On the current crypto nihilism: Pseudo-demands cannot solve real problems

Author: Tang Han, founder of SeeDAO

In recent times, crypto nihilism has been prevalent in the circle. But this is not surprising at all. For some experienced practitioners, as early as last year or even the year before, they had doubts about the current industry path.

In my opinion, the biggest reason for the current crypto nihilism is that a large number of funds and builders have poured into a bunch of artificially conceived pseudo-demands. This pseudo-demand cannot bring real users or solve real problems. Instead, it has caused more and more smaller pseudo-problems, and has caused funds and people to run around in the split pseudo-problems. Because the problem is artificially constructed, the result is naturally nihilistic. It's like a person has invented an enemy, and after a long time, he is fighting himself. This game cannot continue.

I don't want to attribute this trend to the Ethereum ecosystem. It's not fair to say so. After all, the trend of Dapp was once popular in many public chains such as EOS, Polkadot, SOL (SOL in this round). GameFi and Meme were not Vitalik's main designs. However, to this day, this financial game conspired by concept makers, VCs, project parties with connections, exchanges, market makers and advertising companies has made more and more people disgusted and confused. It does not solve real problems, the utilization rate of funds is low (at least a certain proportion of Nasdaq's money will really be used to build the world), and it cannot be used to change the world, so it has degenerated into a worse version of Wall Street. People do not trust each other, regard dreams as an excuse for financial harvesting, lack passion, and become increasingly boring. This runs counter to the original intention of people to enter the crypto world with a heart of change.

Looking back on history, there are three points worth reflecting on:

Cleaning up the existing financial system

The crypto-financial market controlled by VCs from ICOs is worth reflecting on. In 2017-2018, people were fed up with the chaos of ICOs where everyone could issue coins, so they transferred the right to identify market targets to VCs (especially Western VCs with glamorous backgrounds). But after a cycle, we found that VCs did not bring better order to the industry. They created projects with unlocking periods and sky-high valuations for years, and conspired with exchanges, market makers, and advertising companies to let retail investors take over. In this round of bull market, people obviously no longer trust these VCs in the market as much as they trusted a16z in 2019.

As the market becomes increasingly nihilistic and the rate of return is not guaranteed, some VCs even begin to "chase money" from the project parties. For new project parties that want to raise funds, it is obviously not a good idea to raise funds from VCs. Looking back at this round of bull market, most of the successful projects are Meme coins. They bypassed the VC coin model, relied on the community, and the chips were fully circulated. There was a wave of people on SOL who sent money to Meme coin bloggers for leaving messages on Twitter, which is actually more like an ICO that does not rely on smart contracts.

From ICO to VC, and then from VC to ICO, the return of this wave is worth noting. If insiders see through the true face of VC and feel nihilistic because they lose confidence in VC, I think it is a good thing. This industry did not start with VC, and Binance was not originally opened by the US government. At first, people in the currency circle resisted the financial order dominated by Silicon Valley elites and Wall Street. But the people in the cryptocurrency circle at that time were too naive and inexperienced, and they quickly surrendered their market dominance under the chaos of ICO. Today, the world's leading centralized exchanges are accepting rectification and incorporation by the US government. Wall Street controls the chips of Bitcoin. It is expected that the cryptocurrency market will become more like US stocks or even the Shanghai Stock Exchange.

But I dare say that the financial innovation of cryptocurrency will not stop because the US government has incorporated Binance. Not only will it not stop, but when people's concepts are completely reversed, it will also open up greater innovation. The drama of resistance - incorporation - and then resistance will continue. Because the antipathy to the financial order dominated by VC and Wall Street (control of licenses, manufacturing of concepts, media collusion, market makers cutting leeks, and the country allowing them to be big and not fall) is the reason why there is blockchain. Our current nihilism and disgust indicate that we are still the same as before, disgusted with those things that we originally disliked but only had fantasies in the middle.

Clean up words and concepts

Don’t infinitely magnify blockchain, create concepts for it, and let people have unrealistic expectations of blockchain. The bitter fruit we bear today is actually created by ourselves. We first established the ideology of "decentralization", and then created the term Dapp based on this ideology, trying to move the application's computing to the chain; then we found that the computing resources on the chain were not enough, so we started to expand the chain, which triggered many expansion plans and L2 plans. We also invented the term "Web3", and the meaning of this term is so vague that no one can clearly say what this term means until now. It is sometimes used to refer to the blockchain industry, sometimes related to Polkadot's Web3 Foundation, and sometimes compared with Web1 and Web2, saying that "Web1 is readable, Web2 is writable, and Web3 is owned." However, in practice, Web3 is often associated with Dapp, that is, moving the application's computing to the chain.

The confusion of words is often a sign of nihilism, which makes people confused about what they are fighting for. In the end, we found ourselves fighting for a technology stack that "decentralizes the computing of network applications". Its core consciousness is "decentralization", but even this decentralization no one can clearly explain its true meaning. If it is "courage", "love" and "freedom", we can have a good talk. But how do we talk about "decentralization"? "Love" may be regarded as a goal, but "decentralization" sounds more like a means without reaching the end. Why is it also held up as an ideological goal?

