Why Crypto Shame?
Recently, the term "crypto shame" has appeared frequently in the industry. Some people feel "ashamed" because they feel that blockchain has not brought substantial value to society, and some are ashamed to speak up because of the sluggish market. It is worth noting that this sentiment not only exists among ordinary investors, but also the core developers of Ethereum who have been deeply involved in the industry for many years.
On August 5, 2024, on the day when the market plummeted, Péter Szilágyi, a member of the Ethereum Foundation and head of Geth development, published a tweet. He compared the crypto-asset industry with SpaceX, pointing out that SpaceX continues to advance human progress through research on rocket launches, while the crypto-asset industry is more like a casino for gamblers and does not create real social value.
You may argue that from Bitcoin, which was born during the financial crisis in 2008, to Stable Coins, DeFi, DEX, wallet applications, etc. that have appeared continuously in the following ten years, aren't they all the results of these years? Peter agrees that Stable Coins do play a role, but he also believes:
- BTC's initial attempt to become a safe-haven asset failed, with severe price fluctuations making it difficult to achieve its original goal.
- Decentralized exchanges promote speculation more than substantial value creation.
- Although tools such as Dune and Messari can be used to analyze the market, they still essentially serve a "casino"-like market.
- Although high TPS is technically achieved, the current application scenarios are almost limited to supporting the issuance of a large number of Meme Coins, rather than creating truly valuable services or products.
Indeed, technology itself is not an end, but developing technology to bring about substantial improvements in life for the public is. At present, not to mention whether life has been improved, in fact, if you want to live or have your life protected, it seems safer to keep silent about the industry you are engaged in and the crypto assets you hold.
A month ago, a 29-year-old BTC holder was kidnapped by four men in the Ukrainian capital of Kiev and killed after having BTC worth approximately $207,000 stolen. Several attendees were also robbed at the recent EthCC conference held in Brussels, Belgium.
Jameson Lopp, co-founder of Casa, pointed out in the article A bitcoiner's guide to organized crime that there are organized criminal gangs in the United States that target BTC holders and steal the victims' BTC.
Many encryption practitioners have been robbed, so in order to protect their own safety, many people choose to hide their identities from the outside world.
The instability and volatility of the crypto asset market is also a reason why some crypto practitioners are "unspeakable." The plunge in prices has damaged the confidence of investors and holders, and has also affected public perception of the entire crypto-asset industry.
Is encryption really “shameful”?
First, we need to recognize the problem with the current state of the crypto industry: a lack of practical applications. Except for BTC and a few ecosystems, most projects still lack substantial application scenarios. All technological development seems to facilitate speculation only.
Indeed, the main purpose of speculators is to make money and does not care about the specific target of investment. However, from a market perspective, speculators have supplemented liquidity for many sub-contracts in the market, objectively making up for the liquidity gap. Value investors and speculators each have their own meaning of existence. To use a metaphor that may not be appropriate, if the water is clear, there will be no fish. Without speculators, the activity of the market may be greatly reduced.
Therefore, understanding the importance of speculators to the market helps us look at various phenomena within the industry more rationally. In addition, from the perspective of personal security, it is understandable to hide the identity of encryption practitioners; but if it is because of a lack of sense of value or market fluctuations, it may be unnecessary. Encryption has practical significance for the current existence. There are also practical application scenarios that will continue to expand in the future.
The practical significance of encryption today
Take BTC, for example, which was the first successful experiment in decentralized digital assets that did not require a central bank or other authority to maintain its execution. This feature means that BTC can circulate freely around the world without the intermediary role of traditional financial institutions. Although it is extremely volatile, for some investors it is a long-term store of value, similar to the role of gold, and can provide some protection against the risk of fiat currencies devaluing due to inflation.
For countries with severe inflation in their domestic fiat currencies, BTC has become an alternative. For example, El Salvador officially announced that BTC would become one of the country’s legal currencies on June 9, 2021, in order to deal with the depreciation of the national currency. At the same time, BTC helps improve financial inclusion, providing a new way to pay and save for those who do not have access to traditional banking services.
