Mike Hogan
Published last December 6, 2023
Crypto Applications: A Market Poised to Grow At Least 8,400%
In the early days of a new technology platform, the vast majority of the revenue goes to software infrastructure. By “software infrastructure” we mean the operating system and development tools. This has been the case with the Internet, eCommerce, PCs, mobile phones, crypto, etc., Like building a smart city, the first thing you do is build out the infrastructure: roads, electrical, sewage, gas lines, etc. However, as the technology platform matures, the revenue continues to flow into software infrastructure, BUT the applications enabled by that infrastructure catch-up and surpass the infrastructure revenues. In a mature market, application revenues typically account for 7-TIMES more revenue than the software infrastructure.
If we look at the crypto market, we don’t have good revenue numbers, but we can use the value of the companies and coins/tokens as a proxy. In crypto the ratio is 1:12 apps to infrastructure. Our underlying thesis, the big bet we are placing, is that as the crypto market matures, it too will approach a typical 7:1 ratio of apps to infrastructure.
We believe that crypto apps will follow the typical ratio of 7:1 as the market matures. If we assume zero growth of infrastructure, this catch-up would require apps to grow by 84-TIMES or 8,400 percent. We believe that this represents a huge market opportunity.
But 16,800% Growth is Possible
History shows that as the platform matures and applications start to deliver value it significantly increases the number of users for that platform. This increases the demand for the infrastructure. As a result, we should expect the underlying software infrastructure to at least double in value over the next 5 years as apps deliver more value. If this is the case, and apps crypto applications achieve their 7:1 ratio to software infrastructure, this would result in our projection of app growth doubling as well to 168-TIMES or 16,800 percent. While this trajectory is more likely, we will instead focus on the more conservative 8,400 percent growth number.
The Infrastructure Wars are Over, We Know the Winners
Because applications require a significant investment in time and money, app developers look for certain things before jumping in:
App developers still need a reliable ecosystem, but with the exception of a few skirmishes, the crypto infrastructure wars are over and the foundational technology is there. This gives app developers a great deal of confidence to start investing by building on the winning infrastructures.
Apps Make a Huge Bet by Building on Top of Infrastructure
App developers place a bet when they build on top of certain infrastructure. Make the wrong investment and you’ll quickly find that you built on top of quicksand (like betting on NeXT). But knowing the infrastructure winners is not sufficient. App developers also need an ecosystem. The biggest investment an app developer makes is getting users for their app. If they cannot easily find willing buyers, they will not invest. Successful tech ecosystems of the past have created apps for their platform in order to prove the model for other developers. Apple and Microsoft created early apps for the PCs. Apple created early apps for the iPhone, Google created a suite of Internet apps. Someone must blaze the way, while creating the tools and a roadmap to profitability that other app developers can follow. This is an expensive undertaking as described below.
We Still Need an Ecosystem to Start the Flywheel
What does it take to build an ecosystem? Money, tools, developer outreach, favorable economics, an easy way for developers to find willing customers. Microsoft knew from the beginning that developers were critical to their ecosystem. Just look at Steve Ballmer’s famous rant about developers. We have built UpsideToken’s business model in order to become an ecosystem drawing together willing customers and app developers. Like earlier ecosystems, we will pioneer the earliest crypto apps, while provide other app developers, even competitors, with the tools and investment to follow our lead and build great crypto applications.
Generative AI (GenAI) and Applications
If you’ve used generative AI tools like ChatGPT, Bing Chat, DALL*E, and Midjourney, you know that they are pretty amazing and their rate of improvement is stunning. In the software development world there are tools like Github Co-Pilot, Google Codey, and more. We believe that this is just the tip of the iceberg. We believe, and have documented here, that generative AI will unlock a tidal wave of extremely powerful apps. The apps will be AI-Native, meaning instead of merely incorporating AI into existing apps, they will be built from the ground-up to leverage the power of GenAI. We believe that we can lead the way in the crypto realm by leveraging our expertise in app design and building, GenAI, microservices, and crypto. You’ll see more of this when we start delivering apps with amazingly rich functionality.
