Original title: "Good Things Take Time"
Written by: Gaby Goldberg, TCG Crypto, Bridget Harris, Founders Fund
Translated by: Yangz, Techub News
The current pessimism on CT is stronger than ever. Admittedly, in an industry where price-driven sentiment is understandable, people are confused about the industry's prospects and its application scenarios. However, if we take a step back and observe, we will find that most of the FUD is actually unnecessary. It is important that we see the achievements that the industry has made. After all, good things always take time.
The industry has use cases, you just haven’t noticed. Many practitioners hope that the industry will develop in a certain way, either exactly in line with what they expect, or in parallel with the way other industries have been developing for a long time. However, development is different for every industry, especially considering the development process of a brand new asset class from 0 to 1. It is easy to be indignant about the stagnation of the industry when facing the bubble of our own industry. But this is not the case. Below we will try to introduce the current situation of the cryptocurrency industry and how it is getting better.
Overall, over 66% of cryptocurrency users live in developing countries, while users in low- and middle-income countries continue to show sustained demand for cryptocurrency (India, Brazil, and Vietnam lead the world in cryptocurrency adoption as of March 2024). Cryptocurrency adoption in the U.S. is also high, but Americans don’t necessarily need to use cryptocurrency to avoid inflation or to get a more stable currency relative to the U.S. dollar. For users from developing countries, on the other hand, cryptocurrency is a necessity, a mechanism that protects them from their own governments and often broken financial systems. For example, in Latin America, it is very common for people to "immediately convert their wages into USDT or USDC." In addition, more than a third of Latin Americans have used stablecoins for daily consumption, indicating that many companies have begun to accept cryptocurrencies. Globally, USDT on Tron has performed particularly strongly, with a circulation of approximately $60 billion and approximately 44 million unique addresses. In short, the use of dollar-backed stablecoins around the world has become a killer use case for cryptocurrencies.
As Scott Alexander said in "Why I am not infinitely hostile to cryptocurrencies? ” pointed out in the book “If people try to enter the industry and only see monkey GIFs, it’s not the fault of cryptocurrencies.”
In the above examples, cryptocurrencies are seen as a technology product, but if they are simply seen as a “rail”, there is an entire ecosystem of applications and use cases on it, which can provide a better user experience than the Web2 era. Polymarket, the world’s largest prediction market, is such a breakthrough application. What makes Polymarket unique is the crypto infrastructure it is based on. For applications like this, cryptocurrencies have a competitive advantage for many obvious reasons, as well as many uncommon reasons:
Global accessibility: If the market is not global, there will be huge liquidity and accuracy issues.
Chargeback risk: People can’t bet $100,000 with a credit card, and if they lose, they may ask for their money back. For non-cryptocurrency-enabled gambling sites, this risk is huge, which is why they have historically charged high fees. Polymarket, on the other hand, currently has zero fees.
Complex coordination: For non-cryptocurrency-enabled prediction markets operating across borders, coordination between banks, regulatory jurisdictions, and FX service providers is a huge challenge. In addition to imposing additional costs on users, this has made the development of such prediction market platforms slow and difficult.
As a powerful emerging example of how cryptocurrency can unlock use cases that were previously unable to operate at scale, Polymarket is significantly faster than traditional news sources and is evolving into a completely new form of media. This new form of media is both a source of truth, a peer-to-peer social platform, and a mechanism for participation that incentivizes correctness (or at least as close to correctness as possible given the information available).
We can even see a real-time updated Polymarket embed on Substack (web embed in the original text):
These small achievements continue to accumulate, slowly bringing cryptocurrency into the mainstream.
The final point about Polymarket is that the team has been working on the same vision for a long time. They have been working on it for nearly five years with low trading volumes. Even when the company almost went bankrupt due to a $1.4 million fine from the CFTC, they did not waver. The cryptocurrency industry is always inherently biased towards "what's happening now", and people often don't realize how much time and effort it takes to "achieve success overnight".
