what's wrong with crypto
Crypto and blockchain technology have immense potential to solve numerous world problems. Yet, the number of real use cases remains nearly zero. The majority of the population associates crypto with scams, and there are more protocols than actual apps.
These are just my thoughts after building in the space for three years, coming from a consumer social background, so don’t take them too seriously:
Governments do not help:
Banks in the US refuse entirely to work with you if you have any association with crypto, which constraints you with on/off ramps, integration to the existing financial infra
Existing regulation is flawed. It neither simplifies life for citizens nor for builders. Regulation should disincentivize unethical builders, but it is hard to build anything in its current form.
Builders build infrastructure without considering the distribution
I’m yet to meet a founder of a protocol who can explain to me who and how will use their product
Projects with some distribution often prioritize short-term gains over long-term humanity upside, leading to a rapid rise and quick death
If it's not a meme coin, it rarely addresses a real-world problem that uniquely benefits from utilizing crypto tech.
Speculation dominates most products:
This is a well-known issue, and while I think the speculation is, in some capacity, a healthy feature, these products do not have long-term vision.
An abundance of L2s, L1s, and bridges does not simplify life for users
Most crypto investors focus on short-term gains
This just makes it hard to find capital without a standard GTM, as Vitalik puts it, “casino.”
The number of real users is small:
Only 6.5% of the world has some form of crypto; these are not day-to-day users. We don’t know how accurate this data is since people have multiple wallets and sybils can be up to 98%.
The only actual mass use cases include:
Store of value
Cross-border payments
Payments in countries with poor economies
Dark web activities
Speculation
Decentralization is deprioritized:
The original philosophy is flawed, as users don’t care about it, and developers save time
In the end, projects that quickly gain hype and profit from speculators attract more VC money, leading to token pumping and project death. Infrastructure projects focus on developer grants without understanding user needs. Governments and banks are the gatekeepers, and developers fail to solve real-world problems.
A potential solution for devs:
Create a set of philosophical principles and values for builders that can be used as a market standard, endorsed by reputable individuals. This system would be similar to the Michelin star rating, with various aspects of trust and quality, to guide those who are not deeply familiar with the industry. While this will not solve the distribution problem, it can help create narratives around what is good and bad for the rest of the market.
Build the first consumer use case for your protocol yourself and try to find pmf. Farcaster is a good example, although it’s too early to tell.
Think about solving real problems that utilize blockchains for something that cannot be solved without them. Tokenizing everything doesn't make sense.