Crypto shame? Proud? Better to keep your head down and be patient

Why crypto shame?

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

Recently, the term "crypto shame" has appeared frequently in the industry. Some people feel "shame" for not bringing real value to society, while others are ashamed to talk about it because of the sluggish market. It is worth noting that this sentiment exists not only among ordinary investors, but also among Ethereum core developers who have been deeply involved in the industry for many years.

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

You may argue that from Bitcoin, which was born in the 2008 financial crisis, to the Stable Coins, DeFi, DEX, wallet applications, etc. that have emerged in the following decade, aren't they all the results of these years? Peter agrees that Stable Coins did play a role, but he also believes that:

• BTC, which initially tried to become a safe-haven asset, failed, and the violent price fluctuations made it difficult to achieve its original goal.

• Decentralized exchanges promote speculation rather than substantial value creation.

• Although tools such as Dune and Messari can be used to analyze the market, they still essentially serve a "casino"-like market.

• Although high TPS is achieved technically, the current application scenarios are almost 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 the development of technology to bring substantial improvements to the lives of the public is. At present, regardless of whether life has been improved, in fact, if you want to ensure your life or life, it seems safer to keep silent about the industry you are engaged in and the crypto assets you hold.

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

Casa co-founder Jameson Lopp 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 victims’ BTC.

Many cases of encryption practitioners being robbed have been reported in the newspapers, so in order to protect their own safety, many people choose to hide their identities.

The instability and volatility of the crypto asset market is also a reason why some encryption practitioners are "unspeakable". The price plunge has damaged the confidence of investors and holders, and also affected the public's view of the entire crypto asset industry.

Is encryption really "shameful"?

First of all,we need to recognize the current problem of the encryption industry: lack of practical applications.Except for BTC and a few ecosystems, most projects still lack substantial application scenarios. All technological developments seem to provide convenience only for speculation.

Indeed, the main purpose of speculators is to make money, and they don't care about the specific target of investment. However, from the perspective of the market, speculators have supplemented liquidity for many sub-markets in the market, objectively filling the liquidity gap. Value investors and speculators each have their own meaning of existence. To use a metaphor that may not be appropriate, if the water is too clear, there will be no fish. If there are no speculators, the activity of the market may be greatly reduced.

Therefore, understanding the importance of speculators to the market will help us look at various phenomena in the industry more rationally. In addition, from the perspective of personal safety, it is understandable to hide the identity of encryption practitioners; but if it is because of a lack of sense of value or market fluctuations, it may be unnecessary. Encryption has a practical significance in the present, and there are also practical application scenarios that will continue to expand in the future.

The practical significance of encryption at present

Take BTC as an example. It is the first successful decentralized digital asset experiment. 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 it is extremely volatile, for some investors, it is a long-term means of storing value, similar to the role of gold, which can, to a certain extent, resist the risk of depreciation of fiat currency due to inflation.

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

In addition, BTC introduced blockchain technology, the application of which goes far beyond crypto assets themselves, including supply chain management, identity verification and other fields.

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 transfers without paying any fees. This further reduces the cost of international remittances and improves efficiency.

The social value of the future of encryption

Peter's analogy with SpaceX may not be appropriate. Rockets have a clear purpose - to send objects into space, and the development purpose 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 appropriate analogy. In the just-concluded Paris Olympics, 5G technology was widely used in the live broadcast and data transmission of the event. For example, the Olympic broadcasting service OBS used 5G cameras and ultra-high-definition image technology in the broadcast, providing a higher quality viewing experience for global audiences. 10 years ago, in an era when 2G and 3G were enough, who could have thought of what application scenarios 5G would have? But today, taking China as an example, 5G applications have covered 70% of the national economic categories, and there are more than 94,000 5G commercial projects.

Therefore, technologies that seem to have unclear application scenarios in the early stages may gradually show their huge social value as technology advances. The core feature of blockchain technology is that the information on the chain cannot be tampered with, which increases the transparency and traceability of the data. Applying it to the charity field can increase the trust of donors, 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, its encryption technology can be used for identity authentication, ensuring that only authorized users can access specific resources, while enhancing data security, reducing the risk of identity theft and data leakage, etc.

Although it seems that the developers of crypto assets and blockchains 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 to apply these technologies to more practical scenarios. As shown in the development history of 5G technology, with the maturity of technology and the continuous expansion of application scenarios, crypto assets and blockchain technology will gradually prove their value.

Government's regulatory attitude towards the crypto industry

Bitcoin was born in the 2008 financial crisis. Out of disappointment with the traditional monetary system, Satoshi Nakamoto created Bitcoin without a central issuing agency and wrote in the Genesis block:

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks

This sentence translated into Chinese means: January 3, 2009, The Times: The Chancellor of the Exchequer is on the verge of implementing a second bailout for banks.

The emergence of crypto assets was initially a challenge to traditional finance and governments, but today, governments have gradually begun to establish relevant bills for the crypto industry, which to a certain extent reflects their recognition of the industry.

In 2023, the European Parliament passed the Crypto-Asset Market Regulation Act (MiCA). This bill is an important development for the crypto-asset industry as it provides a comprehensive regulatory framework for crypto-assets throughout Europe, including but not limited to the issuance, trading and custody services of crypto-assets.

This year, the United States has successively passed 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 Putin signed a law to legalize crypto mining. At a previous 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 on 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 answering the question of "crypto shame" from the government's perspective.

Finally

We do not think that crypto is shameful, and those who are engaged in and involved in this industry can move forward without forgetting their original intentions.

We also do not think that Arthur Hayes's statement that "crypto asset holders should proudly display their wealth" is an unconditional initiative, at least to ensure that you are in a safe environment first.

We believe that encryption is necessary, especially after recognizing the source of vitality of the crypto industry.

And at the moment, what we need most is patience.