Pudgy Penguins is another cryptocurrency company that has successfully broken through the circle, and its products are currently being sold in Target, Walmart, and Walgreens in the United States (more than one million toys have been sold to date). Pudgy Penguins is not the kind of "silently build and wait for users to come". Instead, the company actively provides products for its existing user base. Specifically, Pudgy Penguins is developing an easy-to-use L2, a game based on blockchain elements, and a show, all of which revolve around its cute brand image (originally just an NFT series). It is worth noting that Pudgy Penguins first made a lot of efforts in community distribution before building the underlying infrastructure for its stack. This is exactly the opposite of what most L2s currently do. Most L2s will choose to build technology first and then try to guide the community and attract applications to build in their ecosystem.
To attract users, Fat Penguin has come up with some creative ways, for example, each physical toy will come with a QR code that can be redeemed in the Pudgy World game (Webkinz style). By slowly introducing cryptocurrencies to users and ensuring that they have fun in the process, these users are more likely to stay engaged and explore cryptocurrencies more deeply.
Bridge provides critical infrastructure for many projects in the consumer application space. The company's focus is on stablecoin APIs, specifically issuance and coordination (which was a company-scale problem that projects had to solve internally before Bridge modularized it). Bridge has proven that doing one (important) thing well is a sound path in the crypto space, and they have an impressive list of clients for this reason. What looks like a simple API is actually quite complex under the hood. Bridge takes care of all the KYC and compliance, and businesses just need to integrate with them to instantly convert between fiat and stablecoins (or different forms of stablecoins). While stablecoins are a core use case for cryptocurrencies, it has been difficult to find solutions that can convert quickly and compliantly. In addition, there are many types of stablecoins, and each platform usually prefers one. Bridge solves this problem in a flexible and easy-to-use way.
A common complaint in the cryptocurrency space (especially for newcomers) is wallets. Which wallet to choose, how to choose a wallet that can connect to the most DApps, and whether there are alternatives are a problem for many users. Fortunately, vendors like Dynamic, Privy, Capsule, and Coinbase WaaS are solving this problem for cryptocurrency applications and users, allowing individuals to conduct on-chain activities without downloading third-party wallet applications or hosting mnemonics. Constantly fixing integrations, managing updates, and adding new wallets as they are released (ensuring that TAM is not limited) is a problem that consumes significant engineering resources of companies. On the user side, the pain points are also obvious. Without these embedded wallets, users may not have a supported wallet (or, if they are new to the industry, they may not have a wallet at all). Simplifying the onboarding process for new users is key to the industry achieving mass adoption. In this regard, these companies (many of which have only been founded in the past few years) play a key role.
In summary, as a new industry, we still have a long way to go, but we can't ignore the achievements along the way. Ultimately, if you believe that the financial system should be fast, global, low-fee, accessible and for the people, then cryptocurrency is the only ultimate goal.
It is important to note that every new thing will experience growing pains or be outright opposed in the process of maturity. When the printing press first came out, it was strongly opposed by religious authorities because it would weaken their control over information. Islam outright prohibits printing, while Swiss scholar Conrad Gessner "asked the authorities of European countries to implement a law regulating the sale and distribution of books." Because in his view, ordinary people should not have access to so many books. At the end of the 15th century, Italian writer Filippo di Strata wrote: "The pen is a virgin, but the printing press is a whore."
If the printing press is a whore, then it may not be a very appropriate analogy for the public's view of cryptocurrency. But for the sake of progress, we are willing to accept this criticism. Embracing the strange is to know that new technologies often look "weird" at the beginning.
We also acknowledge that the vast majority of experiments in the field of cryptocurrency may not succeed. But if you insist on this view, then you fundamentally misunderstand the development process of breakthrough technologies. This idea is not new. The maturity of the Internet requires us to say goodbye to internal server farms, network loops, and Sony's AIBO robot dogs. It’s a natural and healthy evolution as people try out new technologies. The “power law” of successful products is exactly what investors follow when they enter these fields.
Many breakthrough applications in this cycle benefit from new infrastructure that simply didn’t exist in the previous cycle. Yes, there seems to be more infrastructure than applications, but without a strong underlying framework, applications can’t really exist or scale. With much of the infrastructure in place, innovation in applications is also accelerating.
