Crypto: trade show trick or paradigm shift?

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Technology only makes sense if it changes our behavior. As many of you have pointed out, my writings are increasingly focusing on blockchain, cryptocurrency, smart contracts and NFTs, decentralized finance (DeFi), Web 3.0 and the role it plays. AI and other nascent computational tools could play in the future. There is a simple reason. These are all technologies that change behavior.

At one end of the spectrum, there is the potential for an alternative, decentralized system of value exchange that challenges our understanding of the role of central governance. On the other end of the spectrum, it’s nothing more than a fad that can be easily ignored. In my experience, no technology is ever “either or”.

As you know, nearly $ 8 trillion in wealth evaporated when the dot-com bubble burst in 2000. These speculative losses had nothing to do with the underlying technology; it was all about the hype. With that in mind, think about this …

Crypto is a Ponzi scheme

On the surface: Yes. You are absolutely right. If you analyze the tokenomics of almost any cryptocurrency, you will find some pattern of some sort, and it will almost certainly be to the benefit of those at the center of the process. Whether there was an ICO or some other method of minting, allocating and distributing the initial number of tokens (crypto), someone pre-chose the initial “big winners”.

Wherever you find an information asymmetry, you’ll find a financial engineer smart enough to take advantage of it (and you).

Under the Hood: The tools and techniques used to develop decentralized value exchange systems are fundamental building blocks for the future. Whether or not you choose to use a public or private blockchain or any easily searchable blockchain, crypto hash distributed ledgers serve a wide range of business use cases. The most important use of tokens (cryptocurrencies) that reward and empower users of any DeFi platform is to provide financial incentives. Crypto and their associated platforms need to be tested and deserve serious study.

Why use blockchain when a secure and well-structured database will suffice?

On the surface: Yes. You are absolutely right. This is the most important question you can ask about any potential blockchain project. Most of the time, there is no reason to use a blockchain. Blockchains are slower and less secure than anyone will admit. They are difficult to use. These are terrible places to store large amounts of data. Blockchains have very limited use cases!

Under the Hood: We’re so used to central authorities imposing rules and regulations on our transactions, it’s hard to allow ourselves to think of a world where it’s not an immutable law of life. Blockchain technologies (in the broad sense) allow people (or machines) who do not know or trust each other to do business. You trade the security of a central bank or central government (and their rules, regulations, and imposed costs) for the freedom to do whatever you want with anyone in the world at any time. This group of technologies is powerful and ubiquitous. Learning how to use them (or learning how others use them) is as fundamentally important as learning any other global IT standard.

NFTs are a SCAM!

On the surface: Yes. You are absolutely right. What’s the point of paying to “own” something that everyone already has a free copy of? This is madness ! There is only one Mona Lisa. Any other representation is clearly a copy. But who in their right mind is paying $ 69,000,000 for a .gif I can download for free from Google?

Under the Hood: NFTs are smart contracts. The technology allows the creator of the NFT to impose automatic business rules on the initial transaction and all subsequent transactions. Because the results are written to a public blockchain, the chain of custody is precise and immutable. Can you imagine a business case where (no matter when, where or why it happened) you would benefit from a contract that would automatically be executed when the terms of the contract were met? NFTs and smart contracts don’t require a blockchain to function, but coupled with utility tokens or cryptocurrency and a publicly explorable blockchain, they are a new way of doing business. Billions of dollars in business have already been processed using these tools. It is more than worth studying.

Web 3.0 is a crippled version of Web 2.0. That’s all the hype!

On the surface: Yes. You are absolutely right. Web 3.0 websites are clunky and difficult to create. When you’re done, if you’ve done a good job, users can’t tell if it’s a 3.0 or 2.0 website because (if successful) it looks exactly like a Web 2.0 website ( current). What a waste of time!

Under the hood: There are of course technical challenges. But the progress of the past few years has been remarkable. Big Topics: Oracles vs. API, Content ID vs. URL, Decentralized Data vs. Centralized Databases, No Censorship Possible vs. Imposed Government Regulations. We all have experience with BitTorrent or other peer-to-peer file systems. They tend to suck. This is different. The ability to financially reward nodes on a Web 3.0 platform creates a way for a community of interest or a community of passion to easily exchange value. This is very clearly a new way of organizing global communities. It might never be a way to rebuild the web (I’m not sure the web needs to be rebuilt), but I can put together a remarkably long list of potential use cases for every company I work with.

Push back hard, but don’t pretend it doesn’t happen

I don’t intend to stop thinking about the future. I don’t intend to stop exploring what’s new, what’s next, and what it means for your business and mine. But please push back hard. Tell me what I’m missing. Tell me what you know. Tell me what I should know, what I don’t know etc. I look forward to hearing from you.

Do you have a blockchain project you want to discuss?

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Author’s Note: This is not a sponsored article. I am the author of this article and it expresses my own opinions. I do not receive, and neither do my company, compensation for this.

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