Original title: "GG" Original author: Matti
Original translation: Lucy, BlockBeats
Editor’s Note:
At present, the cryptocurrency industry is constantly emerging with new technologies and infrastructure, but many developers are more focused on how to attract venture capital rather than directly solving problems for users. Matti pointed out that the cryptocurrency field should prioritize simplifying technical complexity and launching more practical and useful application scenarios to attract more users, using Shopify as an example.
Matti believes that the complexity of the technology and immature infrastructure have hindered the adoption of mainstream users. Despite the huge amount of capital invested, many projects lack practical consumer-oriented use cases. At the same time, the premature involvement of institutions and traditional finance may bring risks and further exacerbate the speculation of the market. BlockBeats translated the original text as follows:
In this article I will explore whether more infrastructure is needed to attract more crypto users, and the final conclusion is that we may actually need less technology. At the same time, the technical narrative is actually capturing more value. In the pursuit of this accessible value, we have entered the era of crypto entertainment, and everyone, including institutions, wants to participate.
Tired of hearing about all those new infrastructures that keep getting funded? Is the complexity of crypto really holding it back from mainstream adoption? Or are we just delaying answering the really tough questions?
I saw a video where the founder of Shopify said that the venture capitalists who missed out on investing in his company claimed that the total market (TAM) was too small. At the time, they counted about 50,000 online stores. Now, Shopify alone has 1 million merchants.
Shopify created a new market by solving the technical difficulties of creating an online store. So for the on-chain economy, do we need more use cases to attract users or better technology? Or is technology speculation itself a use case?
Are developers the product?
Currently, more developers are building products for other developers than for actual users. It’s easier to optimize for venture capital, and the more obscure your product is, the more reflexive your tokens are. Right now, we have more technology than real applications.
To reiterate the above, one of the following must be true (at least):
We need better technology to remove barriers to use
Technology is not important, build the product for users first, then build the infrastructure (see Amazon/AWS)
Technology itself is the product, and venture capitalists are the consumers and sponsors of the casino
Analogizing Shopify’s success story to today’s on-chain usage, we can argue that the lack of useful applications is due to technical barriers. Shopify created a new market, so there was no actual total market amount (TAM) before.
If this is correct, I think we need to simplify the complexity of technology, not add infrastructure. In other words, the answer should be less technology, not more technology. At the same time, we need better use cases beyond speculation to attract more funds.
The case for less technology
Blockchains are complex by design. They are based on redundancy, liberating state retention from closed databases. Block space is the carrier for updating state, and its production is not easy and comes with complexity and cost. After all, there is no free lunch in the world.
Developers and entrepreneurs have proposed various forms of chain abstraction schemes. These schemes are designed to make it easier for people to interact with blockchains, such as conveniently bundling wallets, achieving cross-chain bridges, and deploying applications more quickly and cheaply. In a sense, they act as intermediaries between the block space and users.
From a macro perspective, chain abstraction is about bundling blockspace with developer tools and composable infrastructure and providing it to users. But are we likely to move back to centralization through these over-engineered solutions? Does this mean that we will eventually end up with a complex multi-signature scheme as the "Amazon Web Services (AWS)" of Web3?
If you don’t think abstraction is the solution, but you’re still a proponent of technology first, then you might be looking for the next ZK or FHE miracle that can scale and verify proofs so that our average neighbors can use blockchain. Therefore, the solutions to today’s technical friction can be summarized as:
Reducing technology: simplifying complexity (compromise)
Adding technology: Scaling and bridging (faster, cheaper, seamless transactions)
This means that to attract the next 500 million users, we need blockchains that are scalable and interoperable, as well as simpler ways for users and developers to interact.
Developers continue to promote wallets and universal apps, claiming that better UX is a means to attract new users to the cryptocurrency space or to steal market share from Metamask. Crypto doesn’t need a better UX for users — it needs new use cases. Give people more interesting or useful things to do.
Coming up with new use cases is much harder than copying something that already exists and tweaking it to make it look original. Many applications are built based on “shoulds” — “users should want to own their data or use governance” and “Twitter shouldn’t have so much power” — rather than actual needs.
So I don't think the problem is the technology, but the lack of imagination in the use cases. We need new applications right now. Given that there is more money in crypto than ideas with good execution, we end up in a crypto cycle binge.
Lollapalooza’s Professionalism
When you don’t know what to build, you build more technology. When you don’t know how to spend money, you do financial manipulation. When you’re bored, you browse memes online. Cryptocurrency encompasses all of this into one escapist exercise.
Cryptocurrency is currently in a macro cycle that I call "decreasing entropy". This can be summarized as "speculation is the wedge". Speculation is eating cryptocurrencies, and cryptocurrencies are eating speculation. I think the past and future can be divided into the following macro cycles:
2009-2014 Cypherpunk Movement (Origin)
2014-2020 Cryptocurrency Entrepreneurship (Entropy Increase)
2020-2025 Crypto Entertainment (Entropy Reduction)
2025 and beyond Deployment phase (negative entropy)???
Right now, the industry is stuck in two extremes: dystopian memes with no intrinsic value and utopian promises of technology that don’t solve current problems. No one is focusing on answering the hard questions (use cases). This is the true picture of entropy reduction:
Do you want to make money or do it right?
At the end of the cycle, midcurvers investors may be right again, but this may also mean that they will neither make money nor lose money. Cryptocurrency becomes a reality of betting on the future; everyone is both a technology investor and a meme investor, and everyone can participate in this zeitgeist because there is no barrier to entry.
Both left and right investors continue to play this pretend game because it is profitable (middle curve investors will eventually get sucked in as well, as they become liquidity at the exit). The rules of the game are simple. Sell the token to anyone who is willing to buy it. What’s wrong with this? A lack of fundamentals?
This may sound like so-what-ism, but how do we anchor it to reality when the economy itself relies on a kind of alchemy that few can justify without relying on performative economics? One could argue that the $400 billion global consulting market is also a joke, but because it’s so established, it’s hard to stop playing this particular game of pretend.
In fact, the market has largely become an entertainment industry, such is the impact of 24-hour streaming information on society. Cryptocurrency has found a good product-market fit in this era of peak performance, where we are blurring the line between gaming and reality.
Cest la vie (such is life). This is not a prescriptive analysis; I am not saying it is bad. I am just pointing out how the financial game has evolved. This evolution has made it possible for some things that seemed worthless to become priceless in the future (and most will become worthless again).
In this day and age, following the money means following the Lollapalooza trend. If you can play this game - congratulations, you have the skills to sell faster than the influencer. But in my opinion, cryptocurrency is mainly an entertainment industry at present, and we are in the business of token sales.
I don’t think this is the final form of crypto. I suspect a big bust — a real disillusionment — is still ahead. The crypto equivalent of the dot-com bubble has yet to happen. Why do I think so?
Most projects that get funded are for technology's sake
Blockchain has yet to scale to meet mainstream demand
Very few consumer-facing use cases
Institutional involvement and traditional finance adoption will be premature and will ultimately be dumb money
Whatever you think, we are not ready or worthy to meaningfully absorb trillions in institutional inflows, which is my final puzzle piece. If inflows occur via ETF approval, we will have the ultimate degen kingpin entering the final leg of the macro cycle that began in 2020.
At a high level, the success of cryptocurrency depends solely on bringing more money into the game. In the short term, its success could become a self-fulfilling prophecy, with financial depravity igniting the very system that cryptocurrency is trying to replace. In the long term…
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