Joel Monegro famously proposed the concept of “fat protocols” in 2016, where most of the value in a blockchain network comes from the protocol rather than the application layer.
We believe that modularization of the protocol layer compresses the value capture share of that layer, leaving more wiggle room for the application layer. Applications can use the modular components of the protocol layer to combine and match them according to their needs, ultimately bringing a better experience to users (and making more money). Today, users basically pay for applications through front ends, and these front ends are increasingly abstracting the protocol layer.
Interestingly, many of the issues facing Ethereum application developers today are often not technical, but cultural, due to the modularity of the infrastructure. For these builders, the ecosystem they choose to build on is critical to their brand, community, and sustainability. Sometimes, these applications will call themselves "projects built on xxx L2", but if the L2 is not sustainable, it will reduce the value of their products and brands. Building on Solana is unified because everyone defaults to building on the same single platform, while Ethereum raises a key question for developers: where should I build? "Any deployment" is not really an option either, as most chain abstraction protocols are not ready. When the ecosystem becomes more important than the application itself, a parasitic relationship between the two will occur, and the application and the ecosystem will compete for the same limited attention.
This may all be caused by Ethereum's zero investment in marketing, forcing L2 to create its own brand and style. This trusted neutral approach has created a rich and diverse L2 ecosystem, but it has also led to divisions. Vitalik emphasized this in a recent article, comparing L2 to a cultural extension of Ethereum itself, "For subcultures, L2 is the ultimate arena of action." In fact, these subcultures may be the best incubators for emerging applications. In these incubators, users are attracted by advantages such as low fees, the community is close-knit, and builders emerge in large numbers. In addition, the culture of the underlying L2 can also help its applications strengthen and grow their own culture. Of course, from an infrastructure perspective, many L2s on Ethereum are maturing, allowing more applications to exist and expand.
We have experienced multiple rounds of bull-bear conversions and know that infrastructure will give birth to applications, and applications will give birth to infrastructure. The cycle continues, and the emerging technologies we complain about are the products that enable low-fee chains, better distribution, and higher-quality user experience, all of which will eventually drive adoption. We still have a lot of work to do, but it is worth affirming that despite the collapse of giants such as FTX, constant regulatory resistance, and volatile markets, we have achieved some results. Our industry is still small and in its early stages of development, and the work we do should be positive-sum. It's time to rekindle the ambition in your heart. As the old saying goes, good things take time.
Four individuals confess to $735,000 USDT theft in South Korean OTC crypto transaction. One member with gang ties suspected of money laundering. Victim urges fund recovery as crypto-related thefts rise in South Korea.
EdmundTerraform Labs and its founder Do Kwon are set to go on trial in Manhattan on Monday, accused by regulators of lying to investors before the collapse of two of the company's cryptocurrencies roiled markets in 2022.
JinseFinanceDo Kwon, Terraform Labs' co-founder, faces extradition to the U.S. for charges related to a "multi-billion dollar crypto asset securities fraud" following the 2022 UST collapse.
MiyukiExplore the intricate details of the London trial where Wen Jian stands accused in a sophisticated Bitcoin laundering scheme tied to a $6.3 billion fraud in China.
BrianU.S. Prosecutors forego second trial for FTX's Bankman-Fried, focusing on sentencing following sufficient evidence from the first trial.
KikyoSBF and his defence team are still maintaining that the disgraced founder is innocent.
AlexThe FTX founder is set to address the jurors directly, seeking to substantiate his assertion that he neither committed nor conspired to commit fraud.
KikyoThe initial week of the trial of SBF has brought to light a narrative fraught with allegations of deception, mismanagement, and suspected wrongdoing.
CatherineThere’s no rest for the weary as a judge dismissed a motion put forth by SBF's legal team yet again, which sought his temporary release to prepare for the impending trial.
KikyoIt looks like it’s the end of the world for SBF as he suffers a first-world problem we all can empathise with: no internet! His legal team has made a case for pre-trial release using that as a basis.
Catherine