Cryptocurrency adoption is largely driven by speculation and the vision of getting rich quickly. This is unfortunate from a technology perspective, as the utility of blockchain networks may have little to do with high volatility and market sentiment. Tesla's car features also do not change depending on the movement of the company's stock value. It is important to get rid of unnecessary narratives of the past and start building new ones. Adoption Cardano needs narratives that will help it promote the project's mission and raise people's realistic expectations about the technological possibilities. You might think that most people want to speculate and not use cryptocurrencies. The reality is that a large portion of the population is not interested in speculating in one of the riskiest sectors of investing. If adoption is to increase, it is necessary to think about narratives associated with Cardano. TLDR Market capitalization tends to reflect utility and network effects. Communities promise high market capitalization and hope for higher adoption. The low usage of blockchain networks is not a problem for Cardano, but for the industry in general. Blockchain has not yet made its way into the activities people do every day. Only users can have an impact on the direct network effect. Consider that 15 years is not a long time from the inception of smart contracts to the first mass-deployable solution. Let's leave speculation on value growth in the past I don't know of anything else in the world where the most extolled feature of a given thing is the potential increase in value. Corporate stocks grow in value since useful things are produced. Social media stocks grow in value due to a strong network effect. Gold increases in value due to its natural scarcity, industrial use, and long history. The cryptocurrency community has decided to go about it the other way around. They highlight the potential growth in value. This should attract new users, which in turn will increase the network effect and potential utility. This inverted logic has not worked very well so far. The obsession with price growth stems mainly from the Bitcoin community. In part, this makes sense, as potential value growth is the biggest utility for most fans. Newcomers are promised that Bitcoin will be the new money and that most companies and banks will buy in bulk. Having future money bought before others is a significant economic advantage as it will make you rich in a brave new world. Just convince the people around you to buy BTC too. This is the main message of Bitcoin. Increasing adoption is built on the HODL narrative and promises. Just buy an HW wallet, send some BTC to it and wait for what happens next. Bitcoin has a chance to succeed with this strategy. I don't think it's smart for the Cardano community to try to use the same strategy. The mission of the Cardano project is completely different, and it is not necessary to increase the number of ADA holders to be successful. It is necessary to work on growing the number of users and developers that will be creating on the platform. Cardano is closer to a social network than to digital gold. Cardano's growth in importance will be based on the direct network effect, i.e. direct interaction between users. Bitcoin is more about faith. Success is built on the indirect network effect, even though Bitcoin is also a peer-to-peer network. Cardano needs to establish itself as a useful platform to help people solve real problems. The potential is great, but as yet untapped. There are several reasons. It is important to further develop the technology and improve scalability. More important, however, is getting people, companies, institutions, and governments interested in using Cardano. Narratives can help with this. Cardano's platform can be used without having to speculate on ADA value growth. The utility is what needs to be made visible. The value of ADA coins will naturally grow as the network effect grows. Blockchains on which the greatest number of transactions will take place will also be the ones with the highest market capitalization. Basic economics will work well. Let's not promise people Lambo, but let's think with them about what Cardano can help them with. Utility and network effect Cardano is a globally accessible network with low-cost transactions and the ability to issue your own tokens. Smart contracts will enable the full potential of decentralization to be realized. When you think about it, the potential of such a central authority-independent network is huge. Sometimes I come across the opinion that Cardano has no use. Even the internet didn't do much in the beginning. Over time, the number of new useful services grew and the blockchain industry can be seen as a continuation of the success of the internet. Let us not underestimate the interconnection of existing technologies or technological innovations that will simplify or fundamentally improve the use of blockchain. Cryptocurrencies are owned by roughly 350M users. It is only about 5% of the population. If we counted the number of transactions per day on the top 10 blockchains, we wouldn't even get to 100 TPS. Even if we achieved such a TPS, it would only be less than 10M transactions per day. That would be roughly only 3% of people holding cryptocurrencies today. The low usage of blockchain networks is not a problem for Cardano, but for the industry in general. The vast majority of people mainly hold cryptocurrencies but do not use blockchain networks. It doesn't matter if we're talking about Bitcoin, Ethereum, Cardano, or any other network. The goal of the entire industry is to grow the total number of cryptocurrency holders, but more importantly the number of those who will use blockchain networks. Why don't people use blockchain networks more often? There are several reasons for this. Negative historical experience. In times of hype, the low scalability of networks becomes apparent. Settlement takes a very long time and fees skyrocket. Transferring a volatile value is not useful for most people except for buying and selling. Using blockchain wallets is complicated and uncomfortable for people. In addition to these well-known reasons, there is another that is more critical. Blockchain networks have low usage in the real world. Blockchain has not yet made its way into the activities people do every day. Blockchain is not needed to use most services on the Internet. For payments, blockchain is still just an alternative and most people find it more convenient to use internet banking. Social networks do not yet use blockchain, except for the possibility to use NFT as a profile picture. Companies and banks only hold cryptocurrencies, but they don't use the technology much either. There are exceptions, but they are not very visible. It is very convenient for Cardano to be able to send tokens and stablecoins, as it can be more useful for people than sending ADA or BTC. Once stablecoins are widely accepted, people will use them for paying more. However, tokens may be more significant. Their importance may be semi-useless at first. Some people say this about NFTs, for example. Semi-useless tokens may one day give rise to a use case that will be very useful and businesses will start to take advantage of it. People can learn to use blockchain wallets with semi-useful tokens and they won't risk losing wealth in the process. Narratives around Cardano should be all about utility. People need to understand the difference between a centralized and decentralized service and their preferences need to change. A major company or institution must decide to build its own DEX on top of Cardano and teach customers how to use it. If this becomes a reality, decentralization will start to win. Have a realistic time estimate Some people are waiting for the next bull run and think there will be a new era of cryptocurrencies and endless growth. After that, perhaps another bear market will come and interest in cryptocurrencies, including the use of DeFi, will wane. Don't conflate market cycles with technology development and adoption rates. While the bull run attracts newcomers, they are mostly speculators, not real users. Real users must adopt the technology and use it. Those who merely buy a cryptocurrency and wait are speculators. Only users can have an impact on the direct network effect. The growth of the network effect will influence further interest in exploitation. For example, acceptance of stablecoins will depend on user demand. Merchants need to see that people hold stablecoins and want to spend them. The growing use of DeFi will increase the interest of financial institutions to get involved in this business. Speculators have only minimal influence on the network effect. The number of holders of cryptocurrencies may demonstrate an interest in them, but it may not be obvious how people want to use them. Let's take a little trip back in history to see the pace of development. Around 2016 there was a lot of talk about how great it would be if DEXs could be created and replace CEXs. Everyone saw it as a great technological advance. The reality is that at the end of the bull run in 2017, there was no working DEX. At the end of the bull run in 2021, we already had many DEXs. Some of them had and still have relatively high volumes. The ongoing bear market is exacerbated by the collapse of centralized services including big CEX. This may be an important moment for all cryptocurrency fans as it will make them think differently. Many have learned to use hardware wallets and understand the importance of self-custody. The next logical step is to become more interested in decentralized services. Where will we be in 2025? I dare say people will start using DEXs more and with that, DeFi services. Some DEXs will start to have a significant market share, but CEXs will still dominate. DEXs will suffer from low platform scalability and teams will struggle to leverage second layers. My guess is that it won't be until sometime in 2030 that DEXs will be able to fully replace CEXs. Consider that 15 years is not a long time from the inception of smart contracts to the first mass-deployable solution. Moreover, by the time the solution is available, it will only be the beginning of adoption by the mass population. Maybe in another 10 years, DEXs and DeFi services will have hundreds of millions of users. We're talking about 2040. Cryptocurrency adoption will be a very gradual process. Don't expect everyone around you to be using Cardano from the next bull run. At that time, there will be DeFi services that will be considered time-tested and will grow its user base. This can grow relatively quickly as people from developing countries especially need DeFi services. If Cardano is used by a million users a day in 2025, I would consider that a success. If not, my estimate was too optimistic and nothing is happening. Conclusion The Cardano utility will be significantly improved after the launch of stablecoins. In the long term, DJED will be especially interesting, because if it exists for 5 years without problems, it will prove that we are able to deal with the high volatility of cryptocurrencies in a decentralized way. Personally, I consider the complexity of using wallets and users' fear of sending on-chain transactions to be one of the biggest obstacles to using cryptocurrencies. This is an industry-wide challenge and once someone finds a solution, it will be applicable to all blockchains. Opponents of blockchain argue that on-chain transactions are cumbersome compared to traditional solutions. This is true, but second layers can solve this problem. What makes blockchain solutions different from client-server architecture is self-custody and the replacement of unnecessary intermediaries. Client-server services can't do that. It makes sense to build DeFi on Cardano even though it will be a very long process. Let's adapt the narrative and talk about Cardano as a global social and financial operating system.
