Thoughts from a Bitcoin Conference
What is hype vs. reality in the crypto and web3 world?
I remember coming across Bitcoin back in 2011 at a startup event in NYC. Someone mentioned it in passing to me as this thing you “mine” on a computer and create a “currency” from scratch. He seemed quite excited about it. I thought he sounded unhinged.
The next day I checked it out. The price of Bitcoin was about $1 USD at the time. It did not seem obvious how to acquire any Bitcoin though, so I ignored it. Even as the price soared to $30 that year, I was completely oblivious to this rise. I simply did not see any utility in owning Bitcoin.
I was in Hong Kong in 2016 when I crossed paths with the crypto world again. A friend introduced me to one of his friends that was heading over to a crypto meetup. He had gotten excited about the idea of minting your own coins and getting in on ICO’s, or Initial Coin Offerings. One of the key people that was involved in Ethereum was going to be at the meetup, so I tagged along to check out the event.
Walking into the meetup felt like I stepped into an alternate universe. I expected a typical tech gathering with a bunch of computer nerds. Instead it a motley collection of hustlers, entrepreneurs, day traders, multi-level marketers, and others that did not seem to have real jobs. They did however talk my ear off about the future of crypto and why it would change the world.
The space for the meetup was large by Hong Kong standards, and it was filled to capacity. I stayed for about half the panel discussion until I had heard enough of the new world utopian vision being sold by the speakers. I had expected some substance. Instead it was just a pitch to scam others into getting in on the latest hot ICO.
My impression of ICO’s and much of the crypto world after the meetup was that it was a haven for grifters and criminals. Much of the news about ICO scams in the subsequent years confirmed by initial thoughts. I was intrigued by the journey of Bitcoin though and figured out how to acquire some, mostly as an experiment. I then promptly forgot about it as I started a new job at Stack Overflow.
Fast forward six years later and I found myself attending a crypto conference this week of my own volition. I signed up, blocked three days out of my work week, and headed down to the crypto capital of the world, Miami, to wrap my head around what I actively dismissed for over a decade. While the year is still young, this might be the best decision I make in 2022.
Even as the price of Bitcoin shot up to the moon in 2020, it was the NFT craze of 2021 that brought crypto into the mainstream. Now it was not just the hustlers, crypto bros, and tech utopists piling into crypto, it was artists, musicians, celebrities, professional sports leagues, and non-techies jumping on board to get a piece of the NFT action. This led to a rise in people setting up digital wallets, converting fiat to crypto, and getting on board the crypto rocket ship.
That was the world I was stepping into this week with two big questions on my mind. First, what is reality versus what is hype? Second, what can we expect to emerge as the sustainable use cases that create real value and lead us into the next evolution of technology?
Much of my thinking is quite fluid at this point. I am still processing the vast amounts of information I took in during the show from the presentations and the many conversations I had with speakers, startup founders, and developers. That being said, I took away four key themes that I feel fairly certain of in terms of where things are headed in crypto, blockchain, NFT’s, and this thing called web3.
NFTs are more than JPEGS
While NFT’s got people’s attention, especially after the $69 million auction haul for the digital artist Beeple, there was a growing chorus of critics that said NFT’s were just images. When you look at things like the Bored Ape Yacht Club or Crypto Punks, you could be forgiven for thinking NFT’s are built entirely on hype sustained by techniques out of the MLM (multi-level marketing) playbook.
What most people do not realize is that an NFT is fairly mundane. An NFT is simply a piece of data that is stored on a blockchain. The data that is stored can point back to a media file, such as a graphic or music or video. It also could just as easily point to terms of a legal document, season tickets for a sports teams, plane tickets, or anything else where ownership and authenticity are critical in the digital space.
When Mark Cuban spoke on the first day of the conference, he said that NFT’s were just proof of concepts for smart contracts. He is correct. While silly social profile pics and digital art were the initial implementations of NFT’s, it is merely the first of what will be many types of use cases for NFT’s in the future that leverage the power of the blockchain to enable smart contracts.
Crypto has the power to change society
The utopian view of cryptocurrency has always had a strong anti-establishment theme. I heard this in many of the talks during the conference with speakers taking shots at governments, central bankers, and regulators. The accepted truth of attendees is that Bitcoin will become the new fiat currency for the globe, upending the power of institutions to hoard power and tug at the strings of the global economy for their bidding.
Whatever you may believe of the rhetoric, what I saw is hope in a better future that is enabled by the power of cryptocurrencies. El Salvador made huge waves this year by becoming the first nation to declare Bitcoin legal tender. How would citizens be able to tap into Bitcoin however when most of the population didn’t even have a bank account?
Justin Network, CEO of Netki, shared from the stage the work his startup did to help enable over 4 million citizens to setup and use Chivo, their digital wallet. Within two weeks, over 4 million people entered the world of crypto, an adoption rate that blows any digital bank out of the water. This opens up a whole new realm of services, businesses, and wealth generation for citizens and reshape the long-term economic prospects for the nation.
Decentralization is a vision built on the backbone of web2
The big selling point of crypto is decentralization, which shifts power from centralized institutions to individuals. In a decentralized world, entities cannot horde data, prevent access, or arbitrate rules. This new world of the Internet is dubbed web3.
While the blockchain itself is decentralized, what we have seen is the rise of very large players emerge in the crypto world that look much like existing entities in the web2 world. These include companies like Coinbase, Binance, and Opensea that collect user data, provide access to the blockchain, and have user agreements to use their centralized platforms built on technologies and providers that are very web2.
True decentralization will happen, but it is not one big leap. The reality is many parts of the web3 world will rely on the tools, infrastructure, and models of the centralized world for the foreseeable future until potentially newer technologies and innovative breakthroughs come forward.
You have not missed the boat, but now is the time
I often feel that I missed out on a few golden opportunities to dive into crypto in the early days. What I came away from the conference however is that the future is happening right now. After a decade of dabbling and hacking and taking wrong turns, the core foundation of web3 is in place.
These are the earliest days. Only 16% of Americans have owned or traders Bitcoin and most still view cryptocurrency as highly risky. Most regulators, particularly in the US, have not yet decided on how to regulate this new industry. The whole process from setting up wallets to engaging in NFT markets to using crypto in the real world is a chore.
Despite all of that, when you connect the dots, there is an inevitable conclusion that web3 is the future. The smart money is betting heavily in the space, from top VC’s like A16Z and Sequoia, to successful startup founder, to an entire country. There is no putting the genie back in the bottle of an industry that reached and exceeded $3 trillion in total market cap across all cryptocurrencies.
What are your thoughts on crypto and web3? How do you see web3 influencing or potentially changing the work that you are currently doing?
Mark Birch, Editor & Founder of DEV.BIZ.OPS
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I get that the technology behind web3 may be transformative, but does this change the fact that the vast majority of those piling into crypto today are still looking for the promised riches of a vast MLM?
How does one "dive into crypto" meaningfully without becoming a speculator?