“Have we earned it?” – probably the most important question posed in 2017 in the cryptocurrency community was this one by Vitalik Buterin, the founder of Ethereum.
In December 2017, the much celebrated 23-year-old Russian-Canadian posted the following on Twitter:
There were many other tweets and explanations given later but, with that opening thought, he was able to encapsulate in a very concise and elegant manner a general feeling that currently permeates the cryptocurrency ecosystem: people are focusing much more on the wealth generated by the extreme valuation of coins than on delivering on the promises of real change and disruption that we have been hearing and/or propagating in recent years.
In Vitalik’s words: “how many unbanked people have we banked? How much value is stored in smart contracts that actually do anything interesting? How many Venezuelans have actually been protected by us from hyperinflation?”
Throughout 2017, many cryptocurrencies had stratospheric valuations, making a lot of early investors sudden millionaires. And, to be fair, this kind of story makes the media headlines a lot more often than, for example, the current efforts of replacing a century old finance industry with blockchain technology. The media frenzy over crypto valuation, predictions about the future and overnight millionaires have occupied much of the space last year.
The vast majority of people (many of whom investing in crypto) still have not fully understood the importance of the blockchain concept and its true potential. Moreover, many do not even care – as long as whatever coin they bought yesterday continue to increase in price, that is all that matter.
Jeremy Gardner, another major player in the crypto community, made a similar point in his great keynote last week (Jan 19), at The North American Bitcoin Conference, in Miami.
Gardner criticized the current focus on wealth that is so pervasive nowadays in the crypto community reminding the audience of the days when our parents dropped the protest sign on Wall Street to embrace instead corporate suits and pension plans, and urging the crowd to avoid going down that same path.
The ongoing blockchain revolution has deep social change roots and many in the community are in fact committed to doing something for the common good, irrespective of making money along the way. But their efforts have been shadowed by a growing number of investors/curious whose only focus is on making money fast without any regard to what is the effort about.
In other words, there is still a long way to go before cryptocurrencies will play a major role in society. There are a number of ensuing initiatives that will soon surely flourish but a lot more needs to be done.
One obstacle might be that a lot of the talented people capable of overcoming the challenges in the crypto world is presently devoted to ICOs (Initial Coin Offerings).
While ICOs are a legitimate way of raising funds for startups, some argue the model is being abused and used for projects that are either nonsense or would not need to be involved in the crypto space. It is an interesting thought but I will leave that for a future post.