If our goal is a technology stack that "decentralizes the computing of network applications", then we should resort to technical discussions to discuss its feasibility and technical advantages and disadvantages as well as the price we have to pay. If we cannot point out the ultimate goal of this technology stack of "decentralizing the computing of network applications" and its relationship with this ultimate goal, then our behavior will inevitably go against our minds and be frustrated. When we cannot explain these things clearly, we use marketing means to create words, and even magnify it to the point of Web3, which involves the entire Internet transformation, and conspire with VC to add fuel to the flames. The final result is what we have today: people believed it, but people no longer believe it.

Once words are created, it is difficult to clean them up. At this point, I admire Satoshi Nakamoto even more. As the founder of Bitcoin, he understands technology, has his own position, and never ambiguously states these things. In terms of ideology, he chose to engrave "British government aid" into the genesis block of Bitcoin, and also chose not to show up for life and be completely anonymous. A firm position, consistent words and deeds, and no Tai Chi are the virtues of a political leader. In terms of technology, he did not mention "decentralization" but directly said P2P. It is a virtue of a technology leader to not let vague ideologies hijack the technology stack, and not let those who do not understand technology romanticize the technology route that is not feasible to cause more fallacies. It is a virtue of a technology leader to directly call out the name of the technology stack he wants.

Clear up the real problem

Clearing up the existing financial system and word system is just to help us unravel the cocoon and eliminate the expectations and interest structures imposed on the blockchain. Now, it is time to face the real problem.

To clear up the real problem, I have a personal position, that is, to return to Bitcoin, not to return to Ethereum. This is not only because Bitcoin is much higher than Ethereum in market value, but also because Satoshi Nakamoto is more revolutionary in the technology stack and has a more mature foresight for the future world. In fact, when we delete the "invalid words" that the Ethereum ecosystem and VC conspired to collude with, what we finally get is a technology stack that "decentralizes the calculation of network applications." Bitcoin points to a set of P2P technology stacks. The former tends to put as many things as possible on the blockchain, that is, to expand the use scenarios of the blockchain infinitely, while the latter is to remain restrained and only put what should be put on the chain, and at the same time combine with the P2P (now we call it DWeb) technology circle to build a new network.

In my opinion, the P2P technology stack pointed by Bitcoin can be truly called Web3 - if we still want to keep the word Web3. Putting all the calculations of all applications on the chain is not only difficult to achieve and a waste of resources, but also stupid. This idea is like the source of problems, constantly creating more problems; the most fatal thing is that it does not bring real users. Users' demands are monetary freedom, market freedom, content freedom, social freedom, and freedom of association, not decentralization. Decentralization is just a means. Decentralization is meaningful only when it can serve our real purpose well.

A real problem: Bitcoin

Even if you say this, some people will think it is too empty. They will ask: Why don’t you just say what you think is the real problem? Apart from Bitcoin (digital gold, which may be included in the Fed’s balance sheet) and stablecoins (daily means of payment, with a large number of use cases already available), what else is the real problem? What else needs to exist? Bitcoin’s market capitalization is increasing. Is it better if it is the only one in the entire cryptocurrency market?

Then, there is a real problem at the moment, that is, the economic mechanism of Bitcoin, which makes Bitcoin unable to exist alone. Not only can Bitcoin not exist alone, but a huge ecosystem must be formed around Bitcoin. In my eyes, only this question is not a false proposition at present.

This is because the reason why Bitcoin is digital gold is that it is hard-coded as 21 million in quantity. This constitutes a basic belief. Shaking this number will shake this basic belief. At the same time, Bitcoin is halved every 4 years. If Bitcoin is analyzed as a country, the military expenditure of this country is halved every four years relative to the GDP of this country. After the first four halvings, this ratio may progress to a worrying number.

The social consensus carried by Bitcoin is getting bigger and bigger, but the relative cost of protecting it is getting smaller and smaller, which is bound to be unsustainable in the long run. (The price of Bitcoin cannot rise indefinitely, but the Bitcoin that miners can dig out will decrease indefinitely.) When Satoshi Nakamoto wrote the Bitcoin white paper, he implied a strong assumption that if the issuance of additional Bitcoins is not considered, Bitcoin will need to become a strong transaction chain in the future, subsidizing miners with handling fees to maintain network security. In the past, people regarded this assumption as an unfixable defect. Today, with the iteration of Bitcoin's own code, we can see such a structure from this defect: a Bitcoin main chain and a huge Bitcoin ecosystem cooperate with each other to provide long-term security for Bitcoin without shaking the fundamental modification of the upper limit of the number of Bitcoins.

This assumption will not be realized automatically, it can only be realized by the efforts of future generations. If there is anything worth doing for entrepreneurs at the moment, this thing is worth doing for us. Because it is difficult, and it is worth it. Most importantly, this is not an official topic designated by a philosopher king, nor a license issued by a national government, nor the personal preference of a VC or exchange owner. The problem is here. It exists here fairly, open to everyone with digital certainty. The entire industry has to face it, and even in the future, every national government that includes Bitcoin on the balance sheet of the central bank will face it.

Let's cheer up and really do something.