Let’s give you a hint about what we mean by AI-Native. The traditional method of adding a feature to an app takes months of collecting feedback, modelling workflows, extending and exposing your backend services, designing the UI/UX, coding, testing, and deploying. This might take 4 months for each feature. In the AI-Native world, you have general purpose backend services (microservices) that can perform all sorts of basic functions. AI provides the interface to the user. It handles everything except the backend functions. This approach saves you 4 months, but more importantly, it gives the user the ability to add features by simply talking to or chatting with the AI front-end. This means providing thousands of features instantly. It also means that the software conforms to YOU instead of you conforming to it. It will be extremely disrupting to software. When combined with crypto, it will be extremely disrupting to worldwide finance.
Users are First, But Apps are Most Critical
We offer some short videos in the learning section that describe how ALL massive tech companies leverage a 2-sided market. In short, a 2-sided market has people or companies on either side, that benefit from more people on the other side. Examples are marketplaces like eBay and Amazon that have buyers/sellers, and application platforms like Microsoft, Apple, Oracle, etc. that have users/developers.
Building a platform for crypto apps requires users and application developers. The investment is asymmetric: a user might invest 15-minutes trying a new app, but an app developer invests months or years with a team of designers, developers, project management, marketing, sales, fund-raising, etc. Building and launching a new app, including the above costs, will easily run into the millions of dollars, and the odds of failing are relatively high. As a rough estimate, you might invest $3-5M with a chance of becoming profitable of maybe 20%.
As a result, convincing app developers to invest in your platform is the primary goal. That said, you must have users waiting to use apps before an app developer will even consider building apps on that platform. Microsoft famously recognized the value of winning over developers; as you can see from this famous rant by Steve Ballmer.
Clearly, developers are most critical to the long-term success of a platform, but you cannot get developers until you have users. But then what brings in the users in the first place?
Getting Users: Referral Earnings and Sweepstakes
You may have looked at our website and app and seen that we promote referral earning and sweepstakes. Referral earning is where you earn crypto by referring friends. These might seem spammy or even, God forbid, like Multi-Level Marketing. Hopefully, by now you realize that we’re a serious technology company. We are using these as tools to achieve our first challenge: Get lots of users!
The social earning is meant to get a lot of users to hold tokens. The social competitions—memes, TikTok, X—are intended to create content to feed the social earning. Ideally one or more of these goes viral. It is very different from spam or Multi-Level Marketing, because we aren’t selling anything. We offer all this solely to get you as a holder of tokens
The purpose of the sweepstakes is to keep you engaged going forward. If all you did was get free tokens, sell them, and leave, we’ve wasted a lot of time and money. We want you engaged. We want you to try the new apps that come out. We want you to continue to promote our token to friends. We want the price to appreciate—upside!—to get the attention of more users and app developers. We believe that in the early phase of the token’s life, the sweepstakes will keep you holding and keep you engaged with the platform and community.
Once there are killer applications built on our token and platform, then they offer the value to keep you engaged. At that point the sweepstakes may become meaningless. But what if we never get app developers to build on our platform?
We thought of that too. We are taking XX% of our proceeds from investment and contractually reinvesting them in building crypto apps. We’re also hosting hackathons and investing in other app developers. We will deliver the first 10-15 apps for the upside platform. All we need is one killer app, and you never know when that gets built, but we’ll do everything we can to make sure it is soon!
In the meantime, we apologize for appearing a little spammy or MLM-like. I assure you, we are legit and we are very focused on building a long-term sustainable crypto app platform.
Why Create a New Token? Why Not Build on an Existing One?
Need users who are incentivized to try apps, need money to funnel into app dev, need an “app” focus, need a community, and more. The problem with existing coins is they are more about trading and building wealth, not apps. In fact, as the value of the token grows, you want to hold it more, not spend/trade. A token that is low in value—but growing—is ideal. It also must have excellent transactional characteristics: high transaction throughput, low transaction costs. It also must have the development tools which is where Eth as a platform excels.
Why Create a New Token? Why Not Build on an Existing One? Need users who are incentivized to try apps, need money to funnel into app dev, need an “app” focus, need a community, and more. The problem with existing coins is they are more about trading and building wealth, not apps. In fact, as the value of the token grows, you want to hold it more, not spend/trade. A token that is low in value—but growing—is ideal. It also must have excellent transactional characteristics: high transaction throughput, low transaction costs. It also must have the development tools which is where Eth as a platform excels.