In addition, BTC has introduced blockchain technology, the application of which goes far beyond the cryptocurrency itself, including supply chain management, identity verification and many other fields.
Stable Coins are also widely used in cross-border payments due to their stable value. For example, Xoom, an international remittance service owned by PayPal, allows users to use Stable Coins to transfer funds without paying any fees. This further reduces the cost of international money transfers and increases efficiency.
The social value of crypto future
Peter's analogy between crypto assets and SpaceX may not be appropriate. Rockets have a clear purpose - to send objects into space, and the development purpose of encrypted assets and blockchain technology, just like Internet technology, is not limited to a specific purpose, but has the vitality of self-iteration and advancement with the times. .
5G may be a more appropriate analogy than rockets. In the just-concluded Paris Olympics, 5G technology was widely used for live broadcast and data transmission of events. For example, the Olympic Games broadcast service organization OBS uses 5G cameras and ultra-high-definition picture technology in the broadcast to provide a higher-quality viewing experience for global audiences. Ten years ago, in an era when 2G and 3G were sufficient, who could have imagined what application scenarios 5G would have? But today, taking China as an example, 5G applications have covered 70% of the national economy, and there are more than 94,000 5G commercial projects.
Therefore, technologies that seem to have unknown application scenarios in the early stages may gradually show their huge social value as the technology advances. The core feature of blockchain technology is that the information on the chain cannot be tampered with, which increases the transparency and traceability of data. Applying it to the charity field can improve the trust of donors. In the food supply chain, blockchain It can be used to track the origin and history of food to better ensure food safety. At the same time, its encryption technology can be used for identity verification to ensure that only authorized users can access specific resources, while enhancing data security and reducing the risk of identity theft and data leakage, etc.
Although it seems that developers of crypto assets and blockchain currently invest manpower and material resources in infrastructure construction and improve TPS, which are mainly used in Meme Coins and speculation scenarios, the key to the future is how to apply these technologies to scenarios with more practical value. . As the development history of 5G technology shows, as the technology matures and application scenarios continue to expand, cryptoassets and blockchain technology will gradually prove their value.
Government’s regulatory attitude towards the crypto industry
Bitcoin was born during the financial crisis in 2008. Out of frustration with the traditional currency system, Satoshi Nakamoto established Bitcoin without a central issuing authority and wrote in the Genesis Block:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
This sentence translated into Chinese means: January 3, 2009, "The Times": The chancellor is on the verge of implementing a second bailout of the banks.
The emergence of crypto-assets was initially a challenge to traditional finance and government, but today, governments around the world have begun to gradually establish relevant bills for the crypto industry, which to a certain extent reflects recognition of the industry.
In 2023, the European Parliament passed the Cryptoasset Market Supervision Act (MiCA). This bill is an important development for the crypto-asset industry as it provides a comprehensive regulatory framework for crypto-assets across Europe, including but not limited to the issuance, trading and custody services of crypto-assets.
This year, the United States successively passed spot ETFs for Bitcoin and Ethereum, marking the entry of crypto assets into the mainstream of the market. At the same time, the United States is brewing a new proposal to establish a BTC tax-free digital economic zone (DEZ) to promote the use and development of BTC by providing a tax-free trading environment.
In August 2024, Russian President Putin signed a law legalizing crypto mining. At a previous meeting on economic issues, the Russian government also emphasized the importance of crypto-assets as a promising economic field and planned to quickly establish a legal framework and regulatory system.
These countries and regions have adopted more standardized regulatory measures for crypto-assets, from establishing a comprehensive regulatory framework to promoting the development of specific crypto-assets, reflecting the government's positive expectations for the future development of the industry, and also addressing "crypto shame" from a government perspective. The question was answered.
Summarize
We do not believe that encryption is a shame, and those who engage in and participate in this industry can move forward without forgetting their original intentions.
We also don’t think Arthur Hayes’ statement that “crypto asset holders should proudly display their wealth” is an unconditional initiative, at least to ensure that they are in a safe environment first.
We believe crypto is necessary, especially after recognizing the lifeblood of the crypto industry.
And right now, what we need most is patience.
