Ruined By Praise, Saved By Criticism
The Blockchain Echo Chamber
Note: For those who aren’t medium members — you can view the full story here.
As someone who has been involved and worked with dozens of companies, funds, and investors in this space over the past three years, I write this as one of the early adopters who feels deeply indebted to the opportunities that this technology has afforded me. I want Ethereum and others to succeed, but it’s become blindingly apparent that most people in this space would rather be ruined by praise than saved by criticism.
Build it And They Will Come
Exactly 6 months ago, I found myself ambling through the streets of Prague, distancing myself from the disappointment that I had faced while at the conference which I had been so excited for and had flown halfway around the world to attend — Devcon IV.
This isn’t to say that the conference wasn’t a success — the discussions and talks concerning the ongoing work relating to scaling solutions, zero knowledge proofs, and the vast improvements being made to developer tooling were clear indicators that the space was continuing to make technical advances despite the bear market.
So, if things were looking up, why was I now skipping out on the last day of the conference to aimlessly wander around Prague? Well, the fact is that it doesn’t matter how good your code is or how much of it there is if nobody is using it. And taking a poll of the average conference attendee, I found that despite them being in Prague at the yearly Ethereum conference, they seldom used Ethereum-based applications.
But frequency of usage may not be the best metric. There are certainly decentralized applications which require little interaction on the part of the user to benefit from them. For instance, DAI, a decentralized stablecoin, managed to aggregate in excess of $60M equivalent in ETH from the community in collateralized debt positions to support itself.
And DAI isn’t the only success story. There are a slew of other businesses which have since come online under the umbrella of ‘Decentralized Finance’ or ‘DeFi’, for short. One of which that recently launched, Dharma, managed to broker $6.4M in crypto loans in its first three weeks.
While it’s great to see decentralized applications being used, their value is focused on providing an upside to people who currently hold ETH — doing little to onboard individuals from outside the space with solutions to the many problems which blockchain has been identified as a solution to (e.g. censorship, identity, etc…). And this could very well be a result of “ETH holders looking to mitigate portfolio losses endured during 2018’s bear market” as Leigh Cuen put it.
But people are adamant about the technology taking off and will go so far as to fabricate stories and narratives to support these claims. Let me elaborate.
It’s All Noise
Elon Musk on Ethereum
For those who have been keeping up with Elon Musk, you’re likely aware that he recently came to an agreement with the SEC on seeking pre-approval from a securities lawyer before certain tweets to ensure that they wouldn’t cause him to be committing securities fraud, again.
So when Elon Musk tweeted this.
It’s likely that he was doing this to troll the SEC given that they had recently ruled that Ether was not a security. But the community ran away with this, claiming that Elon Musk was pro-Ethereum — a completely baseless claim.
Then we have groups like Blockchain Capital publishing flawed and heavily biased reports on Bitcoin interest which leave the community in an uproar of excitement.
Noticing the plethora of issues with the way the data was both collected and reported, I posted a brief response. But, as you can see by the lack of engagement, people much preferred to ignore the criticisms and turn the other way.
First is the vagueness of the report, take the first question relating to one’s familiarity to Bitcoin. There is no…medium.com
And it gets worse… with people creating derivative works of this nonsense and disseminating them to the world as facts.
So, Where’s the Signal?
With the space being chiefly comprised of engineers who believe ‘If you build it, they will come’ and the majority of the thought leaders continuously shilling and devoid of any critical thought, it makes it nigh impossible for any real signal to be distilled. So, here are a few bullets that might assist you in determining for yourself whether or not the news you’re hearing from people is real:
- While there are indeed enterprises experimenting with this technology, their work is often in the form of proof of concepts (PoCs) and used as a boast of innovation to their competitors.
- The PoCs which these enterprises are building are hosted on their own private blockchains. This somewhat discredits the public blockchain narrative as many of these businesses regard blockchain technology as a means by which to create a shared resource with a common interface between one another.
- The businesses which have gone beyond PoCs are often those building infrastructure for other enterprises (e.g. MSFT, AMZN, etc…)
- A number of fake announcements have been made in the past by individuals and businesses relating to enterprises using the technology. These are evident as they often do not include any public statement or acknowledgement from a decision-maker within said enterprise.
- Numbers don’t lie. ConsenSys (a company which exceeded 1000 employees in 2018 and is the largest ‘blockchain company’ by employee count) logged a meager $21 million in revenue for 2018 while Binance, a cryptocurrency exchange founded in late 2017, recorded $446 million in profits for 2018.
In short, the vast majority of the money to be made in this space still lies with speculation and trading. So, if you are on the outside looking in, I would highly advise that you be careful with where you source your information from, because the majority of it is comprised of disillusionment and lies.