Crypto Shame? Pride? Better to Keep Your Head Down and Be Patient

Why cryptoshaming?

Do you feel shy about your involvement in the crypto/blockchain industry?

The term “crypto shame” has been popping up a lot in the industry lately. Some people are “ashamed” that blockchain has not brought any real value to society, while others feel too embarrassed to speak out due to the sluggish market. It’s worth noting that this sentiment exists not only among regular investors, but also among Ethereum core developers who have been deeply involved in the industry for years.

On August 5, 2024, the day of the stock market crash, Péter Szilágyi, member of the Ethereum Foundation and head of Geth Development, posted a tweet comparing the crypto asset industry to SpaceX, pointing out that SpaceX is constantly advancing human progress through research into rocket launches, while the crypto asset industry is more like a casino for gamblers and does not create any real social value.

You could argue that from Bitcoin, which was born in the 2008 financial crisis, to the stablecoins, DeFi, DEX, wallet applications, etc. that have emerged in the decade since, that they are not all a result of these years? Peter agrees that stablecoins have indeed played a role, but he also believes that:

• BTC’s first attempt at becoming a safe haven failed. Its huge price swings made it difficult to achieve its original goal.

• Decentralized exchanges facilitate more speculation than they actually create value.

• While tools like Dune and Messari can be used to analyze the market, they essentially still serve a ‘casino’ style market.

• While technically a high TPS has been achieved, the current application scenarios are pretty much 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 the goal, but developing technology to bring substantial improvements to the lives of the public. At this point, regardless of whether life has improved, it seems safer to keep quiet about the industry you are in and the crypto assets you own, if you want to secure your life.

A month ago, a 29-year-old BTC holder was kidnapped by four men in the Ukrainian capital of Kiev and murdered after BTC worth approximately $207,000 was stolen. During the recent EthCC conference in Brussels, Belgium, several attendees were also robbed.

Casa co-founder Jameson Lopp pointed out in his article A bitcoiner’s guide to organized crime that there are organized criminal gangs in the United States that target BTC holders and steal their victims’ BTC.

There have been many cases of robbed encryption experts in the news. In order to protect their own security, many people choose to hide their identity from the outside world.

The instability and volatility of the crypto asset market is also a reason why some crypto practitioners find it difficult to talk about it. The price crash has damaged the confidence of investors and holders and has also affected the public’s perception of the entire crypto asset industry.

Is encryption really ‘shameful’?

First of all, We need to acknowledge the current problem of the crypto industry: the 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.

The main goal of speculators is indeed to make money, and they do not care about specific investment goals. However, from the perspective of the market, speculators have added liquidity to many submarkets, objectively filling the liquidity gap. Value investors and speculators each have their own meaning. To use a metaphor that may not be appropriate: if the water is too clear, there are no fish. If there were no speculators, market activity could decrease significantly.

Therefore, understanding the importance of speculators to the market helps us to view various phenomena in the industry more rationally. Moreover, from the perspective of personal security, it is understandable to hide the identity of crypto practitioners; but if it is due to a lack of sense of value or market volatility, it may be unnecessary. Encryption has practical significance at present and will continue to grow in the future.

The relevance of encryption today

Take BTC as an example. It is the first successful experiment with decentralized digital assets. It does not require a central bank or other authoritative institutions to maintain its operation. This feature means that BTC can circulate freely around the world without the intermediary role of traditional financial institutions. Although extremely volatile, it is a long-term store of value for some investors, similar to the role of gold, which can to some extent withstand the risk of depreciation of legal currency due to inflation.

For countries with severe inflation of their own fiat currencies, BTC has become an alternative. For example, on June 9, 2021, El Salvador officially announced BTC as one of the country’s legal currencies to address the problem of its own currency depreciation. At the same time, BTC helps to improve financial inclusion. For those who do not have access to traditional banking services, BTC offers a new way to pay and save.

In addition, BTC introduced blockchain technology, the applications of which go far beyond cryptocurrencies themselves. They include supply chain management, identity authentication, and many other areas.

Stable Coins are also widely used in cross-border payments due to their stable value. For example, Xoom, an international remittance service under PayPal, allows users to use Stable Coins for remittances without paying fees. This further reduces the cost of international remittances and improves efficiency.

The societal value of the future of encryption

Peter’s analogy between crypto assets and SpaceX may not be appropriate. Rockets have a clear purpose: to send objects into space, while the development of crypto assets and blockchain technology, like internet technology, is not limited to a specific purpose, but has the vitality of self-iteration and keeping pace with the times.

Compared to rockets, 5G may be a more apt analogy. During the recent Olympic Games in Paris, 5G technology was widely used in the live broadcast and data transmission of the event. For example, the Olympic broadcasting agency OBS used 5G cameras and ultra-high-definition image technology in the broadcast, which brought a higher quality viewing experience to the global audience. 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 commercial 5G projects.

Therefore, technologies that seem to have unclear application scenarios in the early stages can gradually show their great social value as the technology advances. The core function of blockchain technology is that the information in the chain cannot be manipulated, which increases the transparency and traceability of data. By applying it to the field of charity, the trust of donors can be increased, and in the food supply chain, blockchain can be used to track the source and history of food, so that food safety can be better guaranteed. At the same time, encryption technology can be used for identity authentication to ensure that only authorized users can access specific resources, while improving data security and reducing the risk of identity theft and data leakage, etc.

Although it seems that crypto assets and blockchain developers have invested manpower and material resources in infrastructure construction and TPS improvement, which are mainly used in Meme Coins and speculative scenarios, the key to the future lies in how these technologies can be applied to more practical scenarios. As can be seen from the development history of 5G technology, with the maturity of the technology and the continuous expansion of application scenarios, crypto assets and blockchain technology will gradually prove their value.

Government Regulation of the Crypto Industry

Bitcoin was born during the 2008 financial crisis. Disappointed with the traditional monetary system, Satoshi Nakamoto created Bitcoin without a central issuing authority, writing in the Genesis Block:

The Times 03/Jan/2009 Chancellor of the Exchequer on the verge of second bank bailout

The translated sentence means: January 3, 2009, The Times: The Chancellor of the Exchequer is about to bail out the banks for the second time.

The rise of cryptocurrencies initially challenged the traditional financial world and governments. However, nowadays, governments around the world have gradually started to draft relevant laws for the crypto industry. This reflects their recognition of the industry to some extent.

In 2023, the European Parliament passed the Crypto-Asset Market Regulation Act (MiCA). This law is a significant 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 of crypto-assets.

This year, the United States has successively approved spot ETFs for Bitcoin and Ethereum, marking the entry of crypto assets into the mainstream 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 Vladimir Putin signed a law legalizing crypto mining. During an earlier meeting on economic issues, the Russian government also emphasized the importance of crypto assets as a promising economic sector 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. This reflects the government’s positive expectations for the future development of the industry, and also provides an answer to the issue of “crypto shame” from the government’s perspective.

finally

We don’t find crypto embarrassing, and those who work and participate in this sector must keep their original intentions in mind and move forward.

We also don’t think Arthur Hayes’ statement that “crypto asset owners should proudly display their wealth” is an unconditional initiative. At least make sure you’re in a safe environment first.

We believe encryption is necessary, especially now that we recognize the source of the encryption industry’s vitality.

What we need most now is patience.