Summer 2018: The Great Gestation

The question of the summer for crypto is clear: what’s going on?

It’s a question asked with good reason: there doesn’t seem to be strong market sentiment, major crypto prices are down significantly from the all-time highs of end-2017, and ICO activity appears to have slowed to a crawl.

Perhaps most striking is this: when Gabriel asked this question of six previous Coloring Crypto podcast guests, answers were all over the map. And these guests are individuals who have a lot in common. Strange days.

Unwilling to accept a non-answer, I’ve worked to isolate some shared observations about the state of crypto. To distill where we are, I reasoned, I first had to figure out if we’re using the same map.

Or, frankly, if we’re on the same planet.

That’s when I started to gain some traction.

1. It’s Increasingly Difficult to Separate the Signal from the Noise

There used to be a clear playbook for joining the crypto and blockchain community: get an account in BitcoinTalk, follow the right people on Twitter, and join some Telegram groups. You could expect to make good connections and have quality conversation.

But as the ICO market took off, marketing talent moved in. With marketing talent came marketing automation, and with marketing automation came bad marketing automation. Suddenly, BitcoinTalk, Twitter, and Telegram were overrun with bots and noise.

It’s not surprising — this happens. It is unfortunate, however. I say this for two reasons:

  • This is a sector in its early days and there are many people trying to learn the ropes. When you’re new to something, it’s hard to separate the signal from the noise — and that means people are unwittingly exposed to biased opinions and false news. Not good, especially when there is money at stake.
  • The quality conversation has been pushed to small, private channels. And while I love my Facebook groups of 20–250 people, I have to be mindful that these groups are bubbles and we’re at risk of dangerous groupthink.

2. Bitcoin is Down, Bitcoin is Stable

When bitcoin peaked around $20,000 in December 2017, detractors cited volatility as a key reason to stay away, even through the lens of a speculative investment. Fair enough.

In the time since, we’ve seen the price of bitcoin fall and stabilize (especially relative to previous price movement). Bitcoin has traded inside of a single ~$1,000 range for more than thirty days — an unthinkable reality eight months ago.

This more-sane price and a more-sane trading range has not flipped the haters, however, and it has had another impact: the crypto-rich aren’t feeling as crypto-rich as they once were.

Broad strokes: it seems the crypto-rich are in “hodl” mode and new money is trickling in from traditional investors. Key word: trickling.

3. ICO Funding is Up, ICO Funding is Down

Having observed a slowdown in new token sale proposals, I was surprised to head to CoinDesk and see this:

A few days after what CoinDesk says was the best month of ICO funding to date, I couldn’t name a single project that launched its sale in June. Neither could a handful of people I messaged this morning.

I wondered if I had completely lost my mind. I wondered if this meant my bubble had become the bubbliest bubble that ever bubbled. And yes, I wondered who was responsible for more than $5b in ICO funding.

It turns out CoinDesk appears to have counted the entirety of the non-traditional EOS token sale, which formally ended in June, as June 2018 funding. That accounts for a lot of it.

But even if this was just a data presentation anomaly, CoinDesk chart says there was between $750m and $1b in ICO funding done in April and May this year. And I couldn’t tell you where that came from, either. I was back to square one.

Armed with shared observations, we’re still left with the question: where are we?

My conversation with Gabe (the host of Coloring Crypto mentioned 1,000+ words ago) turned to Occam’s razor, the problem-solving principle that says the simplest solution tends to be the right one. We tried to distill what leads us to these observations:

  1. We still don’t have the killer blockchain application, which means investors are stuck speculating with the major cryptos (generally by holding their existing position, especially if they joined in late 2017) and new money is planted on the sidelines. 
    That does not mean there isn’t meaningful development happening — there is, but a lot of it is infrastructure or weak attempts at a consumer application. 
    We could use a really sweet B2B play to move the ball forward.
  2. ICO funding is up, but most of it never touches crypto. A lot of VC firms are purchasing equity (or token) from blockchain startups with fiat, and those projects keep the investment in fiat to pay bills, employees, and the like. The reason is obvious — valuation risk — but if you’re starting a blockchain company, walk the walk. Failure to do so hurts the entire crypto market.
  3. We need to focus on education. We haven’t even scratched the surface re: mass understanding of core blockchain concepts.
  4. We need more people to develop this stuff. Earlier this year, the claim there were fourteen blockchain developer jobs for every blockchain developer made the rounds. I believed it. There has been progress, but it’s still a problem.
  5. Talented blockchain developers are heads-down, building what needs to be built. And this takes time.

While pulling these points together, I was struck by one common denominator: almost everyone I spoke with is bullish on the long-long term with distributed ledgers. The real difference seems to be the timescale — people don’t seem to agree whether this has already changed our lives, or whether it’s coming in 2019 or 2028 — but we agree this is an inflection point.

Each of these points tell part of the story: a set of growing pains hit at the same time, slowing the growth and pace considerably.

It’s confusing, frustrating, and heathy. It’s different than how things have been, but we know it’s healthy. We’re building something significant.

In other words: welcome to the Great Crypto Gestation of 2018.


Andrew J. Chapin is Co-Founder & CEO of Benja, head of the benjaCoin token project, author of Art of the Initial Coin Offering, and an advisor to several crypto projects. This November, Andrew is running the New York City marathon for Athletes to End Alzheimer’s.

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