This is the third in a series of articles about the intersection of blockchain and WordPress. (You can check out the first article here and the second article here.)
In this article I’ll take a closer look at the impact of two blockchain-specific tech trends likely to impact the WordPress community.
1. Digital Wallets and Cryptocurrency Payments
In 6 Blockchain-Inspired Projects That WordPressers Should Check Out, we touched on three payment-related projects: Brave, Coil and Diem. All of these rely on the concept of digital wallets; payments are simply the transfer of value from one digital wallet to another.
Brave’s browser actually has a built-in Crypto Wallet feature which allows you to send and receive cryptocurrencies within Brave itself.
The more eagle eyed amongst you may also notice Metamask and Keplr extensions are installed on my Brave instance; these are browser add-ons that provide digital wallet functionality. This latter approach is the one that Coil also takes, as can be seen below.
There are other examples of ‘digital wallets’ too—you can think of Apple Pay and Google Pay as types of digital wallets—they just don’t yet support digital currencies and therefore rely on integrating traditional payment methods like PayPal, Visa and Mastercard.
The trend for closer digital wallet integration and more seamless cryptocurrency payments feels strong due to many factors: PayPal and Mastercard announcing network support for crypto; an increasing number of fiat/crypto payment methods like Bitpay working with Apple Pay; and the crypto.com and Coinbase cards allowing folks to spend their crypto over fiat payment rails.
What’s in Your (Digital) Wallet?
But what advantages do native asset digital wallets (like Metamask, for instance) offer over just integrating traditional payment methods? For me it comes down to four things:
- Micropayments: The ability to handle digital assets (send, receive, store) without reversion to the centralized fiat payment networks means that payments can be much smaller.
- Send and receive: Traditional payment methods like credit cards generally only allow sending funds (PayPal is an exception, and yes, you can do refunds) which, combined with the lower threshold for value transfer, opens up more opportunities for microtransactions between parties.
- Non-currency assets: Digital wallets don’t just allow storing currency, but also digital collectibles or asset. One of the most common types are called Non Fungible Tokens (NFTs), which we’ll cover in the next article in this series.
- Speed of innovation: Traditional payment routes and methods are simply slower to evolve (for reasons both good and bad). A digital wallet like Metamask, for example, can connect to any test or live payment network specified by the user and allow both developers and real users to start using new services in a matter of minutes.
Integration of Digital Wallets
Why will this disrupt WordPress? My gut feel is that it is not going to be long before apps from Facebook, Google, Amazon and the like come with native digital wallets built in, designed to seamlessly integrate with their digital experiences. We’ve seen signs of this disruption already on Instagram which has morphed from ‘online look book’ to ‘seamless visual e-commerce.’
It’s only a couple of steps from here to imagine users getting paid to watch ads and interact with advertisers; earn digital collectibles; and perform a range of other financial actions like pledging, donating and earning. My hope is that these wallets will be easily integrated with WordPress sites so that users visiting those sites through Facebook/Google/Amazon-owned browsers and devices will be able to transact with WordPress sites as easily, but that’s not a certainty and, of course, may not be in complete alignment with these companies’ interests.
But the disruption may not be at the technical level as much as the business model and marketing level. How do current paywall models survive in the age of micropayments, for instance? How do WooCommerce stores that require off-app payments compete with an Instagram-native experience?
2. Impact of DeFi on the Financial World
DeFi refers to Decentralized Finance and the concept is simple—that all the services traditionally provided by financial institutions can instead be provided through software using blockchain technologies. This includes brokerages, exchanges, lending and borrowing, savings, derivatives and insurance but also introduces some new services like yield farming, liquidity provision and tokenization of physical assets such as gold. (You can read a lot more about it here.)
How has it changed the world of finance? Well, it allows for permissionless, 24/7 access to financial services that don’t rely on a central party—that’s brand new. It also introduces new financial concepts as mentioned above. But some of the things that I find most interesting about DeFi are the ‘business’ models and community engagements. One concept (not actually original to DeFi but well illustrated by it) is of Airdrops.
In short, it’s the distribution of tokens to digital wallets by projects. These tokens often have both a perceived value and the opportunity to bring ongoing yield to token holders. This leads to a new model of ‘community ownership’ whereby the community that uses a project also partially owns the project, shares in the profits generated and sometimes votes in the project governance. (I’ll discuss more about this concept in the next article).
But WordPress isn’t a financial institution or service so how could these trends impact WordPress? Bear with me. The answer requires us to smoke a proverbial bowl and let our minds expand a little. WordPress offers tremendous value; it’s why we all use it. Indeed a recent WP Engine research project estimates the value of the WordPress ecosystem to be around $600B annually.
Who’s Paying for All This?
My contention is that until now there just hasn’t been an appropriate financial protocol to understand, recognize, capture and distribute this value. Cryptocurrency payments and DeFi offer us an opportunity to change this.
- What cost or value to the ecosystem does updating or not updating a WordPress site introduce?
- What’s the value of contributing to a free plugin that is downloaded millions of times?
- What about the volunteers that help drive WordPress forward by contributing in so many ways, i.e. code, support, marketing, translation, theme and plugin review?
Finally, don’t all these people need to eat, pay rent and pay bills in the real world?
Open source is not without its challenges. One of the most significant is the question of who pays for it, as brilliantly articulated (as always) by Morten Rand-Hendriksen. Currently the project relies on support, notably from the huge businesses like Automattic and WP Engine, where the majority of the ecosystem value also accrues.
DeFi shows us that there’s another way, that communities can own and profit from the projects they use. Will WordPress find a way to make this happen? Or do we risk disruption from a project that can? We already live in a world where people benefit from incredible free services like Google and Facebook.
To me it’s not a huge leap to imagine that a future WordPress competitor will pay people to use their service. The economics are there—plenty of money is made in the WordPress space. It’s just that currently, the community doesn’t profit directly.
Photo by Jeremy Bezanger on Unsplash