Another Crypto mining startup is rumored to be gearing up for an IPO in the next two years. In addition to Bitmain’s impending public offering, Bitfury, a manufacturer of crypto mining gear, is reportedly seeking advice from global investment banks on a potential listing or debt financing to raise capital. If Bitfury goes public, it might be valued between $3-$5 billion and, according to reports, the company posted a revenue of $450 million for the 12 months through March.
The picks-and-shovels plays in crypto are clearly reaping fortunes for early movers (Coinbase, Bitmain, etc.) and risk takers (Binance - walking on thin ice with the regulatory sharks underneath it). These centralized applications built on top of the blockchain protocol are growing faster than much-hyped trustless decentralized applications (Dapps), which face the real prospect of slowly fading into irrelevance as they struggle to acquire users who are in no rush to embrace decentralization for decentralization’s stake.
What does this imply? A decentralization ‘purist’ might contend that these are still early days and decentralized applications will eventually come out on top in the long run. However, as centralized applications on blockchain continue to innovate rapidly, given access to existing distribution channels, decentralised applications continue to grapple with a wide array of headwinds such as scalability, token volatility and undercooked UI/UX.
The gulf in this race could become wider and wider and reach a point where the gap might become unbridgeable for dapps, as network effects create impregnable moats for applications with large user bases.