An Asymmetric Bet
Those seem like long odds: 1:5 is profitable and 1:100 goes viral. However, those profitable apps could grow to be worth $100M each, while the viral app might be worth many billions. This also proves the market for additional developers. This is how we intend to build a trillion-dollar segment of apps for crypto. We will also attempt to significantly reduce the app developers’ marketing costs by promoting their apps to a community of token holders who have are invested in making the segment and business model work, since it grows their token value considerably. Because the upside is so much larger than the initial investment, this is an asymmetric bet in our favor.
If you study technology history—our favorite subject—you see what it takes to build a platform. Clearly, you need a large and growing collection of users and developers. In the case of Microsoft and Apple, their operating systems were included on every PC they shipped. The same is true on Android and iOS phones. The biggest challenge is always getting developers to build the apps users love because their commitment of time and money is far higher than users. This explains the chanting “Developers” repeatedly.
You might think that simply having a collection of users is sufficient to draw the developer community to your platform; but you’d be wrong. There are a number of business issues that must be considered when deciding to build on a new platform like crypto.
Why Should You Trust Us?
You shouldn’t trust anyone, until they earn your trust over the long-term. Even then, you should dance close to the exit. We have structured our company, culture, technology, smart contracts, marketing, everything, to achieve our goal of leading the AI-Native Crypto Application wave. We may not succeed, but if we do the upside is huge, while the downside doesn’t even cost money just some of your time sharing social posts and referring friends.
Our experience in Cybersecurity provides a valuable model called “zero trust”. Basically, it means that you operate as if you do not trust anyone and you provide more access based solely on people proving themselves trustworthy. We applied this same mindset to UpsideToken. Buying crypto is an act of trust. We don’t want you to trust us until we have earned your trust by beginning to execute our plan.
This doesn’t mean you cannot get in on the founding and start accumulating tokens, it just means that you cannot buy them…yet. You can earn them, you just can’t buy them. While you cannot buy tokens, we cannot sell them. This is the opposite of a rug-pull, this is us saying “wait until we prove our value”. When we do start trading, XX% of our token proceeds are contractually reinvested in building more apps to build the ecosystem.
When we distribute the tokens to our holders, and start trading, we have then taken steps to start to earn your trust. When we run the Sweepstakes and distribute winnings to users, that will be another proof that we are trustworthy. There will be many steps along this journey where we will have to prove our trustworthiness, and we will.
When Can You Sell Tokens?
We hope to give free tokens to millions of people. These tokens will initially be a notation in your name in a database. If they were in your wallet, you could start trading them, and we’re not ready. We must prove we can execute the plan first. Then when we have enough users and we have staked liquidity pools and delivered initial apps, then we will move the tokens into everyone’s wallet at once. Then you can start trading them and using them in crypto apps.
We’re not really sure how long this will take. Typically this sort of thing takes a while with very slow growth. Then at some point, like the US debt it starts going exponential. Please share with friends and bear with us as we grow this slowly at first, then rapidly.
When Can You Sell Tokens?
We hope to give free tokens to millions of people. These tokens will initially be a notation in your name in a database. If they were in your wallet, you could start trading them, and we’re not ready. We must prove we can execute the plan first. Then when we have enough users and we have staked liquidity pools and delivered initial apps, then we will move the tokens into everyone’s wallet at once. Then you can start trading them and using them in crypto apps.
We’re not really sure how long this will take. Typically this sort of thing takes a while with very slow growth. Then at some point, like the US debt it starts going exponential. Please share with friends and bear with us as we grow this slowly at first, then rapidly.
Will Our Crypto Investments, Tools, and Apps Support Other Tokens?
Yes. Initially, we will deliver apps for UpsideToken. But we will add support for other tokens. Attracting app developers is far easier if we make it easy and cost effective to use UPSIDE but they can also use other tokens. At that point, it will be up to UPSIDE to prove its value, which will be largely driven by building a large community of holders and app users.
