily active users.

Value = User Growth 

Steem has seen its fair share of market volatility, however the correlation between market volatility and users is far more detached than that of Cryptokitty. With a 70% decrease in coin value since December, yet 5x user growth in the past year with strong daily active user retention. Currently the daily active user rate of 7%, compared to a 15% daily active user rate from the centralized parallel company, Reddit, it’s clear that SteemIt is already detaching itself from pure cypto and lining itself up for major growth and mainstream usage.

Building a Crypto Moat – Thinking Long Term

According to a post by Steem, on their flagship website, SteemIt, last year; Steem is focused heavily on user growth with a plan to further open source their platform with a three tier goal of building Communities, Effortless Onboarding, and the implementation of a Mobile App. They are also implementing a plan to attract other decentralized social media sub categories on to their block, positioning themselves to be the umbrella platform for decentralized social media, further widening their moat in this space. With the combination of great incentives, high retention rates, steady user growth (that can be handled steadily in their block), a focus on their product, direct connectivity with their community and a plan to deepen their place in the decentralized social media space, it’s clear why Steem is a favorite in the race to consumer facing applications in the decentralized ecosystem as the ecosystem, itself, continues to grow.

In Conclusion

What Cryptokitty and Steem are both succeeding in, are the fundamentals that most companies in the crypto ecosystem are falling short in (in one way or another) when it comes to making great consumer products: creating consumer content that is easy to understand and easy to use, utilizing creative ways to attract a great developer network, and focusing on consistently building regular users to generate revenue. With the extensive use of open source implementations, and the shift from crypto-centric jargon to mainstream user face adoptions, it’s clear to see that Crytokitty and Steem are quietly paving the way for how companies will build future consumer products and how individuals interact with this promising new technology.

Complimentary Consultation

Contact our team to learn more and grow your business online.

Miami, FL (HQ)
117 NE 1st Ave - FL 4
Miami, FL 33132
Orlando, FL
300 S Orange Ave - #1000
Orlando, FL 32801
Ashland, OR
415 Williamson Way
Ashland, OR 97520
Las Vegas, NV
5940 South Rainbow Blvd
Las Vegas, NV 89118

Questions? Give us a call

(800) 270-1656

Blog - Blockchain Division - Site Map - Privacy Policy
Copyright © 2024 - iAnalyst Inc. - All Rights Reserved

Contact iAnalyst

Book a personal consultation or give us a call at (800) 270-1656