"The Token Disconnect: Understanding the Misalignment Between Blockchain and Traditional Finance"



Aug 12, 2023 β€’ 4 min read


"The Token Disconnect: Understanding the Misalignment Between Blockchain and Traditional Finance"

Blockchain technology has been a topic of both fascination and skepticism. While some see it as a groundbreaking solution with limitless potential, others view it as a solution in search of a problem. This disconnect highlights the challenges and complexities surrounding the adoption of blockchain in mainstream industries.

One of the key issues with blockchain is the lack of clear use cases. Many argue that the technology has yet to find its niche and demonstrate its practicality. As the years go by, the fundamental question of "For what?" remains unanswered. It almost feels like a reverse-innovation scenario, where the technology came before the purpose.

However, the venture capitalist class sees crypto and blockchain in a completely different light. For them, the main goal is to return money to their Limited Partners (LPs). Crypto represents an exciting financial tool for achieving this, as it allows them to navigate the realm of securities regulation and take advantage of new opportunities. The accreditation divide plays a significant role in the obsession with crypto tokens and the ICO mania of 2017. These tokens resemble securities but remain unregulated, providing a unique avenue for investment.

Interestingly, the innovation in crypto assets lies not in software engineering, but in financial engineering. These assets function as option contracts on startups, allowing investors to cash out early if the company fails to meet expectations. Unlike traditional IPOs, which require extensive paperwork and prospectus disclosures, crypto assets offer immediate liquidity without the involvement of Wall Street. This creates an environment reminiscent of the 1920s, where insider trading and market manipulation go largely unchecked.

With this context in mind, it becomes clear that the conversations surrounding crypto are often fueled by post-hoc myth-making. People attempt to rationalize the collective incoherence of the bubble, employing economic determinism to explain the phenomena.

Shifting gears, let's explore the concept of positioning at different stages of Product-Market Fit (PMF). Positioning is crucial for clarifying a product's role and relevance in a specific category. It helps define the space that a product can occupy in customers' minds and distinguishes it from competitors.

In the early stages of PMF, positioning is more about making choices regarding the product and go-to-market (GTM) strategy. It involves understanding who you want to be and, equally important, who you don't want to be. However, it's essential to remain flexible and open to market input, as early positioning may require adjustments based on customer feedback.

As a product moves into the growth stage, expansion challenges may arise. Sales teams struggle to penetrate new markets, and marketing efforts to expand fail to yield results. These symptoms often indicate an issue with positioning in the market. It's crucial to reevaluate the product's fit with the current target persona and address any functional limitations that may impede adoption. Refocusing, rebuilding, and repositioning quickly become necessary to regain momentum.

Another common scenario is when a product scales its GTM strategy without a solid product-market fit. This often occurs when a product tries to do too many things without excelling at any of them. In such cases, it's crucial to go back to the drawing board and reconnect with customers and prospects. Understanding their needs and aligning them with the product's strengths is essential for success.

It's worth noting that startups should prioritize positioning early on, even before achieving a strong product-market fit. By establishing a presence in a specific category and showcasing a unique perspective, startups can lay the foundation for future growth. This is particularly crucial for the marketing team, as they play a critical role in positioning the company and its products effectively.

In conclusion, the token disconnect and the challenges of positioning at different stages of PMF highlight the complexities and nuances of navigating the world of blockchain and traditional finance. While blockchain technology offers exciting possibilities, its true potential is still being explored. By understanding the motivations of different stakeholders and prioritizing effective positioning, businesses can navigate these challenges and find success in this rapidly evolving landscape.

Actionable advice:

1. Continuously reassess the purpose and potential use cases of blockchain technology to ensure alignment with market needs.

2. Regularly evaluate and refine your product's positioning to stay relevant and differentiate yourself from competitors.

3. Prioritize understanding your customers and their needs, allowing you to fine-tune your product and GTM strategy for optimal growth.

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