Crypto Isn't Dead

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Avatar for dave_gutteridge
1 year ago

Every technology goes through hype cycles, where one of the phases is “the triumph of the uninvolved.” That’s the phase we’re currently at with cryptocurrencies. This comes after all the “the world is going to change” hype, like what we’re seeing now with AI.

“The triumph of the uninvolved” stage is where everyone who was skeptical about something get to revel in smug glee about how all the bubbles of excitement have burst. Scammers are revealed for what they are, inflated stocks get “corrected,” and lots of people who hoped to get rich by easy investments are left holding empty bags. There are news stories and blog posts and podcasts where people make jokes about how it was obviously stupid all along.

This stage, however, is merely the inverse of the peak of the hype, and is no less distorted. Which is to say that neither the peak of the hype nor the bottom of the derision are either entirely incorrect. On the one hand, new technologies can bring exciting new opportunities, just nowhere near as extravagant as promised by the quick buck seekers. On the other hand, just because a technology seems to have failed to meet its promises doesn’t mean that it’s simply dead and gone.

The fact is that technology does not die. It can’t. A technology is simply a way of doing something. It may be superseded by something better, but it still exists. And something that exists will always have the potential for someone to pick it up and do something with it.

Cryptocurrencies and the blockchain technologies they are based on are still an interesting and potentially useful idea. There’s nothing inherently flawed about them, all the flaws were in how the marketplace tried to leverage their value. Cryptocurrencies can, and I think most likely, will re-emerge at some point to become a something relevant and put into wide use.

This doesn’t mean, though, that one day people in general will suddenly wake up and realize that cryptocurrencies are such a great idea and adoption will take off as a result. This seems to be the hope that many crypto enthusiasts are clinging to, and it’s pure delusion.

For a technology to hit its stride and become meaningful, it has to intersect with a real and tangible application. Or with a specific use case. And usually both.

Consider tablet computers. For a while there were Apple Newtons and Palm Pilots and other devices that were essentially the precursors to iPads and Android tablets. I had a Palm Pilot, it was kind of useful. Sort of. It had apps and games and things, but, it was always more of a novelty addition to my life than an essential device. It was a solution looking for a problem. The devices were generally only used by technology enthusiasts, and without mainstream interest, they all faded away.

But the concept of a small digital information device, the technology, lay in wait for the right marriage with other technologies. Improved screens and batteries are factors that can’t be discounted, but, I think those are minor points in comparison to the one thing that made a small personal digital device become a must-have technology for everyone. The tide shifted when portable digital devices intersected with with connectivity to the internet. If Newtons or Palm Pilots had wifi from the start, we might still be talking about those brand names.

Most cryptocurrencies are in a similar position to what Palm Pilots were. Outside of the hype cycle, the only people aspiring to actually use them in any way were a statistically insignificant core group of technology enthusiasts. Most likely, almost all the first to market brands, Bitcoin or Ethereum or whatever, are going not going to survive the transition into relevance, the same way that Newton and Palm Pilot were also first to their market, but that had no bearing on their long term success.

Which means, if you’re holding onto bags of crypto, hoping that one day these particular coins are going to suddenly rise in value when the world wakes up, you’re probably going to be disappointed. I can’t predict the future, so, maybe you’ll get lucky. But imagine talking to someone holding a Palm Pilot in 2006 and them telling you they think the brand’s stock will blow up when everyone realizes how useful it really is. However you imagine that person sounds is how you sound waiting for crypto to return without some kind of seismic shift in what exactly crypto is and does.

Unfortunately, most of the crypto space is dominated by enthusiasts and promoters who think that if they can just get the word out about how beneficial crypto would be if only everyone started using them, then crypto will fulfill its promise.

And development is largely stuck in a rut of trying to create financial instruments with no real world utility beyond trying to squeeze value out of people’s existing portfolios. Crypto, and blockchain technology, won’t go mainstream by someone offering another token, or “defi” product, or new staking option.

And don’t even get me started on how pointless NFTs have been so far. The concept of unique identifiers for digital or even real life goods could definitely be a technology with merit. But not if all its doing is just arbitrarily assigning unique identifiers to things that have no value other than the fact that they can be uniquely identified.

Crypto and blockchains will be relevant when it intersects with a purpose or technology or something outside of crypto where whole becomes more than the sum of the parts. Just like digital tablets needed connectivity to matter.

Of course, if I knew what that intersecting technology or use case was, I’d be heading towards future riches. And depending on what I thought that would be, it might be better for me to shut up about it and get in on the ground floor before all the rest of you show up.

My point here is not to try and rally you toward some particular end goal. My point is just to rationally reflect on what it means for crypto to be in its current dark ages. The smug derision of the post crypto highs is no more real than the unjustified hype at the top of the bubble.

If you’re still believing in crypto as a technology that will one day rise again, you’re not insane. But, if you’re waiting on a specific crypto in your portfolio, I think it’s likely you’re holding a Palm Pilot while out there someone is inventing an iPhone.

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$ 0.38 from @TheRandomRewarder
$ 0.01 from @sanctuary.the-one-law
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1 year ago

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