As the Bitcoin halving approaches, founders are gearing up to launch their crypto startups before this market enters another bullish phase, aiming to take advantage of the most profitable conditions. If you’re one of these entrepreneurs, Coinbase’s CEO Brian Armstrong has outlined 10 ideas that he believes could lead to profitable businesses.
You can easily find the details in Armstrong’s original post, but in brief…
Brian Armstrong proposes the creation of a “Flatcoin,” a decentralized crypto coin tied to the Consumer Price Index. The purpose of this coin is to provide stability and resistance to price inflation. Unlike many cryptocurrencies that experience significant price volatility, or even stablecoins, the whole idea of a CPI-linked flatcoin would be to maintain precisely its purchasing power over time, no more, no less. This could be valuable for smart contracts, as they require a stable medium of exchange and store of value. Such flatcoins would help hedge against inflation on a global scale.
2. On-Chain Reputation
Armstrong proposes to create a reputation system on blockchain. This system would serve as a way to combat fraud and establish trust within the blockchain ecosystem. He draws a parallel with Google’s PageRank algorithm, which scores web pages based on their importance and relevance. In this case, blockchain addresses and Ethereum Name Service (ENS) names will be evaluated based on their transaction history and other relevant data. Such a reputation system could significantly increase trust and security in blockchain-based interactions.
3. On-Chain Advertising
Armstrong discusses the potential for “on-chain ads.” Such ads would function differently from traditional online advertising in that they would only charge advertisers when a specific action is completed rather than simply showing an ad. This payment model aligns with the unique properties of Web3 and blockchain technology. Smart contracts could allow advertisers to implement pay-per-action advertising campaigns, with transactions including optional referral data. This approach could enhance the efficiency and transparency of advertising in the crypto space.
4. On-Chain Capital
The “on-chain capital formation” concept involves tracking the net accumulation of capital goods on the blockchain, such as equipment, tools, vehicles, and energy. This data could be used to facilitate fundraising and innovation on a global scale. Projects could use blockchain-based tools to form entities, register securities, and connect with investors. The goal is to democratize access to capital and enable individuals and businesses worldwide to participate in innovative ventures.
5. Decentralized Labor Market
Armstrong envisions a “global labor market” using crypto for cross-border payments. Due to its cheapness and lack of borders, cryptocurrencies are well-suited for paying workers worldwide. This could lead to more efficient and accessible earning opportunities for people regardless of location. The idea aligns with the broader remote working trend and the gig economy, where people can offer their skills and services globally.
6. Layer 2 Privacy
Armstrong highlights the need for Layer 2 transaction privacy in blockchain networks. Layer 2 refers to solutions built on top of the underlying blockchain to increase scalability and speed. Major projects, such as Arbitrum, Optimism, and Polygon, fall into this category. Armstrong compares the need for L2 privacy to the transition from unencrypted HTTP to encrypted HTTPS for Internet communications. He believes that optional, slightly more expensive private transactions can become widespread while preventing misuse of privacy features.
7. A True Peer-to-Peer Exchange
Armstrong suggests a creation of a fully decentralized peer-to-peer exchange built on audible smart contracts. Such an exchange would provide a censorship-resistant solution for functions like escrow, reputation management, and dispute resolution. This would address the challenge that many centralized peer-to-peer platforms face, where they can be shut down or regulated by authorities. A decentralized alternative could provide greater resilience and security.
8. Game Economies Web3
Armstrong discusses the concept of on-chain games where users would have true ownership of in-game assets in the form of NFTs. Such ownership would enable the creation of persistent virtual worlds with real economies. While he sees potential in this area, some have expressed skepticism as it introduces the concept of “GameFi,” where the gaming experience is financially oriented. The debate centers on whether games should prioritize fun and engagement over financialization.
9. Tokenization of Everything
Armstrong emphasizes the potential of tokenizing real-world assets. It is about representing physical assets, such as real estate or art, as digital tokens on the blockchain. Tokenization adds standardized metadata to these assets, making markets more liquid and transparent. It also enables decentralized rating and exchange systems for assets like debt. This concept could revolutionize how traditional assets are bought, sold, and managed.
10. Networked States
Armstrong introduces the concept of “networked states” that could replace or supplement traditional nation-states. These network states would operate as decentralized autonomous organizations (DAOs) whose governance, fundraising, access control, and service delivery would be managed using blockchain technology. This idea involves changing the way society is organized and governed, using the power of blockchain to create more transparent and participatory governance structures.