Crypto Shame? What is the Future Value of Cryptocurrencies if They Focus Only on Hype and Not on Reality?

Why Crypto Shame?

The term “crypto shame” has been popping up a lot in the industry lately. Some people are “ashamed” because they feel that blockchain has not added substantial value to society, and some are ashamed to speak out because of the sluggish market. It is worth noting that this sentiment exists not only among regular investors, but also among Ethereum’s core developers who have been deeply involved in the industry for years.

On August 5, 2024, the day the market crashed, Péter Szilágyi, member of the Ethereum Foundation and head of Geth Development, published a tweet comparing the cryptoasset industry to SpaceX, pointing out that SpaceX continues to advance human progress through rocket launch research, while the cryptoasset 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 during the financial crisis in 2008, to Stable Coins, DeFi, DEX, wallet applications, etc. that have appeared continuously for the next decade, that these are not all the results of those years? Peter agrees that Stable Coins play a role, but he also believes:

• BTC’s first attempt at becoming a safe haven failed. Its wild price swings made it difficult to achieve its original goal.
• Decentralized exchanges encourage speculation more than they create substantial value.
• While tools like Dune and Messari can be used to analyze the market, they essentially still serve a ‘casino’ style market.
• While technically achieving a high TPS, 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.

Technology is indeed not an end in itself, but developing technology to bring about substantial improvements in the lives of the public is. At this point, let alone 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 live or protect 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. Several attendees were also robbed at the recent EthCC conference 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 their victims’ BTC.

Many encryption professionals have been robbed. 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 are “unspeakable”. The drop in prices has damaged the confidence of investors and holders and has also affected the public perception of the entire crypto asset industry.

Is encryption really “shameful”?

First, we need to acknowledge 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 only facilitate speculation.

The main goal of speculators is indeed to make money and they do not care about the specific purpose of the investment. However, from a market perspective, speculators have added liquidity to many subcontracts in the market, objectively compensating for the liquidity gap. Value investors and speculators each have their own meaning of existence. To use a metaphor that may not be applicable: when the water is clear, there are no fish. Without speculators, the activity of the market can be significantly reduced.

Therefore, understanding the importance of speculators to the market helps us to view various phenomena within the industry more rationally. Moreover, from the perspective of personal security, it is understandable to hide the identity of encryption practitioners; but if it is due to 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, the first successful experiment in decentralized digital assets that didn’t require a central bank or other authority to enforce its operation. This property means that BTC can circulate freely around the world without the intermediary role of traditional financial institutions. While extremely volatile, it is a long-term store of value for some investors, 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, to address the depreciation of the national currency. At the same time, BTC helps improve financial inclusion, offering a new way of paying and saving for those who do not have access to traditional banking services.

Furthermore, BTC has introduced blockchain technology, the applications of which go far beyond cryptocurrency itself. They include supply chain management, identity verification, and many other areas.

Stable Coins are also widely used in cross-border payments due to their stable value. For example, Xoom, an international money transfer service owned by PayPal, allows users to use Stable Coins to transfer money without paying fees. This further reduces the cost of international money transfers and increases efficiency.

The social value of the 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, like internet technology, is not limited to a specific purpose, but has the vitality of self-iteration and progress with the times.

5G may be a better analogy than rockets. During the recent Olympic Games in Paris, 5G technology was widely used for live broadcasting and data transmission of events. For example, the Olympic broadcaster OBS used 5G cameras and ultra-high-definition image technology in the broadcast to provide 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 cover 70% of the national economy, and there are more than 94,000 commercial 5G projects.

Therefore, technologies that seem to have unknown application scenarios in the early stages can gradually show their enormous 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 charity field, the trust of donors can be improved. In the food supply chain, blockchain can be used to track the origin and history of food to better ensure food safety. At the same time, encryption technology can be used for identity verification 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-asset and blockchain developers are currently investing manpower and material resources into building infrastructure and improving TPS, which are mainly used in Meme Coins and speculation scenarios, the key to the future is how these technologies can be applied to scenarios with more practical value. As the development history of 5G technology shows, crypto-asset and blockchain technology will gradually prove their worth as the technology matures and application scenarios continue to expand.

The government’s regulatory stance towards the crypto industry

Bitcoin was born during the financial crisis of 2008. Out of frustration with the traditional currency system, Satoshi Nakamoto created Bitcoin without a central issuing authority and wrote in the Genesis Block:

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

This sentence translated into Chinese means: January 3, 2009, “The Times”: The Chancellor of the Exchequer is about to carry out a second bailout for the banks.

The rise of crypto assets initially posed a challenge to the traditional financial world and government. However, nowadays, governments around the world have gradually started to draft relevant laws for the crypto industry, which to some extent reflects a recognition of the sector.

In 2023, the European Parliament passed the Cryptoasset Market Supervision Act (MiCA). This law is a significant development for the cryptoasset industry, as it provides a comprehensive regulatory framework for cryptoassets across Europe, including but not limited to the issuance, trading, and custody of cryptoassets.

This year, the United States has successively adopted 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. During an earlier 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.

To summarize

We believe that encryption is not a shame and that those who engage and participate in this industry can move forward without forgetting their original intentions.

We also don’t think Arthur Hayes’ statement that “crypto asset owners should proudly display their wealth” is an unconditional initiative, at least not to ensure they are in a safe environment.

We believe crypto is necessary, especially since we realize the crypto industry is a lifeblood.

And what we need most now is patience.