Ahhhh... the hype train seems to have left cryptocurrencies for a bit and migrated over to AI or something like that. It is sort of nice that when all the money is gone, that we have the ability to see which projects are solidly plugging away... and which ones seem to have forgotten to update or even host their websites! It is a time to think and contemplate what the uses and strengths of cryptocurrencies and blockchain are, and why they might prove to be transformative to a society that has only partially transitioned to digital infrastructure... and by partly, I only meant that the surface has "transitioned" to look digital and glossy, whilst the underlying plumbing is pretty horrifically old-fashioned.

Well... what are cryptocurrencies and blockchains good for? What are they... well, blockchains are essentially a messaging medium... they are a co-ordination tool for networks that have little to no hierarchy (aka decentralised). In a regular hierarchy, co-ordination is achieved through an agreed upon power structure... but this is prone to bad actors (good guys within, and bad outside), and it doesn't really scale up that well beyond a small and tight-knit team.... especially if you are trying to communicate across arms of the organisation, and in the digital age where anyone could be anyone, it relies too heavily on trust.

So, much of the systems that we have in place are built upon delegated trust. Trust in banks, trust in mediators, trust in exchanges/brokers.... all of that, even down to the personal level of interacting with online shops... you have to trust the digital certification, the payment processors, the delivery, the manufacturer... everything. Which is fine... but you have no way of verifying.

So, the way that cryptocurrencies and the decentralised networks descended from military communication try to solve this problem is through economic incentivisation. Which does have trade-offs...

Anyway, in the hype of the bull market, it can be a bit tricky to see what and why everything needed a token... people seemed to think that tokens would have intrinsic value through the virtue of existing as a token... governance, ownership, game-fi... well, most often, they had no practical intrinsic value beyond hype... and when that evaporates, they are actually worthless.

On a sort of side note, I listened to this interesting podcast about NFTs... where the guest made the statement that the ACTUAL NFT "art" WAS meaningless... and the real worth was the "security investment" that you purchased in the creator's future "worth". So, the NFT would be valuable through the accumulation of perceived "clout" rather than the actual artwork. They argued that the existing physical art world was the same, just that the physical artwork confused the issue... and with the digital artwork, the confounding factor was removed, and it became clear that the real investment was in "clout" and not "art".

In many ways, this is similar to luxury goods market... you can always buy knock-offs or copies... functionally and superficially similar, but they don't convey the same "image" and "clout". Interesting... as I had always seen Art NFTs as essentially worthless with no enforcement of ownership... but now it becomes clear that they are investments in "clout" and not the actual art. But then you are betting long on the creator getting famous... Maybe that would work for an artist like Beeple, but at the moment.. the pickings are a little slim, but on the other hand, prices are cheap for a long shot bet!

Anyway... side tracked... first principles... what are things that DO need tokens. Well, Games NEED player ownership of digital assets/goods (NFTs)... playing a game without unique ownership now feels cheap and meaningless! But it DOESN'T need governance/monetary tokens... players deciding the future development of a game is not a good meta-game to have and takes away power from the developers to craft a sustainable and engaging game world. Monetary tokens... yes, we could use any of the existing ones that actually aim to serve that purpose directly and with much more Lindy and liquidity.

The last bull run saw a lot of alt-L1s that tried to hit at the perceived weak points of Ethereum... high fees and slow transaction times being some of them. Many of these were VC-backed in comparison to the missionary and social-change driven teams of Ethereum... and VC backing means that the mission will be orientated to profit and not to social change. Plus... targeting metrics (a VC/MBA skill...) means that you lose sight of things that are actually important.

So, for Ethereum... yes, main-net was slow and expensive a while back... but at its heart and on the long-term road-map was the ideas of modular design (sort similar ideas with Cosmos...) that allowed the first wave of L2 Optimistic rollups to take over from the Plasma side-chains to fix scaling and cost... and soon comes the zk-rollups and zk-EVMS that will introduce privacy as well as scaling increases. So, the future looks good for Ethereum... it just doesn't come when we scream and yell, but it comes slowly but surely. Meanwhile, there were many who lost faith or were just tourists and ran to shinier solutions...

So, what is the story of the last bull run to keep in mind for the next one? Well... most things in a bull run are shiny hyped things... and we are conditioned to want those rather than the old, battle-tested, and reliable... Sure, there isn't any harm in playing around to cash in on the irrational market impulses... but there are old projects and protocols just chugging away through bear and bull... just learning, iterating, and building... building out the future infrastructure of the digital world and society.

... and that is the real goal. Not the short term hype cycles and the money making opportunities.... but the chance to replace the digital plumbing with a version that hopefully devolves power through the new methods of communication and co-ordination in a world that has exhausted trust as a reliable tool.

I can also be found cross-posting at:
Hive
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Publish0x

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