As 2018’s woes continue for crypto, the last month has seen Ethereum fall dramatically — 42% in a month.
Ethereum’s meteoric rise at the start of 2017 brought a lot of focus on and investment into cryptoassets. It also provided a crowdfunding platform for new projects to access global capital via the ICO.
While many, or even most, of the 2000 cryptoassets are likely to fail, until recently Ethereum was held as a safe haven. It’s recent decoupling from Bitcoin suggests that safe haven status is at risk.
With the price pressure on, the market is clearly asking existential questions. For some time Ethereum has been “in development”, working on scaling updates and an evolution from proof of work to proof of stake.
With some justification, Mr Market is asking:
“Can these scaling improvements be achieved?”
“How commercial will decentralized platforms be?”
“What is being built and who is using it?”
“How far ahead of the technology has the price got?”
“Is this just a very expensive experiment?”
Riccardo (in his characteristically salty manner) highlights this point and the comparison to the milestones that would be expected from a centralized corporation are easy to see:
The crypto pendulum has likely swung into negative territory on Ethereum. The problems they are addressing — building a decentralized, secure & scalable smart contract protocol — is an extremely difficult innovation. Expectations were clearly too high and we are now gravitating back to a more reasonable place.
The “no useful Dapp” criticism is also somewhat misguided. Consensys’s goal isn’t to only build Dapps to compete with centralized Apps. They are also building infrastructure across the web stack (storage, query tools, and wallets) that will ultimately enable scalable progress.
That said, this is a necessary wake up call for the folks at Consensys and other projects. Once you open the door to market forces it cannot be closed and investors have expectations that need to be managed. The primary mismatch here is on timeline — this is an early stage technology and should be appreciated as such.
The open source world blurs lines between, investors/participants/community but that doesn’t mean there isn’t a communication function where targets, progress and milestones are identified.
It seems like Vitalik & Consensys got the message. Vitalik’s tweet storm (75 messages!) last night, Consensys’s post highlighting the 40 working Dapps and Coinbase’s progress on the Toshi wallet are all a step in the right direction. Let’s hope it’